China’s “Manhattan Project” for Chips Aims to Break Western Dominance
The company logo of Huawei is seen on a building in the sprawling Huawei headquarters campus in Shenzhen, China. (AP Photo/Ng Han Guan)
China may be closer than Washington anticipated to breaking the West’s dominance over the world’s most advanced computer chips. According to Reuters, Chinese researchers working inside a secure laboratory in Shenzhen have built and are testing a prototype extreme ultraviolet (EUV) lithography machine—the highly complex technology required to manufacture cutting-edge semiconductors used in artificial intelligence, smartphones, and advanced military systems.
Until now, only the Dutch company ASML has been capable of producing EUV lithography tools, which are subject to strict export controls backed by the United States and its allies. Sources say the Chinese prototype, completed in early 2025, can successfully generate EUV light but has not yet produced functioning chips.
People involved in the effort describe it as China’s version of the Manhattan Project, aimed at eventually producing state-of-the-art chips entirely on domestically built equipment and eliminating reliance on U.S. suppliers altogether. Beijing has quietly invested more than six years into the initiative, mobilizing thousands of engineers across state research institutes and private firms, with Huawei acting as the central coordinator.
Sources told Reuters that a major factor behind China’s progress has been the recruitment of former ASML engineers, some allegedly enticed with large financial incentives and given false identities to work inside the secure compound. Their role, according to those familiar with the project, has included reverse-engineering ASML’s EUV systems. Dutch intelligence agencies have previously warned that China is running broad espionage campaigns to acquire advanced technologies.
Despite the advances, China still faces major technical challenges—particularly in replicating the ultra-precise optics supplied by Western firms such as Germany’s Zeiss. To compensate, Chinese teams have reportedly salvaged components from older ASML machines and sourced restricted parts through secondary markets and intermediary companies. Some of that equipment is believed to have originated from Japanese manufacturers Nikon and Canon.
Internally, Beijing’s goal is to produce working chips using the prototype by 2028, though people close to the project believe 2030 is a more realistic target. Even that timeline would be earlier than many outside analysts had expected. The development highlights the limits of export controls imposed since 2018, which were designed to keep China at least one generation behind in semiconductor manufacturing.
Reuters reports that engineers involved in Huawei’s program often sleep at their work sites, operate in isolated teams, and have restricted access to phones. Earlier this year, the Financial Times revealed that satellite imagery showed Huawei rapidly constructing multiple large facilities in Shenzhen. “Huawei has embarked on an unprecedented effort to develop every part of the AI supply chain domestically—from wafer fabrication equipment to model building,” said Dylan Patel, founder of semiconductor consultancy SemiAnalysis.
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