Japan SPE sector: Media reports on mass production of lithography systems in China

Research evidence excerpt

Japan SPE sector: Media reports on mass production of lithography systems in China

Global Markets Research

Japan SPE sector: Media reports on mass 28 July 2026production of lithography systems in China

EQUITY: JAPAN SEMICONDUCTOR PRODUCTION EQUIPMENT

Insourcing risks could weigh more heavily on share prices Research Analysts

Japan semiconductor production

equipmentQuick Note Atsushi Yoshioka - NSC

atsushi.yoshioka@nomura.com

Report that China has successfully mass-produced immersion DUV lithography +81 3 6703 1176

systems

According to a 27 July report in TheInformation, a Shanghai-based state-owned

company in China has successfully achieved initial mass production of a domestically

produced immersion deep ultraviolet (DUV) lithography system. It reportedly plans to

produce five units in 2026 and 20 in 2027, and supply them to Chinese semiconductor

producers such as SMIC, Hua Hong, and CXMT. The equipment is said to be inferior to

ASML's in terms of equipment performance and reliability, however, and further testing will

apparently be needed for mass production. SPE companies' share prices fell in Europe

and the US in response to the news.

Risk of insourcing not a new issue, but could now weigh more heavily on share

prices

Our comments below assume the report is accurate, although we have not confirmed the

veracity of the report. As the risk of China creating a home-grown front-end equipment

industry has been discussed for some time, this news does not come as a complete

surprise. On the other hand, while we still have doubts about the equipment's

competitiveness in terms of performance and other factors, lithography systems are

considered the most difficult to insource, and if the report is accurate, China has been