China has assembled a prototype extreme ultraviolet, or EUV, lithography machine capable of generating the 13.5nm light required for the world’s most advanced chipmaking, marking a significant step beyond its recent progress in domestic DUV tools. The machine was completed in early 2025 at a facility in Shenzhen, but it has not yet produced a working chip, underscoring how far prototype light generation remains from production-grade semiconductor manufacturing. EUV systems are essential for fabricating chips at sub-5nm process nodes, and Dutch company ASML remains the only supplier of production-grade machines, which cost roughly $250 million each. China’s prototype was developed in part through reverse engineering older ASML technology, and the reported team includes former ASML engineers recruited with signing bonuses of about $420,000 to $700,000. Among them is Lin Nan, who previously led ASML’s light source division and now works at the Shanghai Institute of Optics. Generating EUV light is only one part of the challenge. The process uses a high-powered laser fired at tiny droplets of molten tin to create a plasma that emits 13.5nm light, but commercial EUV lithography also depends on ultra-precise mirrors, near-zero vibration control and contamination-free vacuum conditions. German optics firm Carl Zeiss is the only company capable of producing the mirrors at the required precision, and those components are also covered by export restrictions. Beijing has set a target of producing functional chips using domestic EUV technology by 2028, while industry analysts consider 2030 a more realistic timeline. The effort sits within a broader semiconductor strategy that includes Big Fund III, a state-backed investment vehicle with about $50 billion committed to lithography independence and wider chip self-sufficiency. No EUV systems have been sold to China since export controls took effect around 2018-2019, and tighter restrictions have since expanded to DUV equipment as well.