A Lithography Machine Still Approved for Export Could Let China Match U.S. Chip Capacity in a Decade
U.S. think tanks calculate that if a submersion lithography machine continues to be permitted for export, China's chip production capacity could approach or even match America's within ten years; if supplies are cut off entirely, that possibility closes permanently.
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The overlooked deep-UV already supports production of Huawei's Ascend chips
Public attention focuses on EUV (extreme ultraviolet) lithography, with single machines selling for hundreds of millions of dollars and viewed as the world's most advanced technology—China still cannot import any. But DUV (deep ultraviolet) lithography, though one generation behind, still costs $60–80 million per unit, and its most advanced models can fully support the process nodes required by flagship AI chips like Huawei's Ascend. In other words, the outside world thinks ‘blocking EUV wins the game,’ but the technology actually supporting China's domestically produced AI chip lines is the DUV model still approved for export.
— NickExport controls left a crater-sized loophole
Current U.S. rules permit China to import the NXT:1980 submersion DUV lithography machine from ASML—enough to support 7-nanometer logic and HBM2E/HBM3-class memory manufacturing, exactly matching Huawei Ascend's requirements. Nick describes this opening as ‘not a loophole but a crater’: between 2024 and 2025 alone, China imported roughly 90 of these systems for over $10 billion, accounting for nearly two-thirds of ASML's total submersion DUV exports.
— NickContinuing to permit exports could let China match U.S. capacity within a decade
Based on current lithography machine inventory and process physics constraints, even if China redirected all its systems to AI chips and manufactured not a single mobile phone chip, by 2035 its capacity would almost certainly stay below one-tenth of America's—an advantage nearly locked in. But if China maintains its 2024–2025 import pace and redirects a larger share of capacity from consumer electronics to AI chips (the ‘AI-first’ scenario), the production curve in ten years could bend toward matching or even approaching U.S. levels, and the certainty around the global compute landscape disappears.
— NickThe MATCH Act aims to align allies' controls with U.S. standards
The MATCH Act pursues two things: first, elevate several categories of ‘high-lethality’ equipment, including submersion DUV lithography machines, from controls targeting specific entities like SMIC and Changxin Memory to a complete countrywide ban on China; second, align Japan and the Netherlands' controls on all semiconductor manufacturing equipment with the standard America already enforces—the U.S. already prohibits ‘not a single device’ from reaching advanced Chinese production lines, while allies have not reached that level. The bill gives the Commerce Department 150 days to negotiate with allies; if talks fail, it authorizes unilateral action.
— NickWhether cutting off service will actually choke production is anyone's guess
The bill also aims to cut off on-site maintenance by ASML and Tokyo Electron engineers in China. But Nick admits this is the most opaque corner of the entire research: many maintenance engineers are Chinese contract workers, and some spare parts are locally manufactured in China, so a supply cut may not immediately force the engineers out. His assessment: equipment won't stop dead, but once core subsystems—light sources, wafer stages, sensors—lose OEM support, yield and capacity will likely begin eroding slowly over 6–12 months, with degradation accelerating over time.
— NickCongressional legislation is harder to reverse under pressure than executive order
Some worry about a replay of summer 2025: China plays the rare-earth card, and the Trump administration is forced to back down. But Nick sees a difference: export controls are executive orders—the President signs, it's done, the leverage stays at the White House. Once written into law by Congress, even if a given administration wanted to delay, the statute itself remains, and a successor could enforce it again. More crucial: the bite of an import ban unfolds over 3–10 years—a slow variable, unlike tariffs that hurt export-driven economies immediately next week, and governments cave easiest to ‘pain this week,’ not pain in 2030.
— NickThe U.S. and Japan together can lock down DUV without invoking long-arm jurisdiction
Even if the Dutch government refuses to cooperate, America has a quiet alternative: DUV light-source subsystems come from only two companies—Cymer (U.S.) and Gigaphoton (Japan)—and Cymer is now ASML's subsidiary. If the U.S. and Japan each pass legislation stipulating ‘this light source cannot flow to China's submersion DUV systems,’ there's no need to invoke FDPR or long-arm jurisdiction; the two countries can jointly choke off all submersion DUV exports to China, even if the machines themselves are Dutch.
— NickLithography machines rank first among tools in U.S.-China strategic competition
When asked ‘should we prioritize cutting off China's remote access to U.S. computing capacity?’, Nick's ranking is clear: in the medium to long term, lithography machines rank first. Not because their impact on capacity is biggest, but because the leverage is different—when China rents overseas compute, America can cut it off instantly; once China owns its own chip lines, that leverage vanishes. His view: true strategic advantage rests on autonomous chip manufacturing, and autonomous chip manufacturing rests on lithography machines.
— NickIn their own words · checked verbatim
The fundamental underlying sort of point is that lithography from an export control perspective is what you would call the strongest point of leverage for the U.S. and its allies.
Nick9:22
It's not really a loophole. We call it a cannonball hole in our export controls. And they've taken advantage of that and are importing a staggering number of systems.
Nick11:47
I can see this, like, I would put a pretty high probability on this not being a thing that triggers World War, you know, Trade War 3.0.
Jordan45:59
If you cut off the imports, you are closing the door on anything approaching parity between the US and China. It is a button that lets you win the AI competition, at least as measured by chip making.
Nick51:14
So in some ways it feels really unfair, at least to the Netherlands, to impose this on them. But we have deposition and etching companies and we've handcuffed our own with the expectation that Japan was going to follow suit and they haven't.
Akib58:59
in fact, if Japan could be convinced on litho, on DUV, the US and Japan can jointly have the effect of controlling all immersion systems to China without using the FDPR or any extraterritorial authority.
Nick1:05:00
Truly, if you are seeking any form of strategic advantage or even equilibrium, the foundation of that advantage is indigenous chip making. And the foundation of that is lithography.
Nick1:08:12
Figures
| China's AI chip compute stock (H100 equivalents) | ~1 million units | 3:14 |
| U.S. AI chip compute stock (H100 equivalents) | over 30 million units | 3:14 |
| DUV submersion lithography machines China imported, 2024–2025 | ~90 units | 11:47 |
| Value of these imports and share of ASML's total submersion DUV exports | over $10 billion; nearly two-thirds of ASML's global submersion DUV exports | 11:47 |
| Total ASML lithography machines currently in China (advanced and older process lines combined) | 340 units | 50:12 |
| Negotiation window the MATCH Act gives the Commerce Department to align with allies | 150 days | 26:26 |
| Deposition equipment types the U.S. unilaterally controlled as of October 2022 | 11 types | 1:00:52 |
Glossary
- DUV / Deep Ultraviolet Lithography
- A generation behind EUV but still capable of supporting advanced chip production process nodes.
- EUV / Extreme Ultraviolet Lithography
- The current most advanced lithography technology; individual machines can sell for hundreds of millions of dollars.
- Semiconductor Manufacturing Equipment (SME)
- The collective term for all chip production machinery—lithography, etching, deposition, and more.
- Foreign Direct Product Rule (FDPR)
- U.S. rule used to extend jurisdiction over products containing American technology in global supply chains.
- Countrywide controls / entity controls
- The former bans equipment from entering an entire country; the latter restricts sales to specific companies.
- ASML NXT:1980
- The submersion DUV lithography machine model currently still permitted for export to China.
How to listen
Practitioners in tech, policymakers, researchers, and investors tracking U.S.-China tech competition, export control policy, or semiconductor supply chains.
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