Advanced Semiconductor Manufacturing China's Secret 'Manhattan Project' for Building Its Own Lithography Machine

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Not much is known about China's attempt to build its own lithography machines for the production of advanced semiconductors. The efforts are kept secret since the USA and its western allies blocked the export of the technology to the People's Republic.

All the more attention is given to any report that lifts the veil on this Chinese lithography state secret, even just a little, and reveals some details. Such reports have been increasing lately, which could indicate significant efforts in China and possibly even initial progress in this technological catching-up.

The Chinese manufacturer SMEE received a public order to deliver a lithography machine on December 25, 2025, apparently of the "Step-and-Scan" type, reports the Chinese business portal 21jingji.

The Ministry of Science and Technology in Beijing has announced on its website the order of the facility, valued at around 110 million yuan, approximately €13 million/$15.2 Million, from the company in Shanghai, writes 21jingji. SMEE, short for Shanghai Micro Electronics Equipment, is a subsidiary of the state-owned Shanghai Electric Group and is considered one of the most important companies in China for the production of lithography machines.

Step-and-Scan: Basis for Modern DUV and EUV Lithography

Step-and-scan processes are used in high-precision lithography systems, both in the DUV and the technologically leading EUV fields. During exposure, the mask and wafer move synchronously to produce smaller structures and larger, more precise chip designs.

Apart from the fact that the Chinese government is trying to equip its state research institutes with the most modern lithography technology possible, there is little concrete information to be drawn from this brief announcement. Even the assumption that it is a step-and-scan system remains merely an assumption, based solely on the use of the abbreviation "SSC" in the model designation of the ordered machine.

Shortly before, on December 18, 2025, an exclusive report by the news agency Reuters caused a stir. Their reporters, based on an investigative research, reported that China had already completed its first EUV machine in a secret laboratory in the southern Chinese city of Shenzhen. Unnamed sources, with whom the reporters were able to speak, compared the project to the famous "Manhattan Project," which led to the construction of the first atomic bomb during World War II.

Top Secret – also Explosive?

China is approaching the task in a similar way, the Reuters report suggests. Engineers who previously worked at ASML, the Dutch monopoly manufacturer of advanced EUV machines, are said to have replicated a functioning prototype in Shenzhen by early 2025. It is currently being tested, Reuters writes.

The report is naturally not independently verifiable. However, if it is based on facts, Beijing would have broken ASML's global monopoly for the first time, which, under pressure from Washington, has not been allowed to deliver advanced EUV machines to the People's Republic for several years.

Critics immediately pointed out that a prototype of such a system does not yet enable industrial semiconductor production. So far, not a single chip with EUV technology has been manufactured in China, the critics wrote. However, it is also unclear where exactly the information comes from and how accurate these statements are.

Extreme Ultraviolet Lithography

EUV machines are needed for the production of modern AI chips, whose sale to the People's Republic has also been heavily restricted by the Washington government. Regarding lithography, the U.S. has been pressuring the Dutch government and ASML since 2018 to stop supplying the most advanced generations of DUV and EUV machines to China. The Dutch have yielded to this pressure.

Since then, the Chinese government has been spending the equivalent of billions of euros on a program of "domestic substitution" in the semiconductor industry. Analysts repeatedly state that the development of chip manufacturing with "Extreme Ultraviolet Light" took ASML several decades, and reverse engineering in China by engineers poached from the Netherlands or elsewhere is not easy.

China will need "many, many years" to catch up, ASML CEO Christophe Fouquet reiterated in April 2025. However, similar claims, for example regarding the development of large language models for artificial intelligence, have proven incorrect in the past. What is certain is that China's government is systematically advancing the development of its own supply chain for lithography machines.

The Goal in Sight

Through the acquisition of older lithography machines, procurement on the "gray market," and replication of individual components, Chinese engineers have already managed to build a "crude and underdeveloped" version of an EUV lithography machine, Reuters reports.

While ASML's systems are usually about the size of a school bus, the prototype in Shenzhen has, out of necessity, become much larger and occupies "an entire factory hall." Particularly lacking are the high-precision optical systems of the German manufacturer Zeiss, which has also joined the boycotts against China.

Despite these technical hurdles, the Chinese government remains undeterred and has, among other efforts, tasked the "Changchun Institute of Optics, Fine Mechanics and Physics" with integrating ultraviolet light into the optical system of the prototype. There have been initial successes, but the technology still needs improvement, Reuters quoted "a person familiar with the project."

Observers agree that China will likely succeed in building such a machine in the long term. It is not a question of "if," but only a question of "when." "China has the advantage that commercial EUV technology already exists, so they don't have to start from scratch," Jeff Koch from SemiAnalysis told Reuters. (sb)