A report from The Information said a Shanghai company backed by official Chinese funding has begun producing specific chipmaking equipment, triggering concern in the market over a possible threat to core revenue at ASML. ASML shares fell more than 8% at one point, and the weakness quickly spread across the global semiconductor-equipment sector.
Shanghai company starts making immersion DUV tools
According to the report, the Shanghai-based company has started manufacturing immersion deep ultraviolet lithography machines, or DUV tools. Anonymous people familiar with the matter said the effort brings together research teams from several Chinese companies, including Shanghai Micro Electronics-related participant Shanghai Yuliangsheng Technology as named in the source report.
The production program is still in its early stages. The company is expected to make about five DUV machines this year and has set a target of 20 units for next year.
The report also noted that the Financial Times said last year that Semiconductor Manufacturing International Corp., or SMIC, had started testing DUV equipment made by the Shanghai startup.
Chip-equipment shares fall worldwide
Investors have been highly sensitive to anything that could challenge ASML’s dominant position in the market, and the report set off broad selling in semiconductor-equipment names. ASML dropped to its lowest level since June, while peers in Europe and the United States also came under pressure.
ASM International NV fell 7.3% in intraday trading, and BE Semiconductor Industries NV lost 9.9%. In the U.S., Applied Materials Inc. fell 6.7% and Lam Research Corp. dropped 7.9%.
Export controls keep China in focus
Under U.S.-led export restrictions, ASML is barred from exporting its most advanced extreme ultraviolet, or EUV, lithography machines to China. Sales of some advanced DUV systems are also restricted.
Even though the equipment ASML currently sells to China trails its newest models by about eight generations, the report said China was still the company’s third-largest market in the second quarter of 2026.
That has kept investor attention fixed on how far China can push semiconductor self-sufficiency under tightening export controls, and on what that could mean for long-term sales at Western equipment makers.