China makes EUV lithography machine, rest of the world on its toes

China has apparently done the unthinkable. According to a Reuters report, the country has successfully built a working EUV lithography machine prototype, replicating the ASML tech faster than anyone could have ever imagined.

For people who don't know, EUV machines sit at the heart of a technological Cold War brewing between China and the west. And it's one of the surprisingly few core contituents of the whole supply chain of semiconductors (which is, for the lack of a better word, very "brittle" right now).

Consider this. ALL the advanced chip manufacturing for the most advanced nodes is done by just one company - TSMC. ALL the ultra-precision lithography machines which are used to make those advanced chips, are also made by just one company - ASML. And finally, ALL the ultra-precision mirrors which are used to make those lithography machines, are also made by just one company, i.e. Carl Zeiss.

So as you can probably imagine, there's a lot of fragility in this system.

But this fragility isn't just bad news. It also leads to a lot of leverage for the people who are currently ruling this world. As we know, basically all the profits in AI are currently collected by just Nvidia, and a few friends. And beyond money, that extreme "control" on this vital tech also leads to extraordinary strategic advantages for countries which these companies call home.

What China's trying is attacking this leverage, and thus breaking the west's monopoly in the AI chip play. And apparently, it seems to have hit an inflection point.

In April, ASML's CEO had said that China would need "many, many years" to develop such technology. After all, ASML had itself built its first working prototype of EUV tech in 2001, and then it took nearly two decades and billions of Euros in R&D spend before it produced its first commercially available chips in 2019. While China hasn't come out with its chips yet, its target is to be ready by 2028. Which is insane, because ASML took 18 years to reach that place. China says it'll be there in 3.

People are calling it China's "Manhattan project". Which seems apt, because the way the country is going about it is simply extraordinary.

The employees work under fake identities (so they don't know each other's real names). They work inside secure facilities where "no one outside the compound could know what they were building - or that they were there at all". They're divided in teams who are "kept isolated from each other" to protect the project's confidentiality, and they also "don't know what the other teams are working on". For foreign employees, China has allowed dual citizenship, which is normally forbidden. The salaries offered are apparently "uncapped", with "signing bonuses that start at ¥3-5 Million", with "home-purchase subsidies", and so on..

This is all straight-out-of-a-movie stuff.

If China succeeds at breaking the west's grip in AI's chip manufacturing. The west is done. But what would it mean for India? That's the question.

China is at the cusp of breaking the west's monopoly in chips. But what about India?

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