China begins making homegrown DUV chipmaking tools, The Information reports

July 27 (Reuters) - China has begun manufacturing domestically developed immersion deep ultraviolet lithography machines, a key chipmaking tool long dominated by Dutch supplier ASML, The Information reported on Monday.

The machines are expected to be delivered this year to leading Chinese chipmakers, including Semiconductor Manufacturing International Corp, Hua Hong Semiconductor and ChangXin Memory Technologies, the report said, citing people familiar with the matter.

ASML declined to comment to a request from Reuters. The company's shares slipped more than 7%, putting the stock on track for its worst day since June 8.

The report also weighed on the shares of companies exposed to the global chip equipment supply chain. BE Semiconductor Industries tumbled about 8.5%, Soitec fell 5%, while Infineon Technologies dropped nearly 3%.

Key details from the report:

• The people did not identify the state-backed manufacturer due to the sensitivity of the matter.

• The breakthrough could eventually challenge ASML in China, but the system still lags on performance and reliability and needs further testing before mass production, leaving the Dutch company's advantages intact for now.

• Production will be limited initially, with about five DUV machines this year and roughly 20 in 2027.

• Immersion DUV machines, which print circuit patterns onto silicon wafers, are the most advanced lithography tools available to Chinese chipmakers after restrictions cut off access to extreme ultraviolet lithography (EUV) systems.

• China is also developing a domestic EUV machine, though it remains at the prototype stage.

• The technology could give Chinese chipmakers an alternative source of critical equipment as the U.S. considers tighter restrictions on foreign lithography tool exports and servicing in China.

(Reporting by Rashika Singh in Bengaluru; Editing by Vijay Kishore)