On July 27, global technology and semiconductor stocks came under heavy selling pressure, triggering a broad market rout across the Asia-Pacific region. South Korea’s KOSPI plunged nearly 11 percent, activating a circuit breaker, while Taiwan’s benchmark TAIEX sank 2,030 points in its third-largest single-day decline on record.
Analysts said the sharp turmoil in global capital markets was driven by Wall Street’s concerns over AI-related financing risks surrounding NVIDIA, combined with reports that China has successfully begun mass production of DUV (deep ultraviolet) lithography machines, which heightened investor anxiety.
DUV lithography machines are advanced semiconductor manufacturing tools that use deep ultraviolet light to print extremely tiny circuit patterns onto silicon wafers. They are one of the most important machines in the chip-making process and are used to manufacture many modern processors, memory chips, and other integrated circuits.
Taiwan stocks plunge 2,030 points
Weakness in the semiconductor sector weighed heavily on U.S. technology stocks overnight, with the Philadelphia Semiconductor Index (SOX) falling 2.23 percent. The resulting surge in risk aversion quickly spread to Asian markets, according to SET News, Taiwan’s largest privately owned news media.
South Korea’s stock market at one point fell by more than nine percent, triggering a circuit breaker. Japan’s Nikkei 225 dropped by more than 2,500 points, while Taiwan’s stock market opened sharply lower and continued to decline throughout the session, closing at 41,603.36 points with a daily turnover of NT$809.5 billion.
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Looking at the history of Taiwan’s stock market, the 2,030-point decline ranks as the third-largest one-day loss on record, surpassed only by the 2,953-point plunge on July 17, 2026, and the 2,065-point drop on April 7, 2025.
The Information, a San Francisco-based technology and business publication, first reported that a Chinese state-owned enterprise had begun mass-producing immersion DUV lithography systems. The company is expected to manufacture about five units this year and increase output to 20 in 2027 as China seeks to reduce its reliance on ASML equipment.
The report was subsequently picked up by Reuters and Storm Media, a prominent Taiwan-based digital news outlet, fueling investor concerns about ASML’s long-term growth prospects in China. ASML shares fell sharply on July 27, helping drive a broader sell-off across the semiconductor sector.
Market concerns over DUV and AI capital spending
Reuters attributed the intense selling pressure on semiconductor stocks to a combination of concerns over AI infrastructure financing and growing competition from China.
Another source of concern was a Wall Street Journal report that NVIDIA was considering guaranteeing roughly US$250 billion in financing for an OpenAI data center project in Ohio. Reuters said NVIDIA shares fell nearly five percent following the report, as investors questioned whether the chipmaker was increasingly financing its own customers to support demand. OpenAI’s continued losses also raised doubts about its ability to meet the project’s vast financial obligations.
Investors have also grown more cautious about whether massive AI-related capital expenditures will generate earnings quickly enough to justify elevated semiconductor valuations. Reuters noted that the reported NVIDIA guarantee would cover OpenAI’s lease and debt financing, while NVIDIA was separately discussing financing as much as US$350 billion in OpenAI chip purchases.
The second source of pressure was China’s faster-than-expected progress toward semiconductor self-sufficiency. Reuters reported that China had begun mass-producing domestically developed immersion deep-ultraviolet lithography machines, although analysts cautioned that the systems still required further testing and were not yet an immediate commercial threat to ASML. News of the development nevertheless weakened investor sentiment and raised concerns that Chinese memory-chip manufacturers could expand capacity more rapidly.
Those concerns were reinforced by the stock-market debut of ChangXin Memory Technologies, now known as CXMT. Reuters reported that CXMT shares surged 466 percent on their first day of trading in Shanghai, lifting the company’s market capitalization to about US$488 billion. Analysts cited by Reuters said the listing strengthened perceptions that CXMT could become a more formidable global memory-chip supplier, increasing the risks of excess supply, weaker pricing and greater competition for established semiconductor manufacturers.
Expert: Major investors are using the sell-off to accumulate shares
Meanwhile, financial commentator Di Xiang wrote in a Facebook post that during periods of stock market weakness, alarming stories tend to proliferate. He noted that reports claiming China has developed or begun producing DUV lithography machines have surfaced periodically over the years, and this latest round is not significantly different.
According to Di, large institutional investors often use negative headlines to push prices lower while quietly accumulating shares, and he believes that semiconductor-related stocks are still likely to gradually rise over time in line with their underlying fundamentals.
Di cited several previous reports that had circulated in the market regarding China’s DUV lithography capabilities:
A report from late 2020 claimed that Shanghai-based SMEE (Shanghai Micro Electronics Equipment) was expected to deliver a 28-nanometer DUV lithography machine by the end of 2021, marking an important step toward reducing China’s reliance on U.S. technology.
An October 2023 South China Morning Post report said SMIC had manufactured Huawei’s 7-nanometre Kirin 9000S processor using ASML deep-ultraviolet lithography equipment and complex multiple-patterning techniques. The achievement prompted observers to conclude that Chinese chipmakers had made greater-than-expected progress in producing advanced semiconductors despite U.S. export restrictions.
A September 2024 report said that China’s Ministry of Industry and Information Technology (MIIT) promoted a domestically developed DUV lithography system. The announcement initially surprised the market as evidence of a technological breakthrough, but subsequent analysis indicated that the machine lagged significantly behind ASML’s technology.
Another September 2025 report stated that Semiconductor Manufacturing International Corporation (SMIC) was testing a 28-nanometer DUV lithography system produced by a startup company, with the goal of reducing dependence on Western technology.
Di Xiang analyzed that, looking back, each time these reports emerged, U.S. semiconductor equipment makers and related stocks came under considerable selling pressure. However, what happened afterward is well known: the share prices of these companies continued to reach new highs, while the value of their equipment exports to China either remained at historically elevated levels or continued to increase. This, he argued, demonstrates that China remains heavily dependent on Western technology.
“The reason is straightforward,” Di said. “Being able to manufacture lithography equipment does not necessarily mean you can produce chips with consistently high yields. If manufacturing yields cannot be improved, the difficulty and cost of chip production increase substantially.” He suggested that this may explain why China has repeatedly announced progress in DUV lithography over the years while continuing to rely on imports of Western equipment in practice.
Di emphasized that he believes this time is unlikely to be much different. In his view, large institutional investors will use negative news to drive prices lower and accumulate shares, while semiconductor-related stocks are likely to continue rising gradually over the longer term, supported by their underlying fundamentals.
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