China Chip Breakthrough Deepens Global Semiconductor Sell-Off
Reuters reported China has begun mass-producing home-grown immersion DUV chipmaking tools, sending semiconductor stocks lower for a second day as SK Hynix fell nearly 15% and Nvidia and Micron declined premarket.
The Morning Brief Desk · July 28, 2026 · Based on reporting by Reuters
Semiconductor stocks fell sharply for a second consecutive day Tuesday after Reuters reported that China has started mass production of domestically developed immersion deep ultraviolet, or DUV, lithography machines, a technology central to advanced chipmaking.
The selling began in Asia. SK Hynix, the South Korean memory chipmaker, declined nearly 15%, and South Korea's tech-heavy Kospi index led losses across the region, according to the Financial Times. The pressure carried into U.S. premarket trading, where Nvidia and Micron both fell, CNBC reported.
The declines extended a global rout in chip stocks that followed another weak session on Wall Street. Investors across Asia sold semiconductor shares, deepening a broader pullback in stocks tied to artificial intelligence, the Financial Times reported. The report of Chinese mass production of immersion DUV tools added a new element to the sell-off: the prospect of intensified competition in a segment of the chip-equipment market that Dutch firm ASML has long dominated. How quickly the Chinese-made machines could reach performance and volume comparable to established suppliers was not detailed in the reporting.
The context
Immersion DUV lithography machines are used to print circuit patterns on silicon wafers and are considered crucial to producing advanced chips. For years, ASML has dominated that market, making the equipment a chokepoint in the global semiconductor supply chain. A Chinese capability to mass-produce the tools domestically would reduce that dependence and, investors fear, sharpen competition for established chipmakers over time.
The report landed in an already fragile market. Chip and AI-linked stocks had sold off in the prior session after a weak day on Wall Street, and Tuesday's news gave that decline a second leg. Memory makers such as SK Hynix and Micron, along with AI chip leader Nvidia, have been among the most heavily traded names in the AI rally, leaving them exposed when sentiment turns. Chinese memory maker CXMT is also among the companies drawing attention amid concerns about Chinese competition.
Why it matters
Lithography equipment is one of the tightest bottlenecks in chipmaking, and a Chinese domestic supply of immersion DUV tools would chip away at a dependence that Western export-control policy has leaned on. For investors, the report raises the possibility of stronger Chinese competition against companies like ASML and memory producers such as SK Hynix and Micron. The two-day sell-off also shows how sensitive the AI trade remains: chip stocks have driven much of the market's gains, so declines in Nvidia and its peers ripple into broad indexes and, by extension, retirement portfolios holding them.
What’s next
Watch how U.S. chip stocks trade through Tuesday's regular session after the premarket declines in Nvidia and Micron, and whether the Asian sell-off extends a third day. Key open questions include the capability and output volume of the Chinese-made DUV machines, which the reporting did not specify, and any response from ASML, chipmakers or policymakers weighing export controls.
Sources
Reuters — China starts production of home-grown immersion DUV chipmaking tools
China has begun mass producing domestically developed immersion DUV lithography machines, a technology crucial to advanced chipmaking long dominated by ASML.
CNBC Top News — Micron, Nvidia fall after SK Hynix plunges nearly 15% as chip sell-off deepens
Semiconductor stocks fell in premarket trading Tuesday, extending a global rout in chipmakers after another weak Wall Street session.
Financial Times — AI stock sell-off deepens as investors dump chipmakers$ Subscription
South Korea's tech-heavy Kospi led declines across Asia as investors dumped chip stocks amid fears of intensifying Chinese competition.
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