China advances EUV lithography with 3.42%-efficient light sources, challenging ASML’s monopoly. ASML’s Q2 2024 China revenue hits $3.1B despite export controls, while SMEE accelerates domestic chip tool development.
Shanghai researchers achieve 1-micron laser efficiency milestone in EUV development, testing Western export control resilience as ASML reports record China sales. SMEE’s 2026 prototype timeline gains momentum with fresh state funding.
Lithography Power Shift Emerges
The Shanghai Institute of Optics and Mechanics confirmed on 22 July 2024 a 3.42% conversion efficiency rate for its 1-micron laser-driven extreme ultraviolet (EUV) light source, edging closer to ASML’s CO²-based systems. Dr. Wei Zhang, lead researcher, stated: ‘This demonstrates China’s capacity to develop alternative pathways in semiconductor manufacturing.’
ASML’s China Paradox Deepens
Despite Dutch export restrictions, ASML reported $3.1 billion in Q2 2024 China revenue – 36% of global sales – through legacy DUV system shipments. CFO Roger Dassen noted in the 17 July earnings call: ‘Our customers are innovating with existing tools to maintain production scaling.’
EU Chips Act Stumbles as SMEE Advances
European Union Chips Act implementation lags, with only $1.36 billion disbursed from its $6.2 billion fund as of 20 July 2024. Meanwhile, Shanghai Micro Electronics Equipment (SMEE) secured $480 million in state funding to accelerate EUV prototype development, targeting 18% domestic market share by 2026.
Geopolitical Ripple Effects Intensify
Carl Zeiss AG revised its 2024 revenue forecast downward by 4% on 19 July, citing reduced demand projections from ASML. India’s concurrent push for rupee-based trade settlements with ASEAN nations, including a 18 July oil deal with UAE, signals broader financial decoupling efforts.
Historical Patterns Resurface
China’s current EUV development mirrors its 2015 semiconductor push through SMIC, which captured 12% of global foundry capacity by 2020 despite early technological gaps. ASML’s China revenue has grown 58% since 2022 export controls began, demonstrating the complex interdependence of global tech supply chains.
Pathways to Collaborative Competition
TSMC and Intel’s joint research into 2D material patterning, announced June 2024, suggests industry recognition of post-EUV innovation requirements. ‘The next lithography paradigm will demand unprecedented R&D cooperation across traditional rivals,’ noted TechInsights analyst Jan-Peter Kleinhans.
