Huawei invests in DUV lithography to cut China's semiconductor reliance
In brief
- Huawei invests in DUV photolithography makers to build self-sufficient Chinese semiconductor supply chain.
- Shanghai Yuliangsheng targets 12 advanced DUV units by end of 2026, tested at SMIC and Huawei.
- US ASML EUV restrictions limit Chinese foundries to 7nm-class processes, driving domestic DUV development.
- Huawei ramps Ascend 910C AI chip production to 600,000 units by 2026, requiring reliable equipment.
- Germany's Zeiss lenses remain critical; China must develop domestic projection lens alternatives.
The DUV Initiative
Analysts at Bernstein have described Huawei's role as "project manager" for China's DUV initiatives. Shanghai Yuliangsheng is leading the manufacturing push, with a target of producing 12 advanced DUV units by the end of 2026. Those machines are already being tested at production sites belonging to Semiconductor Manufacturing International Corporation (SMIC) and at Huawei's own facilities.
For now, the DUV systems are being aimed at simpler chip designs. The longer-term ambition is to develop capabilities sufficient for advanced artificial intelligence applications. Huawei has made targeted investments in companies like Qiqi Photon and Keyihongyuan, which are working on two of the most critical components: projection lenses and high-power light sources.
Closing the Supply Chain Gap
The US has imposed increasingly stringent export restrictions on cutting-edge semiconductor manufacturing equipment, particularly extreme ultraviolet lithography tools made by Dutch firm ASML. Those machines have been off-limits to Chinese buyers for years, limiting domestic foundries like SMIC to manufacturing processes around the 7nm-class.
The company has been ramping up production of its Ascend series AI chips, with targets of around 600,000 Ascend 910C units by 2026. Manufacturing at that scale requires reliable access to fabrication equipment.
Beyond the hardware, Huawei has also been pursuing architectural workarounds. A technique called LogicFolding is designed to increase chip density without requiring the most advanced lithography nodes.
The Remaining Bottleneck
ASML alone shipped hundreds of lithography systems in recent years, making the 12-unit target for 2026 modest by global standards. Yet the initiative signals China's determination to build domestic capacity.
Zeiss lenses from Germany continue to be used in DUV systems even as China tries to develop domestic alternatives. The persistent reliance on Zeiss optics remains a telling vulnerability. Until China can produce projection lenses of comparable quality, the supply chain remains exposed to foreign chokepoints.
Huawei's coordinated push represents a long-term bet on self-sufficiency. Whether the domestic DUV ecosystem can scale to meet China's ambitions remains an open question.
