⚡ Executive Summary
China's Aishengna Breakthrough in Immersion DUV Mass Production:
Amid U.S. sanctions on advanced equipment, Chinese state-owned enterprise Aishengna began domestically producing immersion DUV lithography equipment—previously exclusive to ASML—breaking through the biggest technical bottleneck in China's semiconductor pursuit.
CXMT's Stock Market Debut and Threat to Legacy Memory:
As ChangXin Memory Technologies (CXMT) became the top company by market capitalization in mainland China on its first day of listing on the STAR Market and uses the raised funds to accelerate plant expansion, South Korean chipmakers' market dominance in legacy memory—a key source of profit in China—faces a severe long-term challenge.
Korean Stock Market Plunge and Structural Fears:
The 22% crash of the KOSPI in July and the sharp drop in South Korean semiconductor stocks resulted not only from short-term negative factors, but also from market sentiment pricing in psychological and structural fears that "South Korea's monopolistic status and fundamentals in memory semiconductors could be shaken within a few years."
* This article is based on a video released on July 31, 2026.
A pitch-black July slammed South Korean stock markets. The KOSPI crashed by over 22% during the month of July alone. This was the case even after a record daily rebound on the final day of the month. SK Hynix closed nearly 60% below its June peak, even after hitting its daily upper limit for the first time in history. While semiconductor stocks worldwide fluctuated throughout July, the drop in South Korea's two leading chipmakers was exceptionally severe. Having surged the fastest, their decline went far beyond a routine market correction.
Multiple reasons are being pointed out. Among them, the fear that South Korea's monopolistic status in the global memory chip industry—the fundamental strength of Korean semiconductors—could be shaken. This dual bombshell exploded on Monday of this week. News that China began producing immersion DUV equipment domestically, combined with CXMT (ChangXin Memory Technologies) becoming the top market cap company in mainland China on its first day of trading, wiped out the last week of July for South Korean stocks. Are these bombs from China merely blanks? Or are they structural threats signaling that the golden era of South Korea's market dominance in memory chips is coming to an end?
Switchboard Operator, Aishengna Electronic Technology Group
"I cannot tell you (whether a website exists). Do you have an extension number? If you give me the extension, I can connect you to that department." (Another employee in the background: "Don't answer.") "All such information is confidential, so I cannot tell you."
*Actual phone call between SBS journalists and Aishengna Electronic Technology Group
They could not even confirm whether any online information with limited access existed. Unless you were an insider who already knew the necessary extension number, it was impossible to talk to them any further. Aishengna Electronic Technology Group, a Chinese state-owned enterprise, is the very company reported by U.S. media to have begun mass-producing immersion DUV lithography equipment. What is immersion DUV, and why did this news immediately weigh down the stock prices of Samsung Electronics and SK Hynix in the final week of July?
Until now, Chinese memory chip makers could not even come close to Samsung and SK Hynix because they were unable to acquire this equipment. But if China is solving the biggest bottleneck in its pursuit of South Korean chipmakers through domestic production, does that mean Samsung and SK Hynix have only a few years left of market dominance? That was the interpretation driven by the news.
Samsung Electronics and SK Hynix faced several other negative factors as well. But above all, the news that their scarcity value might be shaken triggered the domino effect of crashing South Korean semiconductor stocks. The market debut of CXMT came right after.
Has China Breached the 'Sanctuary' of Core Semiconductor Processing?
Lithography equipment is essentially a printer. The light emitted by this machine acts like a pen drawing semiconductor circuits onto a wafer. It is one of the most critical processes in semiconductor manufacturing. Worldwide, the Netherlands' ASML was the only company capable of making lithography equipment used for high-spec semiconductor manufacturing. The semiconductor supply chain consists of a few oligopolistic winners. Among them, the company that appeared completely irreplaceable was not Nvidia, TSMC, or Samsung and SK Hynix, but ASML.
The most advanced lithography equipment, EUV (Extreme Ultraviolet) systems, can be produced exclusively by ASML worldwide. Immersion DUV, which China has reportedly begun producing internally, is the class right below EUV. DUV has a coarser light nib than EUV, so it cannot draw intricate semiconductor circuits in a single pass as EUV does. Immersion means submerging—placing ultra-pure water on the wafer to focus light more effectively and improve resolution. It is more advanced than dry DUV, which does not use water, and is widely used alongside EUV in high-end semiconductor manufacturing. ASML produces 97% of the world's immersion DUV equipment as well. Japan's Nikon also makes them, but high-spec models remain ASML's exclusive domain.
