Huawei Backs China's DUV Lithography Push as SMIC Tests the Tools

Huawei has moved from designing chips to shaping the equipment that makes them. Reporting this week, first carried by the Financial Times and summarized by TrendForce, describes the company as a central backer of China's drive to build advanced lithography tools domestically, with twelve DUV systems targeted for production by the end of 2026 and testing already underway at SMIC and on Huawei's own production lines. The machine at the center of the push was co-developed by Yuliangsheng, a Shanghai-based equipment maker, together with SMEE (Shanghai Micro Electronics Equipment), the country's longtime lithography vendor. Multiple prototypes are in development.

The production targets themselves are not settled, and it is worth stating the discrepancy plainly. The Financial Times reports twelve DUV machines by end-2026. Reuters, in late July, instead described the state-owned Shanghai Aishengna — a vehicle that has incorporated teams from both Yuliangsheng and SMEE — targeting "around five machines in 2026 and twenty in 2027." The two numbers differ, but both point the same direction: China is trying to industrialize advanced deep-ultraviolet (DUV) lithography, the mature immersion technology that can still print chips at roughly 28 nanometers or finer through multi-patterning.

Why DUV has become the battleground is structural. Sanctions cut China off from EUV tools — the extreme-ultraviolet systems needed for the very narrowest lines — and from the leading chipmaking equipment generally. Without EUV access, immersion DUV plus multi-patterning is the only realistic route to advanced nodes, even if it costs extra process steps, time, and yield. Localizing that toolchain, rather than leapfrogging straight to EUV, is what the current phase of China's semiconductor autonomy is actually about.

That autonomy effort is broad, and Huawei sits near its center. Since the 2019 sanctions, the company's fully-owned investment arm Habo — also written "Harubou" or "Hubble" — has taken equity in more than 60 Chinese semiconductor firms (per reporting by Nikkei, checked against corporate database Tianyancha), spanning design, materials, manufacturing, and testing, with most stakes below 10%. Two examples illustrate how the bets map to the hard parts of the supply chain: Suzhou Carbon Semiconductor works on carbon-nanotube wafers, and Huahai Chengke supplies packaging materials relevant to HBM. Separately, SiCarrier, a semiconductor equipment firm reported to hold 92 patents covering DUV lithography components and multi-patterning, has reportedly sought around USD 2.8 billion in initial funding — a concrete signal of how capital is being aimed at the component layer rather than only at finished tools.

The component layer is where the ecosystem's fate is decided. Projection lenses are the clearest hard point. Yuliangsheng reportedly uses Zeiss lenses, and Zeiss has told the Financial Times that it sells lithography optics only to ASML — meaning a Chinese DUV machine's optics, if not yet fully domestic, could only come through China's secondary market. Huawei has pushed into this gap through its venture arm: both Habo and its fund Shenzhen Yuanzhi Xinghuo invested in Fujian Zhiqi Photonics, an ultra-precision optics maker spun off from the Shenzhen-listed optical-crystal producer Castech in 2022. Light sources are the other hard component. The market is dominated by Japan's Gigaphoton and ASML's subsidiary Cymer, but Beijing RSLaser Opto-Electronics, backed by Huawei's Habo, is a leading domestic DUV light-source developer and has supplied sources for earlier SMEE machines. At SEMICON China 2026, SMEE said its 28nm immersion DUV system is in the final stage of customer validation, reportedly paired with a high-energy laser source from RSLaser.

Supporting the main push, a wave of smaller listings has been thickening the surrounding bench. In 2025, probe-and-sorter maker Sidea listed in Shenzhen; KYKY Technology, focused on dry vacuum pumps — a linchpin of etching, PVD, and CVD processes — filed for the Beijing exchange; Chengdu LasTop, making laser thermal-annealing equipment that matters to lithography supply chains, filed on the STAR Market; and Zhongdao Optoelectronic, a lithography-support equipment developer, has an accepted IPO application. These are the auxiliary steps (annealing, vacuum, testing) that a complete lithography ecosystem needs to function.

On the fabrication side, the picture is one of coexistence rather than clean replacement. SMIC, which has purchased some of the domestic DUV machines, continues to rely on ASML systems as its workhorse. China remains a meaningful ASML market: it took 14 percent of ASML's net system sales by shipment location in Q2 2026, down from 19 percent in Q1 2026 — actual, company-stated numbers that show Beijing is buying domestic tools without yet turning its back on imported ones. Huawei is reportedly building an advanced 7nm chip production line in Shenzhen for smartphones and Ascend AI processors, with all advanced chips designed by subsidiary HiSilicon and manufactured by SMIC and local fabs. The Ascend 920 AI chip is reportedly set for mass production in the second half of 2025, though analysts have questioned whether SMIC's N+3 process — near-3nm in marketing terms but produced without EUV — can deliver, and whether HiSilicon can secure top-tier HBM.

Huawei's counter is design-level rather than purely lithographic. Its new Tau Scaling Law and "LogicFolding" architecture, unveiled in May 2026, raise transistor density by stacking and connecting logic units across layers rather than by shrinking features — a strategy explicitly pursued because export controls block access to advanced scanners. Peking University researchers built a prototype EDA tool for the architecture, reportedly cutting internal wire length by 30 percent on industry-grade designs. Reports (via Mydrivers, echoed by TrendForce) put the expected Kirin 2026 chip — possibly the world's first commercial LogicFolding device — at a 53.5 percent transistor-density gain over the Kirin 9030 Pro, reaching 238 million transistors per square millimeter, described as "close to first-generation TSMC 3nm." Huawei launched the Kirin 9050 Pro in the Mate XT 2 on 7 September 2026; its LogicFolding design and density are reported, but its manufacturing node and foundry are not confirmed in the sources reviewed, and should not be treated as fact.

Analysis. Huawei is operating as systems integrator and anchor customer rather than a passive buyer — an unusual inversion where the chip designer and end user drives the tooling roadmap, sharing process recipes with equipment and component makers, instead of the tool vendor shaping the fab's future. The design innovation (LogicFolding, advanced packaging, multi-patterning) is therefore not a sideline; it is how Huawei stretches what a DUV-only toolchain can reach. The real bottleneck is not a single machine but full-toolchain coherence: projection lenses and light sources remain the two parts not yet fully domestic, and until those close, every DUV output is partly a foreign-component bill. On the numbers, the "12 systems by end-2026" figure should be read as directional, not a commitment; the more meaningful test is yield at manufacturing scale, whether SMIC and Huawei fabs adopt the tools for high-value product rather than simpler chips, and whether SMIC's continued reliance on ASML signals healthy coexistence or a sign that domestic DUV still has a manufacturability gap to close.