A Chinese state-backed company has begun mass producing deep ultraviolet lithography machines, reports The Information. That's a big step towards China's semiconductor biz standing on its own two feet.It takes a complicated lithographic machine to produce a modern chip, and there are two main types: EUV (Extreme Ultraviolet Lithography) and DUV (Deep Ultraviolet Lithography). It's the older of the two, DUV, that a Chinese company is said to have figured out. These sorts of immersion machines are still used for modern computer chips, and today most are made by Dutch company ASML, which took over from the Japanese companies that dominated prior.Citing people familiar with the matter, The Information says the Chinese DUV machines are set to be delivered to customers this year. Customers including, Semiconductor Manufacturing International Corp., Hua Hong Semiconductor, and ChangXin Memory Technologies (CXMT). Yeah, that same CXMT everyone is talking about due to surging memory costs. While this does challenge ASML for the sale of DUV machines in China, the machines are said to be lagging behind in performance and reliability. This news comes at a time when a plan to restrict sales of DUV machines to China was recently proposed in US Congress. The plan effectively blocks sales and servicing of DUV machines in China. Sales of EUV machines to China have already been blocked by the US since 2019. DUV machines allow chipmakers with fabs located in the country to make chips down to 7 nm, in reference to the loosely defined process node, using clever tricks like multi-patterning. That's loosely equivalent to the Ryzen 5000-series—so pretty darn modern. Smaller process nodes are more reliant on newer EUV machines.ASML's share price dropped 12%, starting July 27, when the news of this Chinese breakthrough first came out. ASML had previously stated it expects to sell roughly 130 DUV immersion machines by the year's end."For immersion DUV, we expect about 130 shipments this year, which is similar to the output level of these systems in 2025. This year we have worked closely together with our supply chain partners to reaccelerate our output of these systems," said Roger Dassen, ASML CFO, in July [pdf warning].It expects to sell less EUV machines, around 65 Low NA systems (as opposed to High NA systems,as bought by Intel, which are more experimental). ASML wants to add capacity to make more machines in 2027, both EUV and DUV.A diagram of an ASML DUV machine. (Image credit: ASML)So, ASML might be hit by the shake-up, but moreover, it wasn't looking like it had the Chinese market all sewn up anyways, as there are controls on DUV machines sold to China by the Dutch government. Previous history suggests the US has lots of influence over whether it can sell its machines. Not the least bit through export controls on technology with some amount of US-originating tech inside. Moreover, China has been adamant in seeking out domestic production of computer chips, and blocking the country from key technologies is likely to only spur it on more.Though there's a long way to go for these Chinese-made DUV machines to prove their worth. Analysts speaking to CNBC suggest the new machines are unlikely to rock the boat too much, as they may not be up to the challenge of very modern chips or huge economics of scale. Working machines are one thing, high yields (lots of working chips on a single wafer) are another thing entirely. That might take some time, but I wouldn't bet against it happening eventually.