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.

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—known as 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.

In April, ASML CEO Christophe Fouquet said that China would need “many, many years” to develop such technology. But the existence of this prototype, suggests China may be years closer to achieving semiconductor independence than analysts anticipated.

China’s “Manhattan Project”

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 sources.

The project falls under the country’s semiconductor strategy run by Xi Jinping confidant Ding Xuexiang, who heads the Communist Party’s Central Science and Technology Commission. Chinese electronics giant Huawei plays a key role coordinating a web of companies and state research institutes across the country involving thousands of engineers.

Sources described it as China’s version of the Manhattan Project—the U.S. wartime effort to develop the atomic bomb. Chinese authorities, Huawei, and relevant ministries did not respond to requests for comment.

The ASML Connection

Until now, only one company has mastered EUV technology: ASML, headquartered in Veldhoven, Netherlands. Its machines, which cost around $250 million, are indispensable for manufacturing the most advanced chips designed by companies like Nvidia and AMD—and produced by chipmakers such as TSMC, Intel, and Samsung.

ASML built its first working prototype of EUV technology in 2001, they said it took nearly two decades and billions of euros in R&D spending before it produced its first commercially-available chips in 2019. No EUV system has ever been sold to a customer in China.

“It makes sense that companies would want to replicate our technology, but doing so is no small feat,” ASML said in a statement. The company said it “vigilantly guards” trade secrets and confidential information, though European privacy laws limit ASML’s ability to track former employees.

Secret Recruitment and False Identities

One veteran Chinese engineer from ASML recruited to the project was surprised to find that his generous signing bonus came with an identification card issued under a false name, according to one person familiar with his recruitment.

Once inside, he recognized other former ASML colleagues who were also working under aliases and was instructed to use their fake names at work to maintain secrecy. Another person independently confirmed that recruits were given fake IDs to conceal their identities from other workers inside the secure facility.

The guidance was clear: Classified under national security, no one outside the compound could know what they were building—or that they were there at all.

The team includes recently retired, Chinese-born former ASML engineers and scientists—prime recruitment targets because they possess sensitive technical knowledge but face fewer professional constraints after leaving the company. Two current ASML employees of Chinese nationality in the Netherlands said they have been approached by recruiters from Huawei since at least 2020.

Inside the Shenzhen Facility

ASML’s most advanced EUV systems are roughly the size of a school bus and weigh 180 tons. After failed attempts to replicate its size, the prototype inside the Shenzhen lab became many times larger to improve its power, according to sources.

The Chinese prototype is crude compared to ASML’s machines but operational enough for testing. China’s prototype lags behind largely because researchers have struggled to obtain optical systems like those from Germany’s Carl Zeiss AG, one of ASML’s key suppliers.

The machines fire lasers at molten tin 50,000 times per second, generating plasma at 200,000 degrees Celsius. The light is focused using mirrors that take months to produce. The Changchun Institute of Optics, Fine Mechanics and Physics at the Chinese Academy of Sciences achieved a breakthrough in integrating extreme-ultraviolet light into the prototype’s optical system, enabling it to become operational in early 2025.

Component Sourcing and Reverse Engineering

To get the required parts, China is salvaging components from older ASML machines and sourcing parts from ASML suppliers through secondhand markets. Networks of intermediary companies are sometimes used to mask the ultimate buyer.

Export-restricted components from Japan’s Nikon and Canon are being used for the prototype, according to sources. International banks regularly auction older semiconductor fabrication equipment. Auctions in China sold older ASML lithography equipment as recently as October 2025, according to a review of listings on Alibaba Auction.

A team of around 100 recent university graduates is focused on reverse-engineering components from both EUV and DUV lithography machines. Each worker’s desk is filmed by an individual camera to document their efforts to disassemble and reassemble parts—work sources described as key to China’s lithography efforts.

Staffers who successfully reassemble a component receive bonuses, creating a competitive atmosphere around the painstaking work of technological replication.

Huawei’s Central Role

While the EUV project is run by the Chinese government, Huawei is involved in every step of the supply chain from chip design and fabrication equipment to manufacturing and final integration into products like smartphones, according to four people familiar with Huawei’s operations.

CEO Ren Zhengfei briefs senior Chinese leaders on progress. Huawei has deployed employees to offices, fabrication plants, and research centers across the country for the effort. Employees assigned to semiconductor teams often sleep on-site and are barred from returning home during the work week, with phone access restricted for teams handling more sensitive tasks.

Inside Huawei, few employees know the scope of this work. The compartmentalization ensures that even those working on the project have limited visibility into the broader effort—a strategy reminiscent of Cold War-era weapons programs.

Implications and What’s Next

The availability of parts from older ASML machines on secondary markets has allowed China to build a domestic prototype, but the country still faces major technical challenges, particularly in replicating the precision optical systems that Western suppliers produce.

Export restrictions have slowed China’s progress toward semiconductor self-sufficiency for years and constrained advanced chip production at Huawei. However, if China succeeds in producing working chips by 2030, it would represent a dramatic acceleration in the technological competition between East and West.

The U.S. State Department said the Trump Administration has strengthened enforcement of export controls on advanced semiconductor manufacturing equipment and is working with partners “to close loopholes as technology advances.”

The Dutch Ministry of Defence said the Netherlands is developing policies requiring “knowledge institutions” to perform personnel screenings to prevent access to sensitive technology “by individuals that have ill intentions or who are at risk of being pressured.”

Dutch intelligence warned in an April report that China “used extensive espionage programmes in its attempts to obtain advanced technology and knowledge from Western countries,” including recruiting “Western scientists and employees of high-tech companies.”

Nevertheless, whether the realistic 2030 target or the optimistic 2028 goal, China’s progress represents years earlier achievement than the decade that analysts believed it would take to match the West on chips—and marks a significant development in what has become one of the defining technological competitions of our time.