China has completed a factory-sized prototype of an extreme ultraviolet lithography machine and is now conducting tests in a high-security Shenzhen facility, according to a Reuters exclusive report on Wednesday. The development suggests China may achieve semiconductor independence years earlier than Western analysts anticipated, marking a significant milestone in President Xi Jinping's drive for technological self-sufficiency.
Credit：Freepik
The prototype, completed in early 2025, was built by former ASML engineers who reverse-engineered technology from the Dutch semiconductor giant, sources told Reuters. While the machine successfully generates extreme ultraviolet light necessary for advanced chipmaking, it has not yet produced working chips. China targets 2028 for production of functional chips, though sources close to the project indicate 2030 is more realistic—still years ahead of the decade analysts previously estimated.
The breakthrough represents the culmination of a six-year government initiative conducted in secrecy under China's semiconductor strategy, overseen by Xi confidant Ding Xuexiang. Chinese electronics giant Huawei plays a key coordination role across a network of state research institutes and companies involving thousands of engineers. ASML shares fell 5.6% on Wednesday following the report's publication.
EUV lithography remains critical for manufacturing the most advanced chips powering artificial intelligence, smartphones, and weapons systems. The technology has been a focal point of U.S.-led export restrictions designed to limit China's semiconductor capabilities, with no EUV system ever sold to Chinese customers.
Six-Year “Manhattan Project” Under Xi's Direction
The project operates under China's broader semiconductor strategy led by Ding Xuexiang, who heads the Communist Party's Central Science and Technology Commission, according to sources who described the initiative as China's version of America's wartime atomic bomb program. "The aim is for China to eventually be able to make advanced chips on machines that are entirely China-made," one source told Reuters. "China wants the United States 100% kicked out of its supply chains."
Huawei coordinates a web of companies and state research institutes across China involving thousands of engineers. CEO Ren Zhengfei briefs senior Chinese leaders on progress, sources said. Employees assigned to semiconductor teams often sleep on-site and face restricted phone access, with teams kept isolated from each other to maintain confidentiality.
The Shenzhen prototype occupies nearly an entire factory floor—significantly larger than ASML's bus-sized machines after failed attempts to replicate the original dimensions. While crude compared to ASML's systems, it is operational enough for testing, sources said.
Former ASML Engineers Working Under False Identities
The team includes recently retired Chinese-born former ASML engineers who were recruited with signing bonuses starting at RMB3 million to 5 million ($420,000 to $700,000) plus home-purchase subsidies, according to Reuters' review of government policy documents. One veteran Chinese engineer received a generous signing bonus along with an identification card issued under a false name, sources said. Inside the facility, he encountered other former ASML colleagues also working under aliases.
Recruits included Lin Nan, ASML's former head of light source technology, whose team at the Chinese Academy of Sciences' Shanghai Institute of Optics has filed eight patents on EUV light sources in 18 months, according to patent filings. Two current ASML employees of Chinese nationality in the Netherlands told Reuters they have been approached by Huawei recruiters since at least 2020.
ASML told Reuters it "vigilantly guards" trade secrets but acknowledged enforcement challenges across borders despite non-disclosure agreements. The company won an $845 million judgment in 2019 against a former Chinese engineer accused of stealing trade secrets, but the defendant filed for bankruptcy and continues operating in Beijing with Chinese government support, according to court documents.
Secondary Markets Supply Critical Components
China has reportedly leveraged availability of parts from older ASML machines on secondary markets to build the prototype. Networks of intermediary companies sometimes mask the ultimate buyer, while export-restricted components from Japan's Nikon and Canon are being used. International banks regularly auction older semiconductor fabrication equipment, with Alibaba Auction listing older ASML lithography equipment as recently as October 2025.
A team of around 100% university graduates focuses on reverse-engineering components from both EUV and deep ultraviolet lithography machines, with individual cameras filming each worker's desk to document disassembly and reassembly efforts. Workers who successfully reassemble components receive bonuses, Reuters’ sources said.
China's prototype lags behind ASML's machines largely because researchers struggle to obtain optical systems like those from Germany's Carl Zeiss AG, which produces mirrors taking months to manufacture for machines that fire lasers at molten tin 50,000 times per second. The Changchun Institute of Optics achieved a breakthrough integrating extreme-ultraviolet light into the prototype's optical system, enabling operation in early 2025, though significant refinement remains necessary, one source said.
ASML and Western Government Responses
ASML, which built its first working EUV prototype in 2001 and spent nearly two decades and billions of euros before producing commercially-available chips in 2019, acknowledged the challenge. "It makes sense that companies would want to replicate our technology, but doing so is no small feat," the company told Reuters. CEO Christophe Fouquet said in April that China would need "many, many years" to develop such technology.
The U.S. began pressuring the Netherlands in 2018 to block ASML from selling EUV systems to China, with restrictions expanding in 2022 when the Biden administration imposed sweeping export controls. The Trump administration has strengthened enforcement and is working with partners "to close loopholes as technology advances," the State Department said.
The Dutch Ministry of Defence said the Netherlands is developing policies requiring personnel screenings to prevent access to sensitive technology "by individuals that have ill intentions or who are at risk of being pressured." Dutch intelligence warned in April that China "used extensive espionage programmes in its attempts to obtain advanced technology and knowledge from Western countries."
Desktop EUV Technology for Small-Batch Production
The Shenzhen prototype development follows reports in November that Chinese researchers developed a desktop-sized EUV light source for producing 14-nanometre chips. According to South China Morning Post, the Hefei-based technology uses femtosecond lasers fired into argon gas through high-harmonic generation, eliminating need for giant collector mirrors and tin droplets.
While the desktop system consumes only 1 microwatt per blast—200 million times less power than ASML's production-level systems—it enables small-batch production, chip inspection, quantum chip prototyping, and photomask defect detection. The technology cannot replace traditional ASML machines for mass production but offers an alternative for research and development environments, potentially helping Chinese manufacturers improve yields at 14nm and 28nm nodes while circumventing Western export restrictions.
