China is now building its own lithography machines, and Europe is the one getting nervous
Beijing has begun scale production of domestic immersion DUV lithography tools, the equipment the Netherlands' ASML dominates. An EU-funded report warns of a gloomy future for European chipmaking.
For years the short answer to why China could not make leading-edge chips fitted in one word: lithography. It is the machine that prints circuits onto silicon, it costs tens of millions, and almost the entire world buys it from the Dutch firm ASML. Without one, no fab is worth anything.
That short answer has just got more complicated. China this year began producing domestic immersion DUV lithography machines at scale — not the cutting-edge EUV tools, but the industry’s workhorse. The stated plan is five units by the end of 2026 and twenty across 2027.
Why does lithography decide everything in chipmaking?
Because it is the bottleneck. You can have silicon, circuit designs and the money for a fab, but without lithography nothing gets printed. That is precisely why Western export controls of recent years aimed at this equipment: block the machine and you block everything downstream. Twenty units a year does not replace ASML — the technological gap is still vast, especially at the top end — but it changes the arithmetic. Absolute dependence becomes relative dependence, and relative dependence can be negotiated.
What does this change for Europe?
It moves the wrong side of the ledger. An EU-funded report published this month describes a gloomy future for Europe’s semiconductor sector, caught between Chinese export controls on critical raw materials, technological dependence on the United States and its own structural fragility. Europe owns the crown jewel in ASML and very little leading-edge manufacturing capacity on European soil.
Brussels knows the diagnosis. In June the Commission put forward a technological sovereignty package with a second version of its chips law and a dedicated cloud and AI proposal, working from the assumption that AI-related components will account for more than 70% of the semiconductor market by 2030. The official framing sits on the European Commission’s European Chips Act page.
Where does Portugal fit into this?
On the edge, but it fits. The country has been betting on digital infrastructure and on attracting computing capacity — Google’s Nuvem subsea cable landing in Sines is the most visible example. The catch is that data centres and cables run on chips nobody in Europe manufactures in sufficient quantity. It is a good moment to start paying attention to who builds the machines, not just to who uses them.
By Oliver Grant
Image: A ansems / Wikimedia Commons (public domain)
