REPORT: SMIC produces 5nm chips without EUV machines — China bypasses the West

A technological lock that no longer holds

For years, the Western strategy for containing China technologically rested on a single bet: the Chinese would not be able to produce advanced chips without the EUV (extreme ultraviolet) machines manufactured exclusively by the Dutch company ASML, whose exports to China are blocked by American and European regulations. That bet has just been put to the test — and it did not hold.

In 2026, SMIC (Semiconductor Manufacturing International Corporation), China's leading chip foundry, succeeded in producing class 5nm chips at high volume using DUV (deep ultraviolet) machines with a multi-patterning technique. Without EUV. Without ASML. Without the West.

What "class 5nm" actually means

A class 5nm chip is a high-performance component used in flagship smartphones, artificial intelligence accelerators and defense systems. Until now, this level of performance was considered unattainable without the EUV machines that only ASML knows how to build. SMIC's demonstration refutes that assumption and forces Washington to completely rethink its strategy for controlling technology exports.

I recall reading confident analyses claiming that banning EUV machines would condemn China to lag behind by a full technological generation. Those analyses were wrong. Not because they were poorly reasoned — but because they systematically underestimated China's capacity for innovation under constraint. That is a systemic assessment error that must be corrected.

The EUV constraint and the DUV workaround

ASML's EUV machines use a light beam at a wavelength of approximately 13.5 nanometers to etch extremely fine patterns onto chips. This precision is what enables manufacturing nodes at 7nm, 5nm, and 3nm. Without EUV, DUV machines use longer wavelengths (typically 193nm) — theoretically insufficient for reaching the same manufacturing nodes.

But multi-patterning is a technique that involves multiple successive etching passes to achieve a fineness that would be impossible in a single pass with DUV machines. It is slower, more expensive, more complex — but it works. And SMIC has demonstrated that with a fleet of several hundred DUV machines, it can produce millions of high-end logic chips at scale in 2026.

The industrial implications

SMIC has considerable industrial capacity. With hundreds of DUV machines, its mastery of multi-patterning, and its high-caliber engineers, it can now supply Huawei — which has ordered AI accelerators based on these chips — and potentially other actors in the Chinese technology ecosystem. This is not the same performance as TSMC or Samsung at the 3nm node, but it is advanced enough for the AI applications China seeks to develop.

China is producing 5nm chips without EUV. It is not as efficient as with EUV — yield is lower, cost per chip is higher, production speed is slower. But it is sufficient. And "sufficient" in the face of a technology embargo is all that is needed to prove the embargo is not working as intended. That is the strategic message that matters.

The Chinese supply chain completes itself

Producing advanced chips does not end with silicon fabrication. The advanced packaging stage — assembling chips, integrating them into complex modules — is equally critical for final performance. That is where JCET, China's top chip packaging subcontractor, comes in.

JCET announced an investment of CNY 7.8 billion (approximately USD 1.15 billion) to build a new advanced packaging factory in Shanghai. This investment completes the advanced semiconductor value chain in China: SMIC fabricates the chips, JCET assembles them into modules. The ecosystem is being built, brick by brick, outside Western supply systems.

The closed-loop strategy

The JCET investment illustrates a coherent strategy from Beijing: building a fully Chinese semiconductor value chain, from raw silicon to final packaging, including fabrication and design tools. This import-substitution strategy for critical technologies is lengthy, costly and imperfect — but it is progressing at a pace that Western analysts have systematically underestimated.

Every billion invested by JCET, every SMIC factory that opens, every Chinese researcher returning from Silicon Valley with years of experience — each is another brick in the wall of Chinese technological independence. The West is building its technology embargo with leaking hands. That must be acknowledged honestly.

Huawei catches its breath

Huawei, under American sanctions since 2019, has developed a strategy of retreating to the Chinese domestic market. AI accelerators based on SMIC class 5nm chips allow Huawei to offer competitive cloud and AI solutions to Chinese customers who can no longer, or no longer wish to, use NVIDIA or Intel equipment for political or regulatory reasons.

This combination — SMIC 5nm chips, Huawei accelerators, JCET packaging investments — creates a Chinese AI ecosystem capable of operating independently of American suppliers across a wide range of applications. It is not as powerful as the best NVIDIA GPUs. But it is sufficient for national-scale and defensive AI applications.

The BIS directive of May 31, 2026

In response to these developments, the U.S. Bureau of Industry and Security (BIS) published on May 31, 2026 a new directive that closes the purchase of advanced chips through Chinese overseas subsidiaries. This measure aims to eliminate workarounds via entities based in Singapore, Taiwan or Europe that served as intermediaries for acquiring embargoed chips. But if SMIC can produce 5nm chips domestically, these workarounds become less necessary anyway.

Chinese 5nm chips in Chinese weapons systems — that is the scenario American strategists were trying to prevent at all costs. It is now becoming reality. The question is no longer how to prevent it. The question is how the West maintains its military technological superiority in this new context. And that question demands urgent answers and massive investment now.

AI embedded in mechanical bodies

SMIC's advanced chips will not serve only AI servers. Morgan Stanley revised its forecast for humanoid robots in China for 2026 upward to 50,000 units, from 28,000 projected in January. This upward revision illustrates the convergence between advanced chip manufacturing and AI robotics deployment.

SMIC's breakthrough changes the rules, but it does not determine the final outcome if the West responds intelligently. The real question is: will we finally invest in tomorrow's technologies with the urgency they deserve? Or will we continue managing this technology war with yesterday's tools? The answer to that question will decide the future of Western technological supremacy.

