China just pushed the semiconductor fight into a new chapter. Inside a sealed compound in Shenzhen, scientists built a prototype EUV lithography machine that Washington has tried to block for years. The machine was finished in early 2025, takes up almost an entire factory floor, and is now in testing. It already generates extreme ultraviolet light, the key part of advanced chipmaking, though it has not produced working chips yet. The whole project was driven by former ASML engineers who were recruited to reverse-engineer the Dutch company’s most restricted system, according to people who know the details. Beams from EUV machines carve circuits far thinner than a strand of hair. Whoever makes these machines controls the top tier of computing power; AI, smartphones, drones, missiles, all of it. ASML CEO Christophe Fouquet said China would need “many, many years” before it built an EUV system, but people working on the project said the prototype shows that China is much closer to semiconductor independence than many expected. They also said heavy limits on optics and high-precision parts still hold China back. But they confirmed that older ASML components on secondary markets helped the country build this first domestic machine. One person said the government wants working chips by 2028, but the realistic date is 2030. China pushes recruitment and secrecy across the country This prototype is the result of a six-year national plan ordered by Xi Jinping, who made semiconductor self-sufficiency a top priority. The Shenzhen project stayed secret even as China talked publicly about chip goals. State media named Ding Xuexiang as the official in charge of the broader semiconductor strategy. People familiar with the work compared the entire effort to “China’s Manhattan Project.” Huawei stepped into a central role. The company connected state institutes, private firms, and thousands of engineers. One source said, “The aim is for China to eventually be able to make advanced chips on machines that are entirely China-made,” adding that “China wants the United States 100% kicked out of its supply chains.” ASML remains the world’s only EUV supplier, with machines costing about $250 million and used by chipmakers like TSMC, Intel, and Samsung to produce chips designed by companies like Nvidia and AMD. ASML said it took two decades and billions of euros to go from a prototype in 2001 to commercial chips in 2019. The company said, “It makes sense that companies would want to replicate our technology, but doing so is no small feat.” U.S. export controls have blocked EUV sales to China since 2018 and expanded in 2022 under President Biden. The Trump administration now says it is tightening enforcement and closing loopholes. The Dutch government is screening research institutions to stop sensitive tech from leaving the country. These limits slowed China’s chip sector and restricted Huawei’s more advanced production. China builds the prototype and expands national chip operations Inside the secure Shenzhen lab, new recruits used fake names on ID cards. One engineer said he was shocked when his hiring package came with an alias. He said he recognized former ASML coworkers who were also working under false identities. Workers were told no one outside the site could know what they were building. Many recruits were recently retired, China-born former ASML engineers. Two current ASML employees in the Netherlands said Huawei recruiters approached them starting in 2020. Cross-border enforcement of non-disclosure rules has been weak, and ASML once won an $845 million judgment against a former engineer accused of stealing secrets who now operates in Beijing. Dutch intelligence warned that China uses “extensive espionage programmes” to gather high-tech knowledge, including recruiting Western researchers. Allegedly, ASML veterans made the breakthrough possible because reverse-engineering EUV systems would have been “nearly impossible” without them. China began a major recruitment drive in 2019, offering 3–5 million yuan signing bonuses and home subsidies. One recruit was Lin Nan, ASML’s former head of light-source tech. His new team filed eight EUV patents in 18 months. Some naturalized citizens abroad were even given Chinese passports despite China banning dual citizenship. ASML’s systems weigh 180 tons, so China built a much bigger prototype after failing to match the original size. The prototype works but is rough compared to ASML’s version. Missing pieces include the high-precision optics normally supplied by Carl Zeiss AG. China’s institutes, including CIOMP in Changchun, worked on local replacements and integrated the EUV beam in early 2025. CIOMP offered “uncapped” salaries and grants up to 4 million yuan to PhD researchers. China pulled older ASML machines and parts from auctions and secondhand markets. Some parts tied to Nikon and Canon also went into the prototype. Intermediary companies masked purchases. Around 100 recent graduates reverse-engineered components, and each desk had a camera recording the work. Bonuses were paid when a worker successfully rebuilt a part. Huawei employees assigned to semiconductor teams often slept on-site and could not go home during the week. Phones were restricted. One person allegedly said teams stayed isolated so they would not know what others were building. CEO Ren Zhengfei briefed senior leaders on project milestones as the country pushed toward full control of its chip supply chain. Want your project in front of crypto’s top minds? Feature it in our next industry report, where data meets impact.
