Understanding AI's Reliance on TSMC and ASML

Editor's note: TSMC (Taiwan Semiconductor Manufacturing Company) is one of the most strategically critical companies in the world because it dominates advanced semiconductor manufacturing, producing chips essential to global technology, defense, and economic systems. TSMC's reliance on ASML's exclusive EUV lithography machines (see the machines that build the machines) creates a highly concentrated supply chain with no true substitutes. This concentration, combined with geopolitical tensions surrounding Taiwan, makes control or disruption of TSMC a major global security and economic risk. Israel's growing cooperation with Taiwan on air defense is widely viewed as an effort to help shield critical semiconductor infrastructure linked to ASML and TSMC, amid concerns over China's ability to access or disrupt advanced chipmaking technology.
________

How China built its 'Manhattan Project' to rival the West in AI chips

By Fanny Potkin | December 17, 2025

SINGAPORE, Dec 17 (Reuters) - In a high-security Shenzhen laboratory, Chinese scientists have built what Washington has spent years trying to prevent: a prototype of a machine capable of producing the cutting-edge semiconductor chips that power artificial intelligence, smartphones and weapons central to Western military dominance, Reuters has learned.

Completed in early 2025 and now undergoing testing, the prototype fills nearly an entire factory floor. It was built by a team of former engineers from Dutch semiconductor giant ASML who reverse-engineered the company's extreme ultraviolet lithography machines or EUVs, according to two people with knowledge of the project.

EUV machines sit at the heart of a technological Cold War. They use beams of extreme ultraviolet light to etch circuits thousands of times thinner than a human hair onto silicon wafers, currently a capability monopolized by the West. The smaller the circuits, the more powerful the chips.

China's machine is operational and successfully generating extreme ultraviolet light, but has not yet produced working chips, the people said.

In April, ASML CEO Christophe Fouquet said that China would need "many, many years" to develop such technology. But the existence of this prototype, reported by Reuters for the first time, suggests China may be years closer to achieving semiconductor independence than analysts anticipated.

Nevertheless, ‌China still faces major technical challenges, particularly in replicating the precision optical systems that Western suppliers produce.

The availability of parts from older ASML machines on secondary markets has allowed China to build a domestic prototype, with the government setting a goal of producing working chips on the prototype by 2028, according to the two people.

But those close to the project say a more realistic target is 2030, which is still years earlier than the decade that analysts believed it would take China to match the West on chips.

Chinese authorities did not respond to requests for comment.

The breakthrough marks the culmination of a six-year ‌government initiative to achieve semiconductor self-sufficiency, one of President Xi Jinping's highest priorities. While China's semiconductor goals have been public, the Shenzhen EUV project has been conducted in secret, according to the people.

The project falls under the country's semiconductor strategy, which state media has identified as being run by Xi Jinping confidant Ding Xuexiang, who heads the Communist Party's Central Science and Technology Commission.

Please go to Reuters to continue reading.
_________


More:

Two of the most critical companies in the world: Taiwan Semiconductor Manufacturing Company Limited (TSMC) and ASML Holding N.V. (ASML)

The US is going to turn Taiwan into another Ukraine over TSMC

Funding the Demolition of America - The CCP Steps In To Take Control of the Multi Polar World

Can't Say We Haven't Heard About ASML Around Here

Note: HONORED TO BE AN ESSENTIAL PUBLIC SERVICE PROVIDER.