Here's a situation. You're trying to build the world's most advanced semiconductors, but the company that makes the single most critical piece of equipment—the machine that uses extreme ultraviolet (EUV) light to etch impossibly tiny circuits—can't sell it to you because of export controls. What do you do? If you're China's top chip executives, the answer is simple, if not easy: you try to build your own version of that company.
That's the essence of a new call to action from leaders at Semiconductor Manufacturing International Corporation (SMIC), Empyrean, Yangtze Memory Technologies (YMTC), and Naura Technology, along with academics. In an article published in Science and Technology Review, they're urging a nationwide, coordinated push to create a homegrown alternative to ASML. The subtext, of course, is the tightening web of U.S. restrictions on advanced chipmaking tools.
The authors point out that U.S. rules have specifically targeted three choke points in China's semiconductor ambitions: the electronic design automation (EDA) software used to design chips, the silicon wafers they're built on, and the manufacturing equipment itself. The crown jewel of that equipment is EUV lithography, a field where ASML enjoys a near-monopoly. Since ASML is barred from exporting its EUV machines to China, the country faces a fundamental roadblock in producing the most cutting-edge chips.
So, the proposed solution is to marshal China's financial and human resources into a single, national project. The goal isn't just to build one machine, but to create an entire domestic EUV ecosystem. The effort, they suggest, would need to run at least through the end of China's 15th Five-Year Plan in 2030. It's a classic industrial policy move: identify a critical dependency, declare it a national priority, and throw the collective weight of the state behind solving it.
The call for unity hints at a deeper problem. The article notes that China's chip industry is currently "too small, fragmented, and weak." The numbers are telling: over 100 different EDA tool developers, roughly 3,600 chip design houses, and more than 180 companies making wafer fabrication equipment. From one perspective, that's a vibrant ecosystem. From another, it's a massive duplication of effort and a dispersion of precious talent and capital. The executives are essentially arguing that China needs less entrepreneurial chaos and more directed, consolidated focus to tackle a challenge as immense as replicating ASML.
While China plots its long-game alternative, ASML isn't standing still. The Dutch giant is looking beyond its EUV heartland. The company is charting a new course by venturing into advanced packaging solutions, which are becoming increasingly crucial for stitching together the powerful but power-hungry chips used in artificial intelligence. ASML is also working to integrate AI directly into its own operations and tools, aiming to make them faster and more efficient. Chief Technology Officer Marco Pieters has indicated the company is planning for the industry's trajectory over the next decade and beyond.
It's a fascinating strategic divergence. One side is forced to look backward, attempting to master a foundational technology it was locked out of. The other is free to look forward, pushing into the next frontiers of chipmaking. For investors, the drama adds another layer of geopolitical risk and long-term competition to the semiconductor landscape. ASML shares were down 2.88% at $1,328.90 in premarket trading Friday. Over the past year, however, the shares have surged about 92%, a testament to its entrenched position in the global tech supply chain—a position China is now openly aiming to undermine.