That is why seven years ago in 2019, during the first Trump administration, when the U.S. decided that China's semiconductor ambitions could no longer go unchecked, it began blocking exports of ASML equipment to China. Without ASML machinery, Chinese semiconductors could not advance any further anyway—identifying the exact bottleneck. The U.S. began blocking them, telling ASML: "Your monopoly equipment uses American patented technology. Even though you are a Dutch company, if the U.S. says don't sell, you can't sell to China."
Where Were They Hiding? The Shrouded 'China Semiconductor Rise'
China has been unable to purchase even a single EUV machine for seven years, and immersion DUV equipment has also been barred from entering China for the past three years. Yet China remains ASML's single largest customer, accounting for one-third of its revenue. By running lower-spec DUV equipment that falls short of China's desires, alongside older machinery secured before U.S. export controls took effect, China is reported to be manufacturing 7nm to 5nm-class semiconductors.
Simply put, smaller numbers mean better semiconductors. With South Korea pushing toward mass production of 2nm chips, Chinese chips still lag about two generations behind. Furthermore, while EUV intricately draws semiconductor circuits in a single pass, DUV requires multiple exposures to achieve the correct pattern, resulting in higher defect rates. Even at the 7nm node, yield and productivity remain far lower than South Korea's.
Nevertheless, backed by massive support from the Chinese government, news broke that Aishengna began mass-producing immersion DUV within China just as Chinese semiconductors reached this stage. Though established only three years ago, it did not appear out of thin air. It was a firm created through a reflagging effort to conceal its pace of progress from the U.S. A newly formed state-owned enterprise that inherited the know-how of Chinese companies researching related equipment succeeded in mass-producing near-advanced manufacturing machinery once exclusive to ASML. Aishengna is reportedly aiming to mass-produce 5 units this year.
Minmin Low | Bloomberg TV China Correspondent based in Hong Kong
"(Aishengna) is a Shanghai-based company, and it aims to mass-produce 5 immersion DUV units this year and 20 next year. It can be considered a very rapid progress."
*Source: YouTube Bloomberg Television
Can producing 5 units a year be called mass production? For this type of equipment, yes. Even ASML, which holds a global monopoly on these circuit printers, produced a total of only 327 EUV and DUV units combined last year. One EUV machine costs over 500 billion won ($370 million), while an immersion DUV unit runs around 150 billion won ($110 million). China producing 5 of these this year and 20 next year is a notable development.
Of course, this alone cannot run even a fraction of a semiconductor fabrication plant. But what happens after that? Aishengna's immersion DUV certainly seems inferior to ASML's 150-billion-won-plus machines. Its technology is currently understood to produce 7nm-class advanced semiconductors at far lower yields than South Korea, relying on continuous multi-patterning regardless of defect rates because the Chinese government keeps bankrolling the efforts to see if usable 7nm products can be made.
It is nowhere near capable of threatening ASML's standing—unlike Japan's Nikon, which still holds about 3% of the immersion DUV market. Producing a few such units domestically in China does not instantly crack the fundamentals of Samsung Electronics and SK Hynix, nor does it immediately shake their dominance as absolute leaders in the AI memory ecosystem or their share in high-end legacy memory markets.
However, the immense expectations reflected in the recent surge of Samsung Electronics and SK Hynix stock were not just for this year. If China can roll out low-spec immersion DUV equipment in 2026, what might it accomplish by 2030? The problem is that no one knows the answer yet—all the more so because China tightly conceals the details of its semiconductor manufacturing progress. As questions arose over whether China will remain decades behind while pursuing South Korea, or whether it might close in within ten years, mounting negative factors fueled a growing sentiment to sell off Samsung Electronics and SK Hynix stocks.
CXMT, 'No. 1 Market Cap in Mainland China': Has It Already Infiltrated Samsung and SK Hynix's 'Wallet'?
Compounding this was CXMT's listing on mainland China's stock market on Monday of this week. While CXMT's presence was already substantial, is it now embarking on a full-scale sprint? Was it a coincidence that news of China's domestic immersion DUV production leaked outside Chinese borders on the exact day CXMT went public? Above all, CXMT shook the core of expectations surrounding Samsung Electronics and SK Hynix this year: the narrative that "memory semiconductor demand will decouple from traditional cycles and stay hot continuously, with memory chips remaining extremely expensive items obtainable only through long-term contracts."
China remains South Korea's largest semiconductor export destination. In terms of revenue, 30% of South Korea's chip exports still head to mainland China, expanding to 45% when including Hong Kong. What about exports to Taiwan, which includes cutting-edge AI memory HBM? In the first half of this year, Taiwan accounted for about 14% of total semiconductor exports. This means that even though Samsung Electronics and SK Hynix sell no state-of-the-art AI memory chips to China, they still earn substantial profits there.
