The rapid rise of artificial intelligence ( AI ) continues to inject strong momentum into the semiconductor industry, pushing global manufacturing demand to new highs in 2025. As the core equipment used in chip production, the global lithography machine market is also expanding steadily. China, despite outside restrictions, is actively advancing its own research and development efforts, seeking to achieve breakthroughs in high-end lithography.

According to the 2025–2030 China Lithography Machine Market Survey and Industry Outlook Research Report released by Shenzhen Zhongshang Industry Research Institute, the global lithography machine market reached US$31.5 billion last year, and is expected to expand further to US$35 billion in 2025.

The lithography machine market remains highly concentrated, with ASML of the Netherlands grabbing a lion’s share of 62%, followed by Canon with 31%, and Nikon with 7%. Lithography technology today has diverged into two major paths: deep ultraviolet ( DUV ) and extreme ultraviolet ( EUV ). The shorter the wavelength of light used, the finer and more powerful the resulting chip structures. DUV lithography operates at 193 nanometers, while EUV pushes the wavelength down to 13.5 nanometers, enabling the production of cutting-edge chips such as those powering Nvidia’s advanced processors – all reliant on ASML’s EUV machines, currently unmatched worldwide.

Facing ongoing restrictions on high-end lithography machine imports, China has accelerated efforts to build a self-reliant semiconductor supply chain.  China’s demand for lithography machines is substantial, though domestic substitution remains limited.

The country’s high-end lithography capabilities are still constrained by foreign technology barriers. The United States began restricting exports of advanced lithography tools to China as early as 2018, later introducing the “1007 New Rules” and collaborating with Japan and the Netherlands to tighten export controls on EUV and advanced DUV equipment. This tri-national coordination effectively created an industry blockade targeting China’s semiconductor ambitions.

Despite these challenges, China’s R&D efforts are gaining traction. A notable milestone came when Shanghai Micro Electronics Equipment ( SMEE ) and Advanced Micro-Fabrication Equipment Inc ( AMEC ) jointly developed a 28nm immersion DUV lithography machine, now undergoing customer validation. With over 70% localized components – including dual wafer stages made by Beijing U-Precision Tech and projection optics from Changchun Neopto Precision Optics – this system represents a meaningful leap for China’s mid-tier lithography technology.

Although key bottlenecks persist in high-end lithography, local governments and major state-owned investors are deepening capital commitment and industrial coordination to accelerate domestic production and strengthen the entire semiconductor ecosystem.

Shenzhen leads bold push

As one of China’s leading semiconductor hubs, Shenzhen is home to prominent companies such as HiSilicon and ZTE Microelectronics, covering design, manufacturing, equipment, and materials. The city’s integrated circuit ( IC ) industry reached 142.4 billion yuan ( US$20 billion ) in output in the first half of 2025, a 16.9% increase from a year earlier – the highest level in its history for that period, according to Shenzhen government data.

At the WeSemibay Semiconductor Ecosystem Expo 2025 held in October 2025, the city unveiled the first phase of the Shenzhen Semiconductor and Integrated Circuit Fund. The fund’s initial size is 5 billion yuan. Designed with a 10-year lifespan, the fund primarily targets start-ups and growth-stage firms in three key sectors: semiconductor equipment and components, chip design ( focusing on AI chips and novel computing architectures ), and advanced packaging technologies. As of late 2025, the fund had secured 3.6 billion yuan in paid-in capital, mostly from state-backed sources.

The Shenzhen State-owned Assets Supervision and Administration Commission ( Sasac ) continues to play a pivotal role in directing semiconductor development. Among the highlights of the 2025 WeSemibay Expo was SiCarrier, established in August 2021, a wholly owned subsidiary of Shenzhen Major Industry Investment Group ( SZMIIG ). The company specializes in semiconductor manufacturing equipment and component services and presented six major product categories, covering etching, thin-film deposition, and metrology technologies – each addressing critical technical challenges in chip fabrication.

The company plans to ramp up mass production in 2026, particularly in advanced-process semiconductor equipment, which is expected to secure a significant increase in orders. According to Cailianshe, SiCarrier’s latest funding round is nearing completion, with a pre-money valuation of 65 billion yuan, up from 50 billion yuan after the previous round.

Beyond SiCarrier, SZMIIG also controls other semiconductor manufacturing companies. Shenzhen Pengxin Micro-Integrated Circuit Manufacturing, founded in 2021, specializes in image sensors and radio-frequency ( RF ) ICs; SwaySure Technology, established in 2022, focuses on memory chip production; and Shenzhen Pensun Technology, also founded in 2022, is building 40nm and 28nm mature-process logic production lines, providing high-quality wafer foundry services for global clients.