China’s top lithography bet shifts gears: SMEE sells subsidiary in strategic pivot

China’s state-backed lithography champion Shanghai Micro Electronics Equipment (SMEE) has reshuffled its business, divesting a manufacturing arm as it sharpens its focus on research in Beijing’s push for chip self-sufficiency.\nSMEE – widely seen as China’s best chance of closing the gap with Dutch lithography giant ASML – had transferred 100 per cent of its subsidiary Shanghai Weiyao Industrial to AMIES Technology, according to updates on corporate database Qichacha.\nThe deal was priced at 228.5 million yuan (US$32 million) and was updated on Tuesday.\nFounded in 2003, Shanghai Weiyao’s business scope includes the processing of metal components and materials – a move that effectively shifts part of SMEE’s production footprint to AMIES, a spin-off established in early 2025.\nThe transaction signalled a strategic pivot for SMEE as it concentrated more heavily on the “front-end” development of lithography tools as part of China’s broader move to catch up with ASML.\nAMIES, meanwhile, has accelerated the commercialisation of equipment for domestic chipmakers, according to Chinese media reports cited by industry observers.\n\nNeither SMEE nor AMIES responded to requests for comment.\nAMIES drew attention at an industry expo in Shenzhen last October, showcasing products ranging from compound semiconductor lithography machines to laser annealing systems, inspection tools, and packaging and wafer bonding solutions.\nDespite the fanfare, AMIES’ most proven production-grade lithography tools are still believed to support legacy manufacturing processes of around the 90-nanometre node and above, underscoring the distance between China’s domestic offerings and the most advanced systems produced by ASML.\nSMEE has repeatedly come under scrutiny over progress claims.\nIn late 2023, its shareholder Zhangjiang Group briefly said on social media that SMEE had “successfully developed” a 28-nanometre lithography machine, but later retracted the reference.\nBeijing has stepped up support for domestically made chipmaking equipment as US export controls — echoed by allies including the Netherlands and Japan — continue to restrict China’s access to advanced chips and leading-edge manufacturing tools.\nIn December, SMEE won a government procurement contract to supply a lithography system labelled SSC800/10 for about 110 million yuan, according to a notice posted on the China Government Procurement Network and cited in media reports.\nThe system was expected to be deployed on a domestic production line tied to a research or manufacturing unit, with Chinese media reports saying it could bolster the country’s capabilities in chips made with mature process nodes.\n