Huawei’s Chip Breakthrough: What It Means for ASML and the Netherlands
Huawei chip ASML dependency could be ending, according to a major announcement made on Monday 25 May 2026 when the Chinese tech giant claimed it has developed a new method for manufacturing semiconductors without relying on ASML’s lithography machines. The announcement, made at the IEEE International Symposium on Circuits and Systems, sent shockwaves through the semiconductor industry and raised immediate questions about the long-term strategic position of the Eindhoven-based company that sits at the heart of the global chip supply chain.
What Huawei Announced
He Tingbo, head of Huawei’s chip division, announced that the company expects to produce next-generation 1.4-nanometer chips by 2031 using a proprietary approach it calls the Tau Scaling Law. Rather than pursuing ever-smaller transistor dimensions, which requires the extreme ultraviolet lithography machines that ASML makes and China cannot access, Huawei’s approach focuses on minimising data transmission latency within a chip and stacking circuits vertically in a technique called LogicFolding.
He Tingbo did not explain in detail how Huawei intends to achieve this performance level without EUV systems. The company says it has designed and produced 381 chips over the past six years using this methodology. A new LogicFolding design will make its commercial debut in Kirin mobile processors later in 2026.
For context, Taiwan’s TSMC, the global market leader in advanced chip manufacturing, expects to begin mass production of 1.4-nanometer chips in 2028, using ASML’s most advanced High-NA EUV machines. If Huawei’s claims are accurate, China could reach comparable chip performance by 2031 without any access to Western lithography equipment.
Why This Matters for ASML
The Huawei chip ASML dynamic has been at the centre of Western export control strategy for years. ASML has never been allowed to sell its EUV machines to China. Dutch export controls, tightened progressively since 2023 under pressure from the United States, also restrict exports of advanced DUV machines and measurement equipment to Chinese buyers. The entire Western semiconductor export control strategy has been built on the assumption that without ASML’s machines, China cannot manufacture the most advanced chips.
Huawei’s announcement directly challenges that assumption. If the Tau Scaling Law approach works as claimed, it would represent a potential workaround to the core technological bottleneck that export controls have been trying to enforce.
The market responded cautiously. ASML’s financial position remains strong. Its Q1 2026 results showed net sales of €8.8 billion, up 13 percent year on year, and the company raised its full-year 2026 revenue guidance to €36 to €40 billion. The company ended 2025 with a backlog of €38.8 billion. AI-driven demand from TSMC, Samsung, and Intel continues to grow strongly and shows no sign of slowing.
China already accounted for just 19 percent of ASML’s system sales in Q1 2026, down from 36 percent the previous quarter, as export restrictions have already significantly reduced Chinese purchases. ASML has diversified its revenue base substantially and the near-term financial impact of Huawei’s announcement is limited.
But the longer-term strategic picture is more complex.
Scepticism in the Industry
Industry experts are treating Huawei’s claims with significant caution. Several important caveats apply.
The announcement lacks technical detail. He Tingbo did not explain the specific mechanisms behind the Tau Scaling Law or how LogicFolding achieves its claimed performance improvements. Extraordinary claims require extraordinary evidence, and the semiconductor industry has seen ambitious Chinese chip announcements before that failed to materialise at scale.
Manufacturing at scale is very different from lab results. Producing 381 chip designs over six years is a meaningful achievement but manufacturing billions of advanced chips reliably and at competitive cost is an entirely different challenge. TSMC’s manufacturing yield and quality control at leading-edge nodes took decades to develop.
The 2031 timeline is distant. The semiconductor industry moves quickly. By 2031, ASML’s customers will likely be manufacturing chips at nodes that make today’s leading edge look obsolete. A 1.4-nanometer equivalent chip in 2031 may still lag significantly behind where Western manufacturers will be by then.
Nvidia CEO Jensen Huang has acknowledged Huawei as serious competition and admitted Nvidia has effectively surrendered the Chinese AI chip market. This suggests Huawei’s existing capabilities are already more advanced than many in the West assumed, which gives some credibility to its future ambitions.
The Dutch Policy Dimension
For the Netherlands, Huawei’s announcement adds complexity to an already difficult policy calculation. The Dutch government has maintained a careful balance between preserving ASML’s commercial interests and aligning with the United States and its allies on export controls.
If Huawei’s alternative approach proves viable, the commercial cost of export controls on ASML may eventually be seen as having been borne for limited strategic benefit. Conversely, if the announcement is primarily a signal of intent rather than a proven capability, the export control strategy may still be working as designed.
Dutch foreign trade minister Reinette Klever has previously stated that the Netherlands makes its export control decisions for national security reasons, noting that technological advances have created increased security risks in the current geopolitical context. That reasoning does not change regardless of Huawei’s claims.
The Dutch government has expanded its export licensing requirements for semiconductor equipment multiple times since 2023, most recently extending controls to measurement and inspection equipment. These controls are now under Dutch national jurisdiction rather than being solely driven by US pressure, reflecting a genuine Dutch assessment of the security risks involved.
What It Means for ASML’s Future
ASML’s position in the semiconductor supply chain remains exceptional. Even if Huawei’s alternative approach eventually reduces Chinese dependence on ASML technology, the company’s growth is driven overwhelmingly by demand from Taiwan, South Korea, Japan, and the United States, all of which continue to use and need ASML’s most advanced machines.
The High-NA EUV system, ASML’s most powerful product, is now commercially deployed with Intel and will be adopted by TSMC and Samsung later this decade. This technology represents a generational leap that Huawei’s alternative approach, even if successful, would not replicate.
Brainport Eindhoven, the technology ecosystem built around ASML and its supplier network, continues to attract significant international investment and talent. The Dutch government’s commitment to supporting this ecosystem is unchanged.
The honest assessment is that Huawei’s announcement is a reminder that the export control strategy has limits and that determined, well-resourced competitors will seek alternatives. It is not evidence that the strategy has failed or that ASML’s position is under immediate threat.
Frequently Asked Questions
Does Huawei’s announcement mean ASML is in trouble? Not in the near term. ASML’s backlog, revenue growth, and AI-driven demand from non-Chinese customers are all strong. The announcement is a long-term strategic signal, not an immediate commercial threat.
Can Huawei actually make advanced chips without ASML? The claim is unproven. The semiconductor industry is treating the announcement with significant scepticism given the lack of technical detail and the enormous difference between lab results and mass production at competitive cost.
What does this mean for Dutch export control policy? The Dutch government’s security-based rationale for export controls is unchanged. The controls will continue regardless of Huawei’s claims.
When would Huawei’s approach reach commercial scale? Huawei claims 1.4-nanometer equivalent chips by 2031. Independent analysts are cautious about this timeline and note that Chinese chip manufacturing capacity is currently at roughly 1 to 2 percent of US production levels.
Summary
Huawei’s claim that it can manufacture advanced chips without ASML by 2031 is the most significant challenge yet to the Western semiconductor export control strategy. The announcement deserves serious attention but also serious scepticism. ASML’s near-term financial position is strong and its growth is driven by customers who will continue to need its technology regardless of what Huawei achieves. The longer-term question of whether export controls can permanently limit China’s chip capabilities is now more open than it was before Monday’s announcement.
