China’s ‘Manhattan Project’ to Dismantle Western AI Chip Dominance
China has made a significant move in its efforts to challenge Western supremacy in advanced semiconductor technology. Within a high-security laboratory in Shenzhen, Chinese scientists have developed a prototype machine that can manufacture the most advanced chips utilized in artificial intelligence, smartphones, and modern weaponry, according to a report. The project reached completion in early 2025 and is currently undergoing testing. China has created a prototype of an extreme ultraviolet lithography machine, recognized as the most advanced tool for producing cutting-edge semiconductor chips. The machine, occupying almost the entirety of a factory floor, was constructed by a team that comprises former engineers from the Dutch chip equipment manufacturer ASML. The report indicated that the team reverse-engineered ASML’s EUV machines. The prototype is now operational and has successfully generated extreme ultraviolet light, marking a crucial advancement in the chipmaking process. Nevertheless, it has yet to yield functional chips.
EUV machines are central to contemporary chipmaking processes. Beams of extreme ultraviolet light to etch circuits thousands of times thinner than a human hair are employed onto silicon wafers. The smaller the circuits, the more powerful the chip. This capability is crucial for artificial intelligence processors, high-end smartphones, and advanced military systems. As of now, only one company globally has achieved mastery in this technology: ASML, based in the Netherlands. In April, ASML CEO Christophe Fouquet stated that China would require “many, many years” to develop EUV technology. However, the presence of a functioning prototype indicates that China might be nearer to achieving this than previously anticipated. The Chinese government has set a goal to produce functional chips utilizing the prototype by 2028. Insiders familiar with the plan suggest that 2030 is a more achievable target, significantly sooner than the timeline analysts previously estimated for China, according to a source. Nonetheless, significant technical challenges persist, particularly in duplicating the ultra-precise optical systems employed in Western machinery.
The Shenzhen EUV initiative is a component of a six-year governmental campaign aimed at achieving semiconductor self-sufficiency, which stands as one of President Xi Jinping’s foremost priorities. Although China’s aspirations in the semiconductor industry are well-known, the EUV project has been carried out in almost complete secrecy. According to those involved, it is classified under national security, and no one outside the compound is permitted to know what is being constructed, the news report stated. The project is part of China’s semiconductor strategy, which is under the supervision of Ding Xuexiang, the head of the Communist Party’s Central Science and Technology Commission. Sources characterized the initiative as China’s equivalent of the Manhattan Project. “The aim is for China to eventually be able to make advanced chips on machines that are entirely China-made,” one of the individuals stated. “China wants the United States completely removed from its supply chains.” Huawei plays a pivotal role, orchestrating the efforts of thousands of engineers from state research institutes and private firms.
Former ASML engineers have played a crucial role in the project. A Chinese engineer recruited from ASML was taken aback when he received an ID card bearing a false name upon joining the project. Within the facility, he discovered other former colleagues also operating under aliases. The instructions were clear and unwavering: no individual beyond the confines of the compound was to be aware of their construction efforts or even their presence. The team comprises recently retired, Chinese-born former ASML engineers who bring extensive technical expertise and encounter fewer professional limitations following their departure from the company. A report indicated that China is procuring components from older ASML machines and acquiring equipment via secondhand markets. International banks routinely conduct auctions for pre-owned semiconductor equipment. Recent listings indicate that older ASML machines have been sold in China as recently as October 2025. According to a report, certain components are sourced from Japan’s Nikon and Canon, funneled through intermediary companies to obscure the identity of the final buyer. Within the Shenzhen lab, approximately 100 recent university graduates are engaged in the reverse-engineering of components. A camera oversees each desk, and employees earn bonuses for effectively reassembling components. ASML’s most advanced EUV machines are said to be approximately the size of a school bus and have a weight of 180 tonnes. China’s prototype has grown in size following previous unsuccessful attempts to replicate ASML’s design. The machine is less refined than ASML’s systems, yet it remains sufficiently functional for testing purposes. The most significant flaw is found in the optics. Western machines depend on mirrors provided by Germany’s Carl Zeiss AG, which require months for production and function under extreme conditions. Chinese institutes, including the Changchun Institute of Optics, Fine Mechanics and Physics, have achieved advancements in integrating EUV light into the system, enabling it to become operational in early 2025. Nonetheless, the news report indicated that considerable refinement remains necessary.
