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

Introduction: the feat Washington feared

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.

The DUV multi-patterning technique: how it works

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.

JCET invests USD 1.15 billion in advanced packaging

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.

Huawei and AI accelerators: the domestic market as refuge

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.

Morgan Stanley and the 50,000 humanoid robots

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.

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.

The geopolitical consequences of SMIC's breakthrough

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.

What Europe must understand

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 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.

Washington's strategic response: between containment and adaptation

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.

Conclusion: the dependency map is being redrawn

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.

Signed Maxime Marquette, columnist

Columnist's transparency box

This report relies exclusively on facts documented in the lot file. The technical details on DUV and EUV machines are based on publicly available information and dated sources. No comments from internal or confidential sources were invented. The analytical and editorial positions in italics represent the columnist's opinion. The stated position is one of concern for Western technological security in the face of China's technological progress.

Sources

Primary sources

ETC Journal: AI in June 2026 — three critical global decisions — June 23, 2026

Silk Bulletin no. 137: JCET investment in chip packaging in Shanghai — June 23, 2026

Silk Bulletin no. 139: Morgan Stanley raises humanoid robot forecast for China — June 25, 2026

Secondary sources

South China Morning Post: Semiconductor geopolitics — June 23, 2026

Geopolitical Daily: U.S. chip export controls and Chinese strategy — June 22, 2026

Claw Street Journal: Frontier AI model access and Chinese strategy — June 21, 2026