TAIPEI (Taiwan News) — China has built and begun testing a prototype extreme ultraviolet lithography (EUV) machine in a covert government program, a move that could challenge Western control over the most advanced chipmaking tools, Reuters reported Thursday.

The prototype, completed early this year and now undergoing testing in a high-security laboratory in Shenzhen, generates EUV light. This is a key requirement for producing cutting-edge chips used in AI, advanced weapons, and high-end consumer electronics.

The machine was built by a team that includes former Chinese-born engineers from Dutch chip-equipment giant ASML, who reverse-engineered parts of the company’s EUV systems, sources said. The machine fills nearly an entire factory floor and represents China’s most ambitious attempt yet to replicate a technology Washington has spent years trying to deny Chinese access to. 

EUV lithography sits at the center of the tech race. The machines use extreme ultraviolet light to etch circuits thousands of times thinner than a human hair. Generally, the smaller the circuits, the more advanced the chip.

Only ASML has successfully commercialized EUV technology, supplying machines at NT$7.89 billion (US$250 million) each to manufacturers such as TSMC, Intel, and Samsung. No EUV system has ever been sold to a Chinese customer.

China’s prototype has not yet produced working chips, the sources said, but its ability to generate EUV light marks a significant milestone. ASML’s chief executive said earlier this year that China would need “many, many years” to develop such technology, but the prototype suggests Beijing may be closer than analysts expected.

The effort is the culmination of a six-year government campaign to achieve semiconductor self-sufficiency, a top priority for Chinese leader Xi Jinping. While China’s ambitions have been publicly stated, the EUV program has been conducted largely in secrecy.

The initiative is overseen by China’s top science and technology bodies and coordinated in part by Huawei, which plays a central role linking state research institutes, suppliers, and manufacturers, the sources said. One person described it as China’s version of the US Manhattan Project.

The goal, according to people familiar with the project, is to eventually produce advanced chips using equipment made entirely in China. “China wants the US 100% kicked out of its supply chains,” one source said.

US export controls, first tightened in 2018 and expanded significantly in 2022, were designed to keep China at least a generation behind in chipmaking. The restrictions blocked not only EUV machines but also advanced deep ultraviolet tools and key components.

Those controls have slowed China’s progress but did not stop it, the sources said. Instead, China turned to salvaging parts from older ASML machines, buying equipment on secondary markets, and sourcing restricted components through intermediaries.

Former ASML engineers played a decisive role, the sources said. Recruited with large bonuses, some were issued identification cards under false names and instructed to use aliases inside secure facilities to protect the project’s secrecy.

The recruits included retired Chinese-born engineers with deep technical knowledge of EUV systems, who faced fewer professional constraints after leaving ASML. European privacy laws limited ASML’s ability to track or restrict where former employees worked.

ASML said it vigorously protects its intellectual property and has pursued legal action over trade secret theft in the past, but acknowledged it cannot control the employment choices of former staff. The company declined to comment on the Shenzhen project.

China’s prototype remains less sophisticated than ASML’s machines, particularly in optics, which rely on ultra-precise mirrors supplied by Germany’s Carl Zeiss. Sources said Chinese researchers have struggled to replicate those components.

A breakthrough came when a Chinese research institute succeeded in integrating EUV light into the prototype’s optical system, allowing it to become operational. Significant refinement is still required before chip production is possible.

China is now targeting 2028 to produce working chips on the machine, though people close to the project say 2030 is more realistic. Even that timeline would be far faster than the decade analysts once believed China would need.

Around 100 recent university graduates are dedicated solely to reverse-engineering lithography components, with their workstations monitored by cameras to document each step of disassembly and reconstruction. Bonuses are awarded when parts are successfully reassembled.

Huawei remains deeply embedded in the effort, with teams stationed across China’s chip design, manufacturing, and equipment ecosystem. Some engineers sleep on-site during the workweek, with phone use restricted for sensitive projects.

“The teams are kept isolated from each other to protect the confidentiality of the project," one of the sources said. “They don't know what the other teams work on.”