Inside a heavily guarded laboratory in Shenzhen, China scientists have developed a prototype machine capable of producing the advanced semiconductor chips that power artificial intelligence, smartphones, and modern weapons systems, according to people familiar with the project.
Completed in early 2025 and currently undergoing testing, the machine occupies nearly an entire factory floor. It was built by a team that includes former engineers from Dutch chip equipment maker ASML, who reverse-engineered the company’s extreme ultraviolet (EUV) lithography technology, the sources said.
EUV machines are among the most sensitive technologies in the global chip race. They use extreme ultraviolet light to carve ultra-fine circuits onto silicon wafers, enabling the production of the world’s most powerful chips. Until now, this capability has been monopolized by Western suppliers.
China’s prototype can successfully generate EUV light but has not yet produced functional chips. Even so, its existence suggests China may be much closer to semiconductor self-sufficiency than previously believed, despite Western efforts to slow its progress through export controls.
Chinese officials did not respond to requests for comment.
The effort is the result of a six-year state-led campaign to reduce reliance on foreign technology—one of President Xi Jinping’s key strategic priorities. While China’s ambitions have been publicly stated, the Shenzhen EUV project itself has been conducted in secrecy, according to the sources.
China’s Manhattan Project
The project operates under China’s national semiconductor strategy and is overseen by senior leadership within the Communist Party, according to people familiar with its structure. Huawei plays a central role by coordinating a network of state research institutes, suppliers, and engineering teams involving thousands of workers.
Sources described the initiative as China’s version of the U.S. Manhattan Project, the secret wartime program that developed the atomic bomb.
The goal, according to one person involved, is for China to eventually produce advanced chips using machinery that is entirely domestically made, eliminating reliance on U.S. and allied supply chains.
Inside China’s EUV Fab
China’s EUV prototype is significantly larger and less refined than ASML’s commercial machines but is operational enough for testing, the sources said. Engineers expanded the machine’s size after early replication attempts failed to deliver sufficient power.
One of the biggest challenges remains optical systems, which in Western machines are supplied by specialized firms such as Germany’s Carl Zeiss. Chinese research institutes have made progress developing alternatives, but these components still lag behind Western standards.
To assemble the prototype, China sourced parts from older ASML machines available on secondary markets and used components from Japanese suppliers Nikon and Canon that are normally subject to export restrictions, the sources said.
Teams of engineers, including recent graduates, are tasked with dismantling and rebuilding components. Their workstations are closely monitored, and those who successfully replicate parts receive bonuses, according to people familiar with the operation.
Huawei Scientists Sleep On-Site
Huawei is involved across the entire semiconductor supply chain, from chip design to manufacturing and integration into consumer devices, the sources said.
Employees assigned to sensitive projects often live on-site during the work week, with limited communication access. Teams are isolated from one another to protect secrecy, meaning many workers are unaware of the project’s full scope.
Despite years of U.S. export controls aimed at keeping China a generation behind in chip technology, analysts say China’s progress shows that such barriers have slowed—but not stopped—its ambitions.