U.S. Semiconductor Export Controls on China Are Being Systematically Circumvented Through DUV Multipatterning While Enforcement Remains Inadequate

Chinese chipmakers including SMIC have learned to apply multipatterning techniques to deep ultraviolet immersion (DUVi) lithography systems, which are not restricted by export controls, to produce chips approaching 7nm and even 5nm-class performance. ASML sold 70% of its DUVi lithography systems to Chinese entities in 2024, and continues to service machines in China (potentially extending their lifespan to 30 years) despite U.S. pressure on the Dutch government. Meanwhile, enforcement gaps persist: in February 2026, Applied Materials was fined $252 million for illegally exporting ion implantation equipment to China. Why it matters: China can produce near-cutting-edge chips using unrestricted DUV equipment, so the stated U.S. policy goal of maintaining a multi-generational lead in semiconductor technology is being eroded despite increasingly complex export control regimes, so SMIC and other Chinese foundries can manufacture 7nm chips for military, surveillance, and AI applications that the controls were specifically designed to prevent, so the U.S. must continually tighten restrictions (creating a regulatory whack-a-mole dynamic) which increases compliance costs for American semiconductor equipment makers like Applied Materials, Lam Research, and KLA who lose billions in China revenue, so the diplomatic relationship with the Netherlands and Japan (whose cooperation is essential for controls to work) is strained by each new round of unilateral U.S. rule changes, so the export control regime risks becoming a worst-of-both-worlds outcome: not restrictive enough to actually prevent Chinese chip advancement, but restrictive enough to cost U.S. companies market share and push China toward full self-sufficiency. The structural root cause is that the physics of DUV multipatterning allows production of features smaller than the wavelength of light through repeated exposures, making technology-based export control thresholds inherently leaky. Export controls were designed around equipment capabilities (blocking EUV), but process innovation (multipatterning with DUV) can partially substitute for equipment capabilities. Additionally, ASML's DUVi machines require ongoing maintenance that only ASML can provide, and the Dutch government has been reluctant to restrict servicing of machines already sold, creating an installed base in China that will produce chips for decades.