European semiconductor equipment stocks fell sharply on July 27 after reports emerged that China has started domestic production and delivery of deep ultraviolet (DUV) lithography machines to local chipmakers.
ASML, the Dutch lithography giant, led the decline with shares dropping over seven percent, marking its steepest single-day drop since June 8.
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Domestic DUV Machines Delivered to Major Chinese Chipmakers
According to sources familiar with the development, a state-backed manufacturer is delivering immersion DUV systems to Semiconductor Manufacturing International Corp (SMIC), Hua Hong Semiconductor, and ChangXin Memory Technologies (CXMT).
These machines represent the most advanced lithography equipment available to Chinese manufacturers after international trade restrictions cut off access to extreme ultraviolet (EUV) systems.
Initial production volumes remain limited, with forecasts projecting five DUV units delivered this year and approximately 20 units in 2027.
China is also developing a proprietary EUV lithography system, but that technology remains at the prototype stage.
Industry reports indicate that while the breakthrough presents potential long-term competition for ASML, the Chinese machines currently lag in overall performance and reliability.
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Extended testing will be required before domestic systems can enter mass production, preserving ASML's immediate market advantage in the near term.
The sell-off extended across the broader European chip equipment supply chain.
BE Semiconductor Industries fell roughly 8.5 percent, Soitec dropped 5 percent, and Infineon Technologies fell nearly 3 percent as investors assessed potential shifts in global equipment demand.
Reuters reported that ASML declined to comment on the matter.
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The domestic technology offers Chinese chipmakers a critical alternative as the United States evaluates tighter restrictions on foreign lithography maintenance and exports.
