By Fanny Potkin SINGAPORE Dec 17 – In a high-security Shenzhen laboratory, Chinese scientists have built what Washington has spent years trying to prevent: a prototype of a machine capable of producing the cutting-edge semiconductor chips that power artificial intelligence, smartphones and weapons central to Western military dominance, Reuters has learned. Completed in early 2025 and now undergoing testing, the prototype fills nearly an entire factory floor. It was built by a team of former engineers from Dutch semiconductor giant ASML who reverse-engineered the company's extreme ultraviolet lithography machines or EUVs, according to two people with knowledge of the project. EUV machines sit at the heart of a technological Cold War. They use beams of extreme ultraviolet light to etch circuits thousands of times thinner than a human hair onto silicon wafers, currently a capability monopolized by the West. The smaller the circuits, the more powerful the chips. China's machine is operational and successfully generating extreme ultraviolet light, but has not yet produced working chips, the people said. In April, ASML CEO Christophe Fouquet said that China would need "many, many years" to develop such technology. But the existence of this prototype, reported by Reuters for the first time, suggests China may be years closer to achieving semiconductor independence than analysts anticipated. Nevertheless, China still faces major technical challenges, particularly in replicating the precision optical systems that Western suppliers produce. The availability of parts from older ASML machines on secondary markets has allowed China to build a domestic prototype, with the government setting a goal of producing working chips on the prototype by 2028, according to the two people. But those close to the project say a more realistic target is 2030, which is still years earlier than the decade that analysts believed it would take China to match the West on chips. Chinese authorities did not respond to requests for comment. The breakthrough marks the culmination of a six-year government initiative to achieve semiconductor self-sufficiency, one of President Xi Jinping's highest priorities. While China's semiconductor goals have been public, the Shenzhen EUV project has been conducted in secret, according to the people. The project falls under the country's semiconductor strategy, which state media has identified as being run by Xi Jinping confidant Ding Xuexiang, who heads the Communist Party's Central Science and Technology Commission. Chinese electronics giant Huawei plays a key role coordinating a web of companies and state research institutes across the country involving thousands of engineers, according to the two people and a third source. The people described it as China's version of the Manhattan Project, the U.S. wartime effort to develop the atomic bomb. “The aim is for China to eventually be able to make advanced chips on machines that are entirely China-made,” one of the people said. "China wants the United States 100% kicked out of its supply chains." Huawei, the State Council of China, the Chinese Embassy in Washington, and China's Ministry of Industry and Information Technology did not respond to requests for comment. Until now, only one company has mastered EUV technology: ASML, headquartered in Veldhoven, Netherlands. Its machines, which cost around $250 million, are indispensable for manufacturing the most advanced chips designed by companies like Nvidia and AMD—and produced by chipmakers such as TSMC, Intel, and Samsung. ASML built its first working prototype of EUV technology in 2001, and told Reuters it took nearly two decades and billions of euros in R&D spending before it produced its first commercially-available chips in 2019. “It makes sense that companies would want to replicate our technology, but doing so is no small feat,” ASML told Reuters in a statement. ASML's EUV systems are currently available to U.S. allies including Taiwan, South Korea, and Japan. Starting in 2018, the United States began pressuring the Netherlands to block ASML from selling EUV systems to China. The restrictions expanded in 2022, when the Biden administration imposed sweeping export controls designed to cut off China's access to advanced semiconductor technology. No EUV system has ever been sold to a customer in China, ASML told Reuters. The controls targeted not just EUV systems but also older deep ultraviolet (DUV) lithography machines that produce less-advanced chips like Huawei’s, aiming to keep China at least a generation behind in chipmaking capabilities. The U.S. State Department said the Trump Administration has strengthened enforcement of export controls on advanced semiconductor manufacturing equipment and is working with partners "to close loopholes as technology advances.” The Dutch Ministry of Defence said the Netherlands is developing policies requiring “knowledge institutions” to perform personnel screenings to prevent access to sensitive technology “by individuals that have ill intentions or who are at risk of being pressured.” Export restrictions have slowed China's progress toward semiconductor self-sufficiency for years, and constrained advanced chip production at Huawei, the two people and a third person said. The sources spoke on condition they not be identified due to the confidentiality of the project. CHINA'S MANHATTAN PROJECT One veteran Chinese engineer from ASML recruited to the project was surprised to find that his generous signing bonus came with an identification card issued under a false name, according to one of the people, who was familiar with his recruitment. Once inside, he recognized other former ASML colleagues who were also working under aliases and was instructed to use their fake names at work to maintain secrecy, the person said. Another person independently confirmed that recruits were given fake IDs to conceal their identities from other workers inside the secure facility. The guidance was clear, the two people said: Classified under national security, no one outside the compound could know what they were building—or that they were there at all. The team includes recently retired, Chinese-born former ASML engineers and scientists—prime recruitment targets because they possess sensitive technical knowledge but face fewer professional constraints after leaving the company, the people said. Two current ASML employees of Chinese nationality in the Netherlands told Reuters they have been approached by recruiters from Huawei since at least 2020. Huawei did not respond to requests for comment. European privacy laws limit ASML's ability to track former employees. Though employees sign non-disclosure agreements, enforcing them across borders has proven difficult. ASML won an $845 million judgment in 2019 against a former Chinese engineer accused of stealing trade secrets, but the defendant filed for bankruptcy and continues to operate in Beijing with Chinese government support, according to court documents. ASML told Reuters that it “vigilantly guards” trade secrets and confidential information. "While ASML cannot control or restrict where former employees work, all employees are bound by the confidentiality clauses in their contracts," the company said, and it has "successfully pursued legal action in response to the theft of trade secrets.” Reuters was unable to determine if any legal actions have been taken against former ASML employees involved in China’s lithography program. The company said it safeguards EUV knowledge by ensuring only select employees can access the information even inside the company. Dutch intelligence warned in an April report that China "used extensive espionage programmes in its attempts to obtain advanced technology and knowledge from Western countries," including recruiting "Western scientists and employees of high-tech companies.” The ASML ve…
(The article has been published through a syndicated feed. Except for the headline, the content has been published verbatim. Liability lies with original publisher.)