Humanoid robots require high-performance AI chips to process sensory data streams in real time, plan movements and adapt to their environment. SMIC's 5nm chips can feed this demand. The Chinese technology ecosystem — chips, AI, robotics — is reinforcing itself in a self-accelerating dynamic.

The Dutch delegation in China: the contradictions of the system

Despite all these tensions, a Dutch delegation including ASML and NXP is scheduled to visit China in early July 2026. This trade delegation illustrates the paradox of Western policy: on one side, bans on exporting EUV machines to China; on the other, companies maintaining active commercial relations with a country declared a systemic rival. Economic mutual dependence does not disappear by decree.

ASML in China in July, while EUV machines to China are banned. This is the perfect illustration of the schizophrenia of Western technology policy. We want to contain China AND do business with it. These two objectives are increasingly incompatible, and a choice will have to be made. The West has not yet made that choice clearly.

Questioning the embargo as a strategy

SMIC's breakthrough in 5nm chips forces Washington to fundamentally reassess its technology containment strategy. If embargoes on EUV machines cannot prevent China from reaching advanced manufacturing nodes, the logic of choking it through equipment is compromised. Either the embargoes must be expanded to cover even more basic machines — which is economically destructive for Western manufacturers — or the strategy must be entirely rethought.

Some analysts argue for a change of approach: rather than trying to prevent China from progressing technologically, invest massively to ensure the West maintains a sufficient lead in the next generations. This is the strategy of acceleration rather than blockade.

The military dimension of advanced chips

Class 5nm chips have direct military applications: precision guidance systems, radar signal processing, autonomous command and control systems, AI targeting. SMIC's capacity to produce these chips at volume means China can now integrate advanced AI components into its weapons systems without depending on Western suppliers. This is a major strategic shift in the technological arms race.

Chinese 5nm chips in Chinese weapons systems — that is the scenario American strategists were trying to prevent at all costs. It is now reality. The question is no longer how to prevent it. The question is how the West maintains its military technological superiority in this new context. That question demands urgent answers.

ASML in the turbulence

For Europe, and particularly for the Netherlands, SMIC's breakthrough creates an uncomfortable situation. ASML is under American pressure not to export its machines to China — but if China can produce advanced chips without EUV, the main argument justifying those restrictions weakens. At the same time, China remains a major market for ASML, and export restrictions represent a substantial opportunity cost.

The history of semiconductors may well record 2026 as the year it became clear that technology embargoes alone could not win this war. SMIC 5nm without EUV is the alarm signal. The right response is not to panic, but to reorient the strategy: less blockade, more acceleration. The West has the resources to win this race — provided it decides to actually run it.

The negotiation between Washington, Amsterdam and Beijing over ASML machines is one of the most complex diplomatic games in current technology geopolitics. And SMIC's breakthrough changes the playing field.

European investment in alternatives

The European Chips Act, with its ambition of producing 20% of global chips in Europe by 2030, is all the more urgent in light of China's breakthrough. If China can source advanced chips independently of the West, Europe must develop its own production capacity to avoid being caught between two rival technological poles — dependent on both but in control of neither.

Reassessing the technology containment strategy

SMIC's breakthrough in class 5nm chips forces Washington to reassess its technology containment strategy. The restrictions on EUV machines, the Pentagon blacklists, and the BIS export controls have slowed China without stopping it. Perhaps the right strategy is not to prevent China from progressing — which seems increasingly impossible — but to ensure the West progresses faster toward post-3nm manufacturing nodes and next-generation chip architectures.

This logic of competition through acceleration rather than blockade is different from the prevailing paradigm. It requires massive investments in fundamental research, in post-3nm manufacturing nodes, and in alternative chip architectures that China has not yet mastered. Investments that neither the American CHIPS Act nor the European Chips Act yet funds at the right scale for this long-term competition.

Cooperation among allies as a systemic response

Faced with China's rise in semiconductors, cooperation among technological allies — United States, Japan, South Korea, European Union, Netherlands, Taiwan — is more critical than ever. These countries collectively have the capabilities, investments, human talent and institutions to maintain a technological lead, provided they coordinate their efforts rather than competing for the same resources.

This coordination requires technology-sharing agreements, joint R&D programs, harmonized export control policies, and a common strategic vision for critical technologies. These are all work streams that exist but remain insufficiently developed given the scale of the technological competition with Beijing in advanced semiconductors.

The response to SMIC 5nm cannot be purely defensive — more restrictions, more blacklists, more export controls. It also requires an offensive response: massive investment in tomorrow's technologies, attracting the world's best researchers to Western laboratories, and building the industrial ecosystems that will ensure the advanced chips of the future are made in Europe and the United States rather than in Shanghai. This is a race. The West must decide to run it to win.

SMIC changes the rules of the game

SMIC's breakthrough in class 5nm chips via DUV multi-patterning is not just a technical achievement. It is a strategic demonstration that China can circumvent Western technology embargoes over the long term. This does not mean restrictions have no effect — they slow things down, increase costs and complicate matters. But they do not stop progress.

The horizon of a long technology war

The technology war between the United States and China will be long. It will play out over decades, in laboratories, factories, universities and export control agencies. SMIC's breakthrough is a reminder that the outcome is not predetermined — and that the West's strategy must be more sophisticated than a simple embargo. The race is on. And the stakes for global democracy are equally open.

By Maxime Marquette, columnist

Editorial stance

I am not a journalist but a columnist and analyst. My expertise lies in observing and analysing the geopolitical, economic and strategic dynamics that shape our world. My work is to take political strategies apart, to understand global economic movements, to put the decisions of international actors in context and to offer analytical perspectives on the changes that are redefining our societies.

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