In a high-security laboratory in Shenzhen, Chinese scientists have built a prototype of a machine capable of producing the most advanced semiconductor chips used in artificial intelligence, smartphones and modern weapons systems, Reuters has learned. The development represents a milestone Washington has spent years trying to prevent through export controls and diplomatic pressure.
Completed in early 2025 and now undergoing testing, the prototype occupies nearly an entire factory floor. It was built by a team that includes former engineers from Dutch chip equipment maker ASML, who reverse-engineered the company’s extreme ultraviolet, or EUV, lithography machines, according to two people with direct knowledge of the project. While the machine has not yet produced working chips, it is operational and successfully generating extreme ultraviolet light.
Why EUV Technology Matters
EUV lithography machines sit at the heart of the global semiconductor race. They use beams of extreme ultraviolet light to etch circuits thousands of times thinner than a human hair onto silicon wafers, enabling the production of the world’s most powerful chips. Control over this technology has become a focal point of a technological Cold War between China and the West.
Until now, only ASML has mastered EUV technology. Its machines, which cost about $250 million each, are indispensable to chipmakers such as TSMC, Intel and Samsung, and to chip designers like Nvidia and AMD. No EUV system has ever been sold to China.
How Close Is China to Catching Up?
In April, ASML CEO Christophe Fouquet said China would need “many, many years” to develop EUV technology. However, the existence of the Shenzhen prototype suggests China may be closer than previously believed. Chinese authorities have set a goal of producing working chips on the machine by 2028, though people close to the project say 2030 is a more realistic target.
Even so, significant technical hurdles remain. China has struggled to replicate the precision optical systems produced by Western suppliers, particularly Germany’s Carl Zeiss, a key ASML partner. Without these optics, China’s EUV capabilities lag behind Western machines in reliability and precision.
China’s ‘Manhattan Project’
The project marks the culmination of a six-year government push to achieve semiconductor self-sufficiency, one of President Xi Jinping’s top strategic priorities. While China’s ambitions in chips are publicly known, the Shenzhen EUV project has been conducted in secrecy and classified as a national security effort, according to the sources.
The initiative is overseen under China’s broader semiconductor strategy, which state media has linked to Vice Premier Ding Xuexiang, a close confidant of Xi Jinping. Huawei plays a central coordinating role, linking state research institutes and private companies across the country and involving thousands of engineers. Sources described the effort as China’s version of the U.S. Manhattan Project.
Recruiting ASML Veterans
Former ASML engineers were critical to the breakthrough, the sources said. Some recruits were issued identification cards under false names and instructed to use aliases inside the secure facility to maintain secrecy. Recently retired, Chinese-born ASML engineers were particularly sought after because they possessed sensitive technical knowledge but faced fewer professional constraints.
ASML has said it vigilantly protects its trade secrets but acknowledges the difficulty of enforcing confidentiality agreements across borders. In 2019, the company won an $845 million judgment against a former Chinese engineer accused of stealing trade secrets, though the defendant later filed for bankruptcy and continues to operate in Beijing.
How the Prototype Was Built
China’s prototype is larger and cruder than ASML’s machines, which are roughly the size of a school bus and weigh 180 tons. After failing to replicate the compact design, engineers opted for a much larger structure to boost power. The machine fires lasers at molten tin tens of thousands of times per second, generating plasma hotter than 200,000 degrees Celsius to create extreme ultraviolet light.
Chinese research institutes, including the Changchun Institute of Optics, Fine Mechanics and Physics, played key roles in integrating the EUV light source into the prototype, enabling it to become operational in early 2025. However, the optical systems still require major refinement.
Sourcing Parts Under Sanctions
To assemble the prototype, China salvaged components from older ASML machines and sourced parts from secondary markets and intermediary companies, the sources said. Export-restricted components from Japan’s Nikon and Canon were also used. Auctions of older ASML equipment in China continued as recently as October 2025, according to listings reviewed by Reuters.
A team of about 100 recent university graduates is dedicated to reverse-engineering components. Each worker’s desk is filmed to document the disassembly and reassembly of parts, and bonuses are paid for successful reconstructions.
Huawei’s Role Behind Closed Doors
Huawei scientists are deeply embedded across the project, from chip design to manufacturing and integration into consumer products. Employees assigned to semiconductor teams often sleep on-site during the work week, with restricted phone access for those handling the most sensitive tasks, according to people familiar with the operations.
Inside Huawei, knowledge of the project is tightly compartmentalised. Teams are deliberately isolated from one another to preserve secrecy, with few employees aware of the full scope of the effort.
Analysis
China’s EUV prototype represents a potentially significant shift in the global semiconductor balance. While the machine is far from matching ASML’s commercial systems, it demonstrates that export controls have slowed but not stopped China’s progress. If China succeeds in producing reliable EUV chips by the end of the decade, it would undermine one of the West’s most powerful technological chokepoints. Even partial success could reduce China’s dependence on foreign suppliers and complicate U.S. and allied efforts to maintain long-term dominance in advanced chipmaking.
With information from Reuters.
