China’s EUV Breakthrough Rattles ASML’s Market Dominance

The technological fortress surrounding ASML, the Dutch semiconductor equipment giant, is facing a potential new challenger. Reports indicate China has successfully developed a working prototype of an extreme ultraviolet (EUV) lithography machine, directly targeting the company's core monopoly. This development emerges even as major institutional investors significantly increase their holdings in ASML, creating a complex narrative for the stock.

Despite the looming competitive shadow from China, heavyweight financial institutions have been substantial buyers of ASML shares. Third-quarter 2025 data reveals notable accumulation.

• Flputnam Investment Management boosted its stake by a striking 245.2%, acquiring shares worth approximately $6.89 million to hold 7,115 shares.
• Red Door Wealth Management expanded its position by 52.7%, raising its holding to 5,810 shares.

This aggressive buying suggests these managers find the current valuation compelling and are discounting the long-term risk from Chinese competition for the time being.

The Anatomy of China's "Manhattan Project"

The most significant news centers on a potential erosion of ASML's technological moat. According to reports from Reuters and Digitimes, China has assembled a functional EUV prototype under Huawei's coordination. Internally, the initiative is labeled the Chinese semiconductor industry's "Manhattan Project."

Key details of the project include:

Should investors sell immediately? Or is it worth buying Asml?

• Status: The machine is already generating EUV light and is currently in a testing phase.
• Development Method: Some components were sourced from the second-hand market, originating from older ASML systems, in a reverse-engineering effort.
• Talent: Former ASML engineers are reportedly working on the project within a high-security facility located in Shenzhen.
• Timeline: Realistic volume production is not anticipated before 2030, though an ambitious internal target has been set for 2028.

This progress marks the first credible challenge to the assumption that ASML faces no serious competition in the high-end lithography segment.

ASML Cements Its Lead with Intel High-NA Milestone

Operationally, ASML continues to solidify its technological advantage in Western markets. Intel has commenced operations with the first commercial High-NA EUV lithography system, the TWINSCAN EXE:5200B. This next-generation machine is essential for manufacturing chips at the 14A node and beyond.

The system's performance specifications underscore ASML's current lead: a throughput of 175 wafers per hour with an overlay precision of 0.7 nanometers. No other equipment provider is currently capable of supplying High-NA technology.

Analyst Sentiment Weighs Near-Term Strength vs. Future Risk

Market experts remain predominantly bullish, with 72% maintaining a "Buy" recommendation on ASML shares. The average price target stands at $1,171.83, indicating further upside potential. The company's operational strength was demonstrated in Q3, as it reported earnings per share (EPS) of $6.41, surpassing the $6.27 consensus estimate.

The central question for investors now balances immediate operational strength against future market share risk. Western chip manufacturers will remain dependent on ASML's technology until at least 2030. The landscape beyond that point hinges on whether China's prototype can transition from a functional model to a commercially viable, volume production tool.