China's DUV Technology Spread Information Affected Chip Sector Stocks

Shares of semiconductor equipment manufacturers declined on Monday following reports that a Shanghai-based company has begun mass production of domestically manufactured DUV lithography equipment.

DUV, or Deep Ultraviolet lithography equipment, is one of the key components in chip manufacturing. According to reports, the Chinese company plans to produce five such devices this year and 20 next year. Their customers will be SMIC, CXMT, and Hua Hong.

This information emerged as the U.S. Congress considers the passage of the MATCH Act. The bill would impose additional restrictions on the sale of similar equipment to China and the provision of technical services. If China is able to achieve local production of the required equipment, the impact of American restrictions would be significantly reduced.

Following the release of the information, share prices of ASML, Applied Materials, Lam Research, and KLA declined by approximately 7% during trading. ASML shares fell roughly 5.7%, Applied Materials 4%, Lam Research 4.5%, while KLA declined 3%.

According to Wall Street analysts, the reaction was exaggerated. In their view, the production of a few devices does not mean that Chinese companies have matched ASML's technological capabilities. For mass production of modern chips, creating the equipment alone is not sufficient. It must operate with precision, speed, and reliability at high volumes—something Chinese manufacturers have yet to prove.

Source: Investing.com