China has achieved a breakthrough in developing technology crucial to the AI boom, overcoming US efforts to limit Beijing’s access to the systems.
China’s chip giant Shanghai Yuliangsheng has started production of deep ultraviolet lithography machines, according to The Information, a tech publication.
These machines, which can reach the size of a double-decker bus, use high-powered lasers to imprint designs on to silicon wafers, which are used to make chips.
Until recently, only Western companies and allies of the US had the capability to produce these machines.
The most advanced versions of the technology have largely been the preserve of companies such as Dutch giant ASML and Japan’s Nikon.
These machines have been cut off from China by US export controls, preventing their production of advanced chips as Washington seeks to slow the development of AI in the country.
Semiconductor stocks plunged on the report. Trading was briefly halted on South Korea’s benchmark Kospi index after it suffered a collapse of nearly 11pc overnight, following a bleak day on Wall Street.
Advanced semiconductors, such as those used in AI chips, rely on minuscule circuits, invisible to the naked eye. They can only be manufactured by directing tiny lasers onto microchip wafers, a process known as ultraviolet lithography.