China may be closing in on a pivotal chipmaking milestone. A new report says Semiconductor Manufacturing International Corporation (SMIC) is trialing a domestically developed deep-ultraviolet (DUV) lithography machine from Shanghai startup Yuliangsheng—potentially the first of its kind made in-house. If successful, the trials could lay the groundwork for China to scale its own advanced semiconductor manufacturing equipment.
Momentum is building thanks to surging demand from China’s artificial intelligence sector. With the government encouraging a pivot to homegrown technology, the domestic chip supply chain is seeing intense pressure to deliver. That urgency is pushing leading firms to test local alternatives to the Western tools they’ve relied on for years.
Until now, SMIC has depended heavily on equipment from overseas providers. Under current U.S. export controls, the company is limited to less advanced DUV systems—specifically early-immersion tools—through which it has managed to reach 7nm-class production. But further scaling with imported machines is increasingly constrained, prompting a strategic shift toward domestic solutions. The company is now testing 7nm production flows using Yuliangsheng’s DUV platform.
There are bolder claims on the table, too. Industry chatter suggests these homegrown DUV tools could, in theory, be pushed toward 5nm. The catch is yield. Achieving such fine geometries with DUV typically requires multiple patterning steps, which compound alignment errors and erode yields. Even so, if the overriding objective is to ramp output for AI chips, SMIC may be willing to trade efficiency for volume—something it has reportedly accepted in earlier nodes.
The stakes are clear. A viable domestic DUV ecosystem would help China reduce exposure to export restrictions, stabilize production roadmaps, and better serve the booming AI market. Manufacturers across the country are reportedly aiming to significantly increase AI chip output to keep pace with demand, and dependable in-house lithography is a critical piece of that puzzle.
What happens next hinges on reliability and repeatability. If Yuliangsheng’s DUV machines can deliver consistent results at 7nm—and improve over time—China’s chipmakers could move faster toward greater self-sufficiency. And while any move to 5nm via DUV will likely face yield headwinds, even incremental progress would mark a notable step forward for the country’s semiconductor ambitions.
