The Lithography Lever

Why should you care about lithography exports sold to China? What is Congress thinking about doing about it? And what does it mean for the future of humanity, the lightcone, great power relations — all of the above. Nick Brown is a co-founder of the Center for Technology and Statecraft (CTS) , a new think tank spun out of IFP, that looks at long-term technology challenges and opportunities facing the US. Nick was a physics major, spent a while as a software engineer in and around government, and had an arc as an aspiring concert violinist. But we’re here to talk about what is in pole position for my paper of the year: his master class on what would happen if the US cut off DUV exports to China: DUV Immersion Lithography: The Foundation of US AI Compute Advantage . Co-hosting is ChinaTalk’s Aqib Zakaria . We discuss: The case for banning DUV exports to China: Why lithography is the hardest part of the semiconductor manufacturing stack for China to replicate/indigenize and the strongest point of leverage the US and its allies have over China’s future AI compute. The cannonball-sized hole in US export controls: China imported roughly 90 immersion lithography systems a year in 2024–25, nearly two-thirds of ASML’s immersion exports. If imports continue at this rate, China could approach or even reach parity with the US in AI chipmaking within a decade. What the MATCH Act would do: How Congress could close this gap by restricting DUV immersion exports and servicing, and whether the US can get its allies on board. Will Beijing retaliate? Why a gradual, long-term restriction may be less likely to provoke another rare-earths crisis Buying time for AGI: How cutting off DUV imports could preserve America’s AI compute advantage into the 2030s, giving the US more time to navigate the technological, geopolitical, and societal implications of increasingly powerful AI. Listen now on your favorite podcast app and check out the MATCH Act’s theme song below. Compute, Leverage, and the Cannonball-Sized Hole Jordan Schneider: To set the groundwork: why should we care how much compute China has relative to the rest of the world? Nick Brown: Compute is one of the fundamental drivers of AI capability. There’s compute, algorithms, and data, and a decade of work by many people has established that of those three, compute is the most governable — the one where it’s most possible to intervene and shape where it goes. Those factors combine to create AI capabilities, both in training and in deployment, and those capabilities get realized in some context: economic, governmental, security-related. If you care about the exercise of AI capabilities, which many do, and about the degree to which China can exercise them relative to the US, then compute — the number of chips, their quality, the aggregate computational stock available — is one of the fundamental levers you’d want to examine or push on. Jordan Schneider: Let’s do the tale of the tape as of October 2026. Aqib, how much compute does China have, and how much does the rest of the world have? Aqib Zakaria: Everyone’s numbers are hazy, but at the median estimate, the US has a commanding lead. Measured in H100 equivalents, China has maybe around a million, and the US has upwards of thirty million. Jordan Schneider: With asterisks — remote access, right? Aqib Zakaria: Yes. That’s roughly one million Chinese-designed chips in China. But when Nick Corvino and I ran the numbers , there’s almost another million in remote-access compute China can reach in data centers in Thailand, Malaysia, and elsewhere in Southeast Asia. Which goes to show how hard this is to measure. Jordan Schneider: So in a worst case, we’re still at a 10x advantage as of fall 2026. Nick Brown: There are three segments: remote-access chips, exported chips, and China’s indigenously produced chips. The chip export wars continue to rage — H100, then H800, then H20, then H200 — but I’d segment all of that from indigenous production. The difference between the three categories comes down to leverage. For remotely accessed chips, there’s a lot of leverage, and even within that category you might distinguish chips accessed in the US from those accessed elsewhere. The US, its companies, and entities that answer to it as a sovereign have enormous leverage over how that compute is used; they could cut it off at any moment. For exported chips, there’s leverage at the point of export. Once you decide to export, you let go of that leverage, but production remains within your grasp. For indigenously produced chips, there is very little leverage. If China can make its own chips with its own supply chain, as many as it wants, the compute chokepoint stops being an effective governance tool—at least for shaping international power. That is why it’s so critical to look at China’s indigenous production while we debate how many chips to export. Aqib Zakaria: So we already banned EUV. Why isn’t this a solved problem? What’s the deal with DUV? Nick Brown: EUV and DUV are two technology generations: extreme ultraviolet and deep ultraviolet. We’re not extreme, we’re just deep. EUV gets all the press, and in many ways it should — by many measures it’s the most advanced technology on the planet, and individual machines sell for hundreds of millions of dollars. But DUV machines, which still go for $60–80 million, are extraordinarily powerful pieces of technology. The most advanced DUV systems are certainly capable of manufacturing advanced AI chips. China’s current flagship AI chips are Huawei’s Ascend line, manufactured indigenously, and at the nodes those chips use, many DUV systems can support production. Those systems are good enough to facilitate China’s indigenous AI chip manufacturing. Jordan Schneider: Say we stay on the current path: DUV exports aren’t controlled, and the machines keep flowing into China, where the rest of the world has no leverage over them once they’re installed. Play that movie out five or ten years. Why is DUV so important to the buildout, and where does it leave China relative to the rest of the world? Nick Brown: Two scene-setting points, then the scenarios. First: from an export control perspective, lithography is the strongest point of leverage the US and its allies have. That comes down to the fact that it is by far the hardest tool for China to indigenize . You can see that across the industry — lithography tools cost far more than other tools, and ASML’s R&D expenditure is higher than that of toolmakers spread across many product lines. Digging into the numbers, we feel confident that China will not be able to make its own DUV systems good enough to make AI chips, at a scale sufficient to really expand its chipmaking, until into the 2030s. That adds up to a very large point of leverage. Second: there are many generations of DUV systems, from ASML’s most advanced to the earliest ones from the 2000s. The version we currently allow into China — the NXT:1980i, for the nerds — is good enough for 7nm logic and HBM2E, maybe even some HBM3, which is what Huawei’s chips use. Those tools contribute to AI chip production through various channels inside China. China has very astutely recognized that we have a big hole in our export controls — it’s not really a loophole, we’d call it a cannonball-sized hole — and has taken advantage of it, importing a staggering number of systems . We estimated the entire installed base and the rate of imports: about ninety systems per year in 2024 and 2025, worth over ten billion dollars, close to two-thirds of ASML’s entire immersion DUV exports. Modeling China’s Lithography Ceiling Nick Brown: Right now the US is dramatically ahead of China in chipmaking and compute capacity. That’s because China is constrained by a number of things — not just lithography, but etch, deposition, and other SME restricted by US controls. But there’s good reason to expect China to indigenize those other segments over time. Litho is almost certainly t