China is using several methods to circumvent United States export controls on extreme ultraviolet (EUV) lithography machines, including developing its own machines and stacking artificial intelligence (AI) chips to boost their performance.
However, Washington suspects these may not be what Beijing has done alone. It says China may have already obtained an EUV machine from ASML through underground channels.
US Commerce Secretary Howard Lutnick has questioned ASML’s senior executives over concerns that one of the Dutch company’s EUV systems may have ended up in China in breach of export restrictions, in a series of private meetings that began in April 2026, Bloomberg reported, citing people familiar with the discussions.
Several US officials said they possess information indicating that ASML exported equipment associated with EUV systems, including specialized systems used to transport EUV machines, though they declined to disclose any evidence, citing sensitivity concerns.
Such a scenario would represent a serious breach of the Wassenaar Arrangement, which bars ASML from shipping EUV lithography equipment to Chinese customers.
“In recent years, ASML has refuted several unfounded rumors regarding non-compliance with export controls concerning China, which were inaccurate and damaging to our reputation,” said a spokesperson for ASML.
After the April meeting, ASML began circulating a document in Washington titled “No indication of any ASML EUV System in China,” stating that none of its 314 EUV machines in operation worldwide, plus 26 decommissioned units, are located there.
The document said ASML can automatically detect “any interruption, abnormal behavior, or loss of connectivity” in its EUV portfolio, and that customers “cannot remove, transport and relocate EUV systems without ASML involvement due to specialized handling procedures.”
“From a business standpoint, ASML has no motive to take such a risk,” says a Henan-based columnist who goes by the pen name Cantonese Music Fountain. “China was ASML’s largest single market in 2025, accounting for 33% of its total revenue, and about 20% of its projected 2026 revenue is expected to come from sales to China. Only a fool would risk losing the entire Chinese market or having its global export license revoked over one illegal EUV sale.”
He says the US allegations could reflect several possible motives:
- Intelligence misjudgment: Washington may be confusing deep ultraviolet (DUV) equipment or EUV-related parts with a complete EUV system during customs checks.
- Tactical pressure: Washington is unhappy with ASML’s broader business activities and is using the allegations to pressure the company.
- Policy groundwork: The US Congress is reviewing the MATCH Act, a bipartisan bill introduced in April that would effectively bar ASML from exporting DUV lithography equipment to China. Shaping public opinion before pushing legislation is a familiar playbook.
Reuters reported in December that China had built one inside a high-security lab in Shenzhen, part of a nationally coordinated push to overcome a major chokepoint in chipmaking. The prototype, completed in early 2025, is described as operational but not yet producing functional chips.
The report said Huawei is coordinating a web of companies and institutes involving thousands of engineers, an effort compared to China’s version of the Manhattan Project, the secret US wartime program that built the first atomic bomb from 1942 to 1945.
The machine occupies much of a factory floor and was built by a team that includes former ASML engineers, with Beijing said to be targeting 2028 for production, though 2030 looks more realistic.
The Global Times, a newspaper aligned with the Chinese Communist Party, published a commentary titled “There is no need for Reuters to be anxious about China’s technological progress.” The commentary said the Reuters report reflected Western unease rather than facts, though it did not dispute that an EUV prototype was being developed in Shenzhen.
Chinese media reports that Lin Nan, a former ASML engineer, is leading a team at the Shanghai Institute of Optics and Fine Mechanics (SIOM) that has built China’s first laser-plasma EUV light source platform, which studies EUV radiation generated by a 1-micron laser striking a solid tin target.
In a December 2024 paper, Lin and several others said solid-state lasers could replace carbon dioxide lasers as the next-generation source for traditional laser-produced plasma EUV (LPP-EUV) lithography, citing their compact size and high conversion efficiency.
“Lin Nan’s team chose a 1-micron solid-state laser to strike tin targets, and the cleverness of that route is that it sidesteps ASML’s rare-gas discharge route, plus more than 2,000 of its patents,” says Qiu Yanfang, a Liaoning-based writer. “This patent workaround is not just a legal maneuver. It is genuine technical innovation.”
“However, in the short term, solid-state EUV sources cannot shake ASML’s dominance. The global semiconductor industry has already built its supply chains, patents and engineering experience around ASML’s carbon dioxide laser route,” she says. “Even if China’s solid-state technology breaks through in the lab, it will still have to walk a long way before reaching mass production.”
She stresses that the value of Lin’s achievements lies not in replacing ASML but in laying groundwork and forging a top research team spanning theory to engineering.
Betting on chip stacking
While it remains unclear whether China has set up a secret lab in Shenzhen to test an EUV machine prototype, or whether Lin is connected to that project, Chinese media have recently been promoting the country’s plan to produce next-generation graphics processing units (GPUs) using stacking technology.
Stacking technology has long been used in memory chips to increase storage capacity, with manufacturers typically layering 100 to more than 200 individual memory cells into a single chip, but it has not yet been applied to GPUs.
Several Chinese fabless chipmakers have raised funds in the first half of this year to pursue this route:
- Suanmiao Technology, focused on AI cloud computing chips, raised nearly 1 billion yuan (US$140 million) in two rounds by February to develop a fully domestic 3D compute chip, with backing from several state funds. Its 3D TokenPU inference chip, the A4E, completed tape-out on June 15.
- Transtreams, spun off from Kuaishou’s chip team and backed by Beijing’s AI fund, raised several hundred million yuan on June 24 for its next-generation chip, which completed tape-out in April using a domestic 3D stacking process and near-memory architecture aimed at heat and reliability issues.
- Dongfang Suanxin, a two-year-old Shanghai AI chip firm led by veteran executive Wei Shaojun, is now valued at 12.3 billion yuan, backed by state funds, Meituan, and Xiaomi.
However, some Chinese analysts remain doubtful whether stacking GPUs will be a way out for China to bypass US chip export controls.
“When people hear about 3D stacking, they get excited and think it is a shortcut around the US technological blockade. It is not that simple. This is more of a forced workaround than an easy win,” says A Lun, a Hunan-based columnist. “Once chips are stacked, the first thing to fail is heat dissipation.”
“A flat chip can still be cooled with heat sinks, vapor chambers and fans, but in a 3D stack, heat is trapped between chip layers,” he writes. “In this case, all cooling facilities must be upgraded or the chip will be overheated.”
“3D stacking is not as simple as piling a few chips together. What is really valuable is hybrid bonding, yield control, thermal and mechanical coordination and EDA design tools, and that whole package is the real barrier,” he says. “Hybrid bonding is extremely process-intensive, since copper must bond directly to copper with extremely high alignment precision. The slightest misalignment drags down yield, and once yield falls, costs soar.”
He says that when chipmakers start delivering their stacked GPUs, what matters most is yield, production costs and their chips’ heat-dissipation capability.
Read: Made-in-China EUV machine targets AI chip output by 2028
Follow Jeff Pao on Twitter at @jeffpao3
