Shares of major chipmakers fell sharply on Monday after reports that a state-backed Chinese firm has begun mass-producing domestic deep ultraviolet (DUV) lithography machines.
ASML Holding NV (NASDAQ:ASML, XETRA:ASME) dropped more than 7% as China’s progress in domestic DUV production threatens the Dutch company’s sales of older-generation tools in the region. Advanced Micro Devices Inc (NASDAQ:AMD, XETRA:AMD) also fell 7.3% and Micron Technology Inc (NASDAQ:MU) was down nearly 5% by midday.
China has been unable to obtain extreme ultraviolet (EUV) lithography machines from ASML, the sole global manufacturer, after export controls blocked access starting in 2019. But Chinese firms stockpiled a large fleet of older DUV machines before restrictions tightened, and companies including SMIC and Huawei have used multi-patterning techniques on those tools to produce near-frontier chips.
The export control regime was designed to keep China several years behind at the leading edge. DUV multi-patterning is slower, lower-yield and more expensive than EUV production, but it is proving sufficient for near-frontier chips, unsettling policymakers and investors who had assumed China faced tighter constraints.
China’s domestic lithography advances bypass Western supply chains entirely, hitting equipment makers hardest.
The declines also reflect broader valuation concerns, as high expectations tied to AI infrastructure spending have left sector rallies vulnerable to profit-taking amid shifting macroeconomic conditions.
