ASML sinks as China starts making advanced DUV chip tools

China has begun producing self-developed immersion deep ultraviolet (DUV) chipmaking machines, according to reporting based on The Information, and ASML shares plunged roughly 8 percent on Monday as investors feared a lasting hit to the Dutch lithography leader's remaining China revenue stream. Early deliveries are expected this year, but volume stays small and the tools still trail ASML.

Key Takeaways

• A state-backed Chinese firm has started making immersion DUV lithography machines, with expected deliveries this year to SMIC, Hua Hong Semiconductor, and ChangXin Memory Technologies.
• ASML stock fell about 8% on the Amsterdam exchange, and U.S. peers Applied Materials, Lam Research, and KLA were also pulled lower.
• Output is expected to stay limited—about five machines this year and around twenty in 2027—while performance and reliability still lag ASML.
• The news lands as U.S. lawmakers push the MATCH Act to curb DUV sales and support for China, raising questions about how effective export controls remain.
• ASML still holds the EUV monopoly and says none of its extreme ultraviolet systems are in China, preserving a clear high-end lead for now.

For investors tracking semiconductor names and passive income portfolios built around chip-equipment stocks, the selloff was a sharp reminder that geopolitics can move prices overnight. More market and income-focused coverage sits in our Wealth Hacks & Passive Income hub.

What exactly did China start producing, and why does ASML care?

According to NU.nl, China has begun producing self-developed advanced chip machines that use deep ultraviolet (DUV) immersion lithography. Those tools print circuit patterns on silicon and have long been a domain dominated by the Netherlands-based supplier ASML.

The Information report, also summarized by Investing.com, says a Shanghai-based, state-backed company has for the first time put homemade immersion DUV machines into production. The manufacturer's name was not disclosed because of sensitivity. The firm reportedly combined DUV development teams from other Chinese companies, including state-backed startup Shanghai Yuliangsheng Technology.

Machines are expected to be delivered this year to leading Chinese chipmakers Semiconductor Manufacturing International Corp (SMIC), Hua Hong Semiconductor, and ChangXin Memory Technologies. That matters for ASML because, after U.S. and Dutch export controls blocked sales of its cutting-edge extreme ultraviolet (EUV) systems to China, Chinese fabs leaned harder on ASML's older immersion DUV equipment.

Investing.com notes those DUV sales became a major revenue engine for ASML. If Chinese chipmakers can buy viable domestic DUV tools instead, ASML's remaining foothold in the region faces a longer-term challenge—even if the Dutch company's technology edge remains intact today.

How big is the breakthrough in practice?

Scale and quality still look constrained. NU.nl reports that on performance and reliability, the Chinese system still lags. Whether true mass production is possible still needs to be tested. Production is expected to remain limited at first: about five DUV machines this year and roughly twenty in 2027.

That is why the reporting stresses that ASML's lead is not gone overnight. The company's EUV franchise—the machines used for the most advanced chips powering leading AI models—remains uniquely Dutch. ASML has told U.S. officials it knows the location of all 340 EUV machines it has produced, including 26 decommissioned units, and that none are in China.

Trends.be coverage of the broader EUV dispute quotes ASML saying it has never shipped an EUV machine to China, nor parts, modules, or equipment specially designed for EUV use there. Most experts cited in that analysis think China could still need about a decade before it has a working EUV machine, even after Reuters reported a 2025 prototype effort in Shenzhen.

Separately, Chinese firms such as SMIC and Huawei have already stretched DUV further with multi-patterning, producing logic chips below 7 nanometers that once required EUV. That approach costs more and yields more errors than EUV, but it shows why investors treat any credible domestic DUV capacity as strategically important.

Why did chip equipment stocks fall so fast?

Markets moved first and asked nuance later. On the Damrak, ASML lost about 8% in the final trading hour after the news, NU.nl reported, while peer Besi also fell sharply. Investing.com said ASML erased early gains of more than 2% and dragged Applied Materials, Lam Research, and KLA lower with it. In afternoon Dutch market data shown alongside that report, ASML traded near €1,429.80, down about 8.4%.

The investor logic is straightforward. Lithography is widely seen as the hardest bottleneck in chipmaking. If China can localize that step, markets worry other equipment categories—deposition, etch, and inspection supplied by U.S. firms—could eventually face similar substitution risk in China.

Timing amplified the shock. The DUV news arrived as the U.S. Congress advances the bipartisan MATCH Act, legislation aimed at blocking China from buying or maintaining exactly these kinds of DUV machines. If Beijing can build them at home, traders argue, upcoming U.S. restrictions may lose leverage even as Western suppliers lose China revenue.

Trends.be notes ASML's DUV-related exports to China accounted for about one-third of company revenue in 2025. That concentration helps explain why a still-small Chinese production ramp could nonetheless trigger an outsized share-price reaction.

What should investors watch next after the ASML drop?

First, delivery and yield evidence. Reports say machines should reach major Chinese fabs this year, but NU.nl emphasizes that mass-production readiness still requires testing. Investors will watch whether Chinese tools can run reliably at volume, not just ship in single digits.

Second, policy risk. The MATCH Act would not only curb new DUV sales to China but also limit maintenance, spare parts, and software support for machines already installed. The Netherlands and other countries would have 150 days to align with U.S. rules or face pressure under the Foreign Direct Product Rule, according to Trends.be. Dutch officials have called the approach regrettable and stressed national control over export policy.

Third, the EUV gap. Even if domestic DUV advances, ASML's monopoly on EUV remains the high-end moat for the most advanced AI chips. Claims that an ASML EUV system reached China remain unproven in the Trends.be account; ASML says it has received no supporting evidence.

For wealth-focused readers, the practical takeaway is portfolio discipline rather than panic. Semiconductor equipment stocks can swing hard on geopolitics and single reports. Position sizing, diversification across the chip supply chain, and a clear horizon matter more than reacting to one session's move in a single name like ASML.

Bottom line: China's first steps into homemade immersion DUV production are real enough to spook markets and challenge ASML's China exposure over time. They are not yet proof that Beijing has closed the technology gap—or that ASML's global leadership has suddenly ended.