ASML shares dropped more than 5.5 percent on Monday following media reports that a Chinese startup has begun manufacturing deep ultraviolet (DUV) semiconductor machines.
Shanghai Yuliansheng Technology reportedly started producing DUV equipment destined for major domestic chipmakers including SMIC, Hua Hong, and CXMT.
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Domestic Production Targets ASML's Exportable Equipment
The reported domestic production directly targets equipment types that ASML is still permitted to export to China, unlike its restricted extreme ultraviolet (EUV) systems.
According to the reports, the startup plans to produce five machines this year and approximately 20 machines next year.
The development follows earlier pilot tests conducted last year, signaling technical progress that could raise competitive risks for European semiconductor equipment suppliers.
Investment bank Jefferies highlighted the potential medium-term market implications for established European equipment suppliers operating within the region.
“And that could have a negative impact on the outlook for ASML in China in the coming years,” Jefferies said.
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Analysts noted that domestic production capacity could accelerate as major Chinese semiconductor manufacturers integrate locally produced equipment into commercial production lines.
“Although China will undoubtedly continue to buy ASML machines as long as possible due to their significantly superior quality, domestic production capacity will also increase faster if major companies such as SMIC and CXMT start using these machines in commercial production,” Jefferies added.
Financial analysts also advised caution regarding the unverified nature of the market reports, noting that previous claims regarding domestic Chinese lithography advancements later proved inaccurate.
“But in the past, there were more frequent reports on this topic that later turned out to be false,” Jefferies said.
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Broader European semiconductor equipment stocks mirrored the decline, with ASMI dropping 3.7 percent and Besi falling 6.2 percent during the same trading session.
