From Washington:
China's most senior semiconductor executives issued a public call this week for a consolidated national effort to build a domestic alternative to Dutch lithography giant ASML, warning that the country's chip equipment industry remains too "small, fragmented, and weak" to overcome U.S. export restrictions on its own.
The bluntness is striking. The article was co-authored by SMIC co-founder Wang Yangyuan and leaders of Empyrean, Yangtze Memory Technologies (YMTC), Naura Technology, and academics. These are not mid-level engineers. These are titans of China's chip industry. And they are, in effect, admitting that years of aggressive state funding and talent poaching have not closed a gap that many Beijing officials once believed could be bridged by the late 2020s.
China is currently drafting its 15th Five-Year Plan, which covers 2026 to 2030 and is widely expected to prioritize lithography breakthroughs and EDA tool development as national targets. Big Fund III, a state-backed vehicle with roughly USD47.5 billion earmarked for semiconductors, has already redirected fresh capital toward lithography and EDA as substitutes for ASML and Synopsys tools. Yet even with resources that would dwarf most national budgets, the executives are signalling that strategic ambition alone will not deliver results.
The gap between aspiration and reality is measured in physics and precision, not dollars. China's most advanced domestically produced DUV lithography system, from Yuliangsheng, is technically comparable to ASML's Twinscan NXT:1950i, a machine ASML originally designed for 32nm-class processes back in 2008. Two decades behind is not a minor lag. An ASML EUV machine contains over 100,000 components sourced from 5,000 suppliers while ASML serves merely as the integrator, the executives acknowledged. Replicating that ecosystem is not engineering work; it is a civilisation-building project.
Three specific areas where U.S. export controls have choked China's semiconductor ambitions were identified: electronic design automation software, silicon wafers, and manufacturing equipment, particularly extreme ultraviolet (EUV) lithography, which enables the sub-7nm chip production that China currently cannot replicate.
The pragmatic case for Beijing's shift is plain. Throwing money at fragmented efforts has produced duplication, waste, and projects that plateau well short of commercial viability. Centralising direction, pooling talent, and focusing on integration rather than component-by-component copying represents a more honest assessment of what the task actually requires. Whether it will succeed remains deeply uncertain; what matters is that China's own executives now recognise the scale of the problem.
For Australia and its allies, this admission carries reassuring implications. The Quad (comprising the U.S., Japan, India, and Australia) and AUKUS should prioritise initiatives aimed at enhancing supply chain resilience and supporting Taiwan's technological ecosystem. Taiwan remains central to global semiconductor security. About 90% of global advanced semiconductor chip production is based in Taiwan and produced by TSMC. That concentration is a strategic vulnerability, yes. But it is also a source of enduring advantage for the Western alliance if managed wisely.
The harder question is whether Australia is investing adequately in supply chain resilience. As China calibrates to a more realistic timeline for lithography independence, Western democracies should be doing the reverse: accelerating domestic capabilities, strengthening ties with Taiwan and South Korea, and treating semiconductor security not as a technical footnote but as core infrastructure defence.
China's candid admission suggests the path ahead will be longer and harder than Beijing would prefer. That is not cause for complacency. It is opportunity for clear-eyed strategy.