China has started producing domestic immersion deep-ultraviolet lithography tools, Reuters reported on July 28. State-backed Shanghai Aishengna Electronic Technology Group plans to deliver machines to Semiconductor Manufacturing International, Hua Hong Semiconductor and memory producer ChangXin Memory Technologies. Production is expected to remain small, at roughly five systems in 2026 and about 20 in 2027.
The news struck ASML Holding N.V. (NASDAQ:ASML) through direct product substitution. Export controls already block the company from selling its most advanced extreme-ultraviolet systems into China, leaving DUV scanners as the main lithography category available there. ASML said China generated 29%, or about €9.5 billion, of 2025 net sales; Reuters Breakingviews noted that this revenue was associated with DUV machines and services. A domestic machine that passes production qualification could replace specific future ASML scanner orders and reduce Chinese fabs’ dependence on ASML service, even if those fabs still prefer its performance.
“Viable” remains the unresolved word. Reuters reported that the Chinese systems still trail ASML in performance and reliability and require further testing. Chipmakers require overlay accuracy, yield, throughput and uptime in sustained high-volume production. Planned output is also modest beside ASML’s installed base. The development raises a strategic risk to future China sales, but it does not show that ASML’s tools have been replaced.
Micron Technology, Inc. (NASDAQ:MU) is connected through a named competitor and a manufacturing bottleneck. CXMT, one of the intended tool recipients, competes in DRAM. If locally serviceable immersion DUV equipment eventually lets CXMT qualify and add reliable commodity-memory output despite tighter foreign-tool restrictions, the additional bits could pressure industry pricing and Micron’s margins. That is a supply-curve risk, not evidence that the new tools can already produce competitive high-bandwidth memory for leading AI accelerators.
Micron’s current results push against the most bearish interpretation. For its fiscal third quarter ended May 28, the company reported $41.46 billion of revenue and said data center revenue exceeded $25 billion. Management also said DRAM and NAND demand continued to exceed industry supply. China’s DUV progress can influence the future supply curve without invalidating those current conditions.
Insider Monkey reported 154 hedge-fund portfolios with MU long positions at March 31, 2026, up from 137 at December 31, 2025. However, that broadening occurred much before the domestic DUV report.
The data showed 36,211,849 MU shares sold short on July 15, or 3.21% of public float, with 0.8 days to cover. Micron’s latest 10-Q showed no convertible debt or pending stock merger. The reading is therefore relatively clean, but neither the float percentage nor the cover ratio suggests a crowded short or an imminent squeeze.
While we acknowledge the risk and potential of MU as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MU and that has 10,000% upside potential, check out our report about this cheapest AI stock.
READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years
Disclosure: None. Follow Insider Monkey on Google News.
Hedge Fund Resource Center