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👀 #SMIC# saw smartphone-related revenue share fall to 18.9% in Q1, down from 24.2% a year earlier and the lowest since 2021. Are memory headwinds hitting China’s top foundry? 💡More: 🔗

🇨🇳 China has begun manufacturing its own immersion DUV lithography machines, the chipmaking tool the Dutch ASML has long dominated. The first units are due this year to Chinese chipmakers SMIC, Hua Hong and ChangXin Memory. ASML shares fell more than 7%.

SITUATION EXPLAINED: A Chinese state-backed company started mass-producing DUV lithography tools, a step below EUV but still significant. • ASML shares fell as much as 6.5%, their lowest since early June, after The Information reported a Shanghai-based, state-backed company began mass-producing immersion DUV lithography machines • The company is Shanghai Yuliangsheng, with ties to Huawei and the SiCarrier equipment group, it brought together immersion DUV development teams from other Chinese firms • Plans call for 5 tools this year and 20 next year, with confirmed customers SMIC, CXMT, and Hua Hong Semiconductor • Real caveat: SMIC has actually been trialing this tool since September 2025, and active mass production isn't targeted until 2027 at the earliest • Independent analysis from the AI Futures Project puts commercial-scale Chinese immersion DUV in the mid-2030s, with ASML still holding 98.7% of the immersion lithography market • Chinese chipmakers are currently only allowed to buy ASML's older DUV tools, not its cutting-edge EUV machines • The MATCH Act, moving through Congress, would widen restrictions specifically on immersion DUV equipment • China is separately developing its own domestic EUV machine, but that project remains at the prototype stage and is likely years away from producing working chips • Nikon and Canon are the only other established DUV/lithography vendors outside ASML, alongside SMEE as another Chinese domestic challenger @theojaffee: "Someone has to own the bottom of the market. Chinese DUV would be the same thing for ASML. The frontier leading-edge chip fabs will still be using ASML EUV machines, but less leading-edge fabs would use DUV machines, like, for example, it would be really helpful for Huawei."

DAILY SITUATION RECAP: Nvidia launches the Open Secure AI Alliance in order to find and fix vulnerabilities using open-source AI, sort of like an open Project Glasswing. Founding partners include a mix of enterprise software companies (Databricks, Salesforce, IBM, SAP, Siemens, Snowflake), cybersecurity companies (Palo Alto Networks, Red Hat), open-source providers (Hugging Face, LangChain, OpenClaw, Nous, the Linux Foundation), AI labs (SpaceXAI, Thinking Machines, Cognition), and other major companies (Nvidia, Microsoft, Cisco, Palantir, Dell). Moonshot AI releases the Kimi K3 weights and technical report after eleven days since launch. Kimi K3 is a 2.8T parameter mixture-of-experts (MoE) model with 104B active parameters and a 1M token context window. Moonshot also open-sourced much of their infrastructure, including their attention kernels, agent environment platform, and MoE communication library. Just because you can download it in theory doesn’t mean you actually can — the model is far too big to be run on any consumer hardware. Nvidia invests $5B in Ilya Sutskever’s SSI. Sutskever, formerly co-founder and Chief Scientist of OpenAI, founded Safe Superintelligence in 2024 with the sole goal of building a safe superintelligence, with no other products along the way. It has since raised $3B at up to a $32B valuation (likely higher now). SSI is famously very secretive about its research, but Sutskever said it’s “focused on overlooked aspects of how the human brain functions”. The new funding, and access to Nvidia Vera Rubin GPUs, will allow SSI to 10x its compute. More companies sign on to Nvidia’s open source letter. The letter, posted by Jensen Huang on Friday, advocates for a robust American open-source ecosystem with minimal government regulation. New signatories include Google, SpaceXAI, OpenAI, AMD, Cisco, Palo Alto Networks, Nebius, Scale, Fireworks AI, Baseten, Cohere, Sakana AI, Periodic Labs, Core Automation, OpenClaw, and GitHub. Every major American frontier lab except for Anthropic has now signed. CXMT