A Chinese state-owned company’s effort to build its own advanced chip-printing equipment is putting a harsh spotlight on the difficult position facing European semiconductor tool maker ASML — a firm whose recent stock surge had made it the most valuable publicly listed company in Europe.
ASML finds itself squeezed from two directions: U.S.-led restrictions on selling high-tech goods to China are cutting into one of its biggest markets, while Beijing’s drive for technological self-reliance is now producing a potential homegrown competitor.
Reuters reported Tuesday that a relatively obscure Chinese state-owned firm, Shanghai Aishengna Electronic Technology Group, is spearheading an effort to manufacture locally built immersion deep ultraviolet, or DUV, lithography machines — equipment that is critical to producing modern computer chips.
ASML holds a commanding position in the market for both DUV machines and the more advanced EUV systems used to print circuits on artificial intelligence chips. Following the news of China’s push, ASML’s stock dropped roughly 10% over two days, erasing more than €60 billion in market value.
Tech news outlet The Information first broke the story on Monday.
The development raises fresh concerns about ASML’s future, especially as its shares have climbed around 50% in 2026, with some investors speculating it could become Europe’s first company worth one trillion dollars.
Despite the alarm, analysts at JPMorgan suggested the near-term damage may be modest. According to The Information, China aims to produce five of these immersion DUV machines this year and 20 in 2027, supplying them to major Chinese chipmakers. By comparison, ASML shipped 131 such systems in 2025 alone.
Still, JPMorgan analysts cautioned in a note that the development is “another data point in China’s equipment self-sufficiency story, and it raises the long-term risk to ASML’s China revenue.”
Not everyone was so measured in their assessment. Ipek Ozkardeskaya, an analyst at Swissquote, warned that a Chinese competitor breaking ASML’s grip on the DUV market could be a “nightmare scenario” for the company.
ASML has said it expects roughly 20% of its revenue this year — about €9 billion — to come from China, even after multiple rounds of U.S.-driven export restrictions have already blocked it from selling its most advanced EUV machines and top-tier DUV tools to Chinese buyers.
Adding to the pressure, the U.S. Congress is currently debating legislation that could cut off ASML’s remaining DUV exports to China — the very segment that Aishengna is now targeting with its domestic machine.
Sanne van der Lugt, a researcher connected to the Netherlands’ Leiden Asia Center, said the situation illustrates an unintended consequence of tightening export rules.
“What this shows is that U.S. export controls successfully created a business case for Chinese lithography,” she said. “It was not what they were intended to do, but that is the outcome.”
Experts caution, however, that launching a DUV machine is a far cry from truly competing with ASML. The Dutch company built its dominant market position over two decades of continuous improvement in machine performance, in the process pushing out major rivals including Japan’s Nikon and Canon.
Aishengna’s new machine will require significant development before it can match ASML’s capabilities, and chipmakers that adopt a less capable system typically face lower productivity and higher costs per chip.
Export controls, though, change that math. Chinese chipmakers may be willing to accept a less powerful domestic machine if the alternative is relying on foreign equipment that could be cut off at any time by Washington.
Chinese firms “already do not really trust that they can rely on Dutch technology in the long run,” Van der Lugt said. “For Chinese customers it may be this or nothing.”
