China's Manhattan Project Sparks Global Semiconductor Shift

By John Pranay (Editor)

India's twin security dilemma has taken a new turn with China's breakthrough in extreme ultraviolet (EUV) lithography technology and Bangladesh's increasing drift towards Beijing's orbit. The development of China's EUV machine in a high-security laboratory in Shenzhen, southern China, has significant implications for the global balance of technological and strategic power. The machine can potentially dismantle the West's near-monopoly over the production of advanced chips, which power AI systems, smartphones, and modern military platforms. The immediate toll is unclear, but the stakes are high, with the global semiconductor ecosystem hanging in the balance.

China's EUV machine development is a culmination of a nearly six-year reverse-engineering effort by Chinese engineers who previously worked for Dutch multinational ASML. The engineers salvaged components from older ASML systems and sourced parts from the company's suppliers through second-hand markets, masking the identity of the end buyer. This achievement signals a major leap forward for China, which has been making significant gains in research leadership over the past two decades. According to a 2024 study by the Australian Strategic Policy Institute, China now tops 57 of 64 technologies, while the US leads in just seven. The development has profound implications for the global balance of technological and strategic power.

The humanitarian impact of China's EUV machine development is yet to be fully assessed, but it is likely to have significant implications for India's security dilemma. India has been wary of China's growing technological prowess and its potential to challenge the West's dominance in advanced chipmaking. The development of China's EUV machine may exacerbate India's security concerns, particularly in the context of its ongoing border disputes with China. The Indian government will need to reassess its strategic priorities and consider ways to counter China's growing technological capabilities. The international community, including the US and its allies, will also need to re-evaluate their approach to restricting China's access to advanced technologies.

The development of China's EUV machine is part of a broader trend of technological supremacy in the Indo-Pacific region. China's exceptional gains in research leadership over the past two decades have significant implications for the global balance of power. The US, which once dominated 60 of 64 technologies, now leads in just seven. China's breakthrough in EUV technology underscores its determination to overcome the barriers erected by the US and its allies to slow its progress in advanced chipmaking. This development has significant implications for the global semiconductor ecosystem and the balance of technological and strategic power.

The development of China's EUV machine poses significant escalation risks, particularly in the context of the ongoing trade tensions between the US and China. The US has spent nearly a decade pressuring ASML to restrict the sale of its most sophisticated lithography machines to China. The approval of Nvidia Corp.'s sale of H200 chips to China last week highlighted Washington's delicate balancing act: restricting China's most powerful capabilities while avoiding a full-blown trade war. The risk of escalation is high, particularly if China's EUV machine development is seen as a challenge to the US's dominance in advanced chipmaking.

The next steps in this saga are uncertain, but several key dates and developments are worth watching. The US and China are set to hold high-level trade talks in the coming weeks, which may address the issue of China's access to advanced technologies. The Indian government will also need to reassess its strategic priorities and consider ways to counter China's growing technological capabilities. The development of China's EUV machine has significant implications for the global semiconductor ecosystem and the balance of technological and strategic power.

This development suggests that China's technological supremacy is accelerating at a pace that is difficult to match. The US and its allies will need to reassess their approach to restricting China's access to advanced technologies and consider ways to counter China's growing technological capabilities. India, in particular, will need to reassess its strategic priorities and consider ways to mitigate the risks posed by China's EUV machine development. This development is part of a broader trend of technological supremacy in the Indo-Pacific region, and its implications will be felt for years to come.

Our internal tone gauge currently reads: Bullish for this development.

1. India's twin security dilemma: China's Manhattan Project and Dhaka's drift — https://www.livemint.com/opinion/online-views/india-china-bangladesh-security-challenges-geopolitical-shifts-11766219820202.html

Methodology: This analysis combines real-time data aggregation from manually selected global sources with advanced AI synthesis, engineered to provide neutral and data-driven insights.