China Hoarded $13 Billion of ASML DUV Tools as TSMC Weighs 2027 Price Hikes and Terafab

China's chipmakers have built a substantial buffer against tightening export controls. Chinese-owned fabs had acquired an estimated 343 immersion deep ultraviolet lithography systems by early 2026, according to a late-September report from the Washington-based Centre for Technology & Statecraft cited by the South China Morning Post, with roughly 270 of them being ASML Twinscan NXT:1980i immersion DUV machines. The study estimates Chinese fabs spent more than $13 billion acquiring about 90 of those systems in 2024 and another 89 in 2025, a buying spree visible in ASML's own disclosures: China accounted for 41% of the company's net system sales by shipment destination in 2024 and 33% in 2025. Although less advanced than EUV, immersion DUV can be adapted to produce 7nm-class logic and the advanced memory used in AI processors including Huawei's Ascend line.

The policy response is still catching up. The Dutch government began requiring export licences for ASML's NXT:2000i and more advanced immersion DUV systems in September 2023 and extended the requirement to the NXT:1980i a year later, though shipments of that model can still be approved case by case. The CTS report argues that approach leaves a significant loophole because equipment sold for mature-node production can be repurposed or relocated to advanced lines, and US lawmakers are pushing the bipartisan MATCH Act introduced in April, which would impose China-wide restrictions on the sale and servicing of chipmaking equipment China cannot readily make domestically, explicitly including immersion DUV. The report models the stakes: if China kept importing around 90 NXT:1980i systems a year and cleared other bottlenecks, its DUV fleet could support annual output of up to 434 million H100-equivalent AI chips by 2035, versus 153 million if new imports stopped in 2027.

Domestic substitution is advancing in parallel. The Financial Times reports that Huawei is coordinating China's homegrown DUV effort, backing component suppliers and helping equipment makers place systems in domestic fabs, with Shanghai-based Yuliangsheng - co-developer of China's first domestically made advanced DUV machine - set to produce 12 systems by the end of 2026 and its tools under test at SMIC and on Huawei's own lines.

On the foundry side, attention turns to TSMC's 15 October earnings call. The company guided third-quarter revenue to $44.6-45.8 billion with a 65-67% gross margin, and JPMorgan expects both to land at the top end at $45.8 billion and 66.8%, with fourth-quarter revenue growth seen moderating to 11% sequentially because 3nm capacity is tight and no further price increases are expected this year. Institutional investors cited by Taiwan's Central News Agency estimate 2027 price increases of 5-10% for advanced nodes, 10-15% for advanced packaging and 3-5% for mature nodes, while Economic Daily News reports mature-node prices rising roughly 3-10% from January. TSMC has already lifted 2026 capex guidance to $60-64 billion and committed a further $100 billion to Arizona for $265 billion of planned investment in the state, and it is now exploring a Terafab partnership that could add a fab in Texas - a structure Elon Musk confirmed is under discussion - alongside an A14 roadmap that could reach pilot production at Baoshan as early as the first quarter of 2027, putting it head to head with Intel's 14A.