The surge in Samsung Electronics and SK Hynix stock in the first half of this year was not driven solely by AI memory. As the two companies concentrated on HBM for AI memory, reducing their capacity for legacy memory, buyers worldwide scrambled to secure commodity chips. Prices for identical commodity DRAM and NAND flash soared 10 to 12 times within a single year, propelling operating profit margins for Samsung Electronics and SK Hynix to unprecedented levels for manufacturing firms and boosting stock prices on rosy forecasts. But what happens if Chinese companies like CXMT or YMTC produce large quantities of legacy memory similar to Samsung Electronics and SK Hynix's offerings, even without reaching HBM?
Yvonne Man | Bloomberg TV Asia Anchor in Hong Kong
"(CXMT) is the world's fourth-largest company in DRAM manufacturing. If China wants to reduce its reliance on foreign chipmakers (like Samsung Electronics and SK Hynix) for items like DRAM or HBM, this company is truly the most promising candidate."
*Source: Bloomberg Television
The AI boom created immense opportunities for Chinese memory chipmakers. They moved swiftly to fill the gap left by Samsung Electronics and SK Hynix, which lacked the capacity to supply legacy memory to existing clients as before. Meanwhile, the Chinese government is urging domestic firms to use products from CXMT and YMTC, even if their quality is slightly lower.
Even American companies are eager to expand their use of Chinese chips whenever an opportunity arises. You may have heard that Apple has been actively lobbying the U.S. government recently, arguing: "Semiconductors from Samsung, SK Hynix, and Micron are now too expensive, so please allow us to buy semiconductor products from China's CXMT and YMTC as well." CXMT held just 3% of the global DRAM market as of early last year, but that share rose to 8% in just one year. There is even talk that CXMT aims to overtake U.S.-based Micron—the third-largest producer behind Samsung Electronics and SK Hynix—by 2030.
As soon as CXMT listed on the STAR Market—often dubbed China's NASDAQ—its share price surged nearly fivefold from its IPO price, immediately becoming the top company by market capitalization in mainland China's stock market. Although the initial offer price was set very low and the circulating floating stake was extremely small at just 6%—reminiscent of Elon Musk's SpaceX—adding to scarcity value, CXMT plans to pour a significant portion of the vast funds raised from the IPO into fab expansion. If it expands supply while making inroads into relatively advanced memory segments like DDR5—where it currently trails South Korea—what will happen in a few years to Samsung Electronics and SK Hynix, whose operating profit margins were achieved through continuously surging prices for commodity memory sold in China? This is the second big question mark hovering over the fundamentals of Samsung Electronics and SK Hynix.
Is the 'China Shock' for South Korean Semiconductors Real?
Looking at SK Hynix's second-quarter earnings and Samsung Electronics' conference call, there is no clear evidence that the fundamentals of either company are being damaged. Although SK Hynix posted extraordinarily strong earnings, its revenue did fall short of market consensus expectations. Paradoxically, this occurred because SK Hynix entered into many long-term contracts at prices slightly below the surging spot market rates. For a five-year contract, prices are naturally discounted compared to immediate spot prices—reflecting a process where memory semiconductors transition away from being a purely cyclical industry. China's AI Kimi 3, unveiled in mid-July to world astonishment, may frustrate OpenAI or Anthropic, but the dominant view is that it will actually expand demand for AI memory.
The reason Samsung Electronics and SK Hynix stocks triggered circuit breakers or sidecars nearly every day throughout July was that single-stock 2x leveraged products shook the South Korean stock market, half of which is weighted by semiconductor stocks. Financial authorities are belatedly rolling out regulatory measures, such as cap controls. Even if the U.S., which froze its benchmark interest rate on July 30 Korean time, raises rates in September, and even if interest rate anxieties persist, big tech companies in the U.S. appear unlikely to stop their AI race. Concerns over how long these tech giants can sustain competition as cash tightens were one of the primary drivers dragging down semiconductor stock prices in July, but there is no sign yet that this race will halt anytime soon.
Yet the emerging presence of Aishengna and CXMT arriving from China during the final week of July served as a reminder that South Korea's semiconductor fundamentals are being pursued. The pursuer remains far behind, and while it is chasing, the gap remains substantial. But how fast is it moving? Nobody knows the answer, and as this question mark grew larger alongside other negative factors, it marked the climax of the South Korean semiconductor stock crash in July.
Park Sang-jun | Executive Director at CMS Securities
"The problem seems to be that CXMT was listed at a time when sentiment toward the semiconductor sector was extremely fragile. As for the DUV equipment (which China claims to have localized), if it was truly recognized even within China as 'Ah, we can really make this!', semiconductor equipment stocks should normally have gone up, but they dropped the next day. Since functionality and performance remain unverified, it seems premature to view them as a threat to South Korea's semiconductor market..."
※
Copying, redistribution, and unauthorized use in AI training are strictly prohibited.