SILICON VALLEY — China has exploited gaps in U.S. export controls to import more than 340 ASML lithography machines and put them to work localizing its semiconductor industry, according to a new report. The tools are less advanced than the cutting-edge lithography systems Washington has blocked, but they can still produce artificial intelligence chips, giving Beijing a mid-tier alternative that poses a challenge to the United States. Analysts say that while the administration of President Donald Trump has piled on export controls to win the U.S.-China AI race, Beijing's exploitation of loopholes is blunting those restrictions.
The Center for Technology and National Security (CTS), a Washington-based think tank focused on security and technology, published a report late last month finding that mainland Chinese-owned chip plants had secured a total of 343 immersion deep ultraviolet (DUV) lithography machines by early this year, Hong Kong's South China Morning Post reported on the 4th.
About 270 of the 343 immersion DUV machines are ASML's Twinscan NXT:1980i model, according to the report. China spent more than $13 billion to buy an additional 90 NXT:1980i machines in 2024 and 89 more in 2025. ASML, the Dutch chip equipment maker, holds a near-monopoly on the global market for advanced lithography systems.
Lithography machines are the core equipment used to etch circuits onto wafers with ultraviolet light, and the shorter the wavelength, the finer the circuits that can be drawn. Extreme ultraviolet (EUV) machines use a far shorter wavelength than DUV systems, enabling ultra-fine processes, but they are difficult to develop and correspondingly expensive. DUV equipment is relatively cheap but has limits in producing the most advanced AI chips.
Immersion DUV was developed to compensate for those limits by filling the gap between the lens and the wafer with water. Because light refracts more than in dry DUV systems that use no water, circuits can be drawn with greater precision. The technology still trails EUV, but it can be used to manufacture 7-nanometer logic chips and high-end memory.
The Dutch government barred exports of ASML's most advanced EUV lithography machines to China in 2019 at Washington's request during Trump's first term. For older models, however, the Netherlands reclaimed control amid domestic pushback and began allowing NXT:1980i exports under case-by-case approvals. CTS argued that this is why exports were cleared to many locations in China.
China took advantage of that gap in the controls. After buying up NXT:1980i machines, it applied multi-patterning, a technique that draws circuits in overlapping layers, to mass-produce Huawei's Ascend AI accelerators and advanced memory. The report warned that the lithography equipment China now holds could allow it to raise AI chip output to uncontrollable levels over the long term. The researchers projected that if China brings in 90 NXT:1980i machines a year, it could churn out as many as 434 million high-performance AI chips a year by 2035, equivalent to Nvidia's H100 graphics processing units.
Even as it imports ASML's older models, China is also pressing ahead with efforts to build such equipment itself. The Information reported in July this year that a Chinese company had begun producing DUV systems on its own with government support. The news of a move into DUV mass production, following a December report that China had developed an EUV prototype, sent shares of global chipmakers tumbling at the time. Investors expected ASML's monopoly to crack and chip prices to fall.
China is rushing to localize equipment production because of moves in U.S. politics to tighten lithography export controls further. In April this year, the U.S. Congress introduced the MATCH Act, which would require allies including the Netherlands and Japan to join U.S. restrictions on chip equipment exports to China within 150 days. The bipartisan bill seeks to control not only EUV but also DUV lithography machines and cryogenic etching equipment.
Nicholas Brown, a former export control officer at the U.S. Commerce Department, and Saif Khan, a former White House technology policy adviser, who co-authored the report, argued that a full blockade on DUV shipments is urgently needed. They projected that cutting off all new imports starting in 2027 would hold China's annual output of H100-class chips to about 153 million, down from 434 million. They also stressed that "Samsung Electronics and SK hynix, which are under threat from China's CXMT and YMTC, could also benefit from restrictions on exports to China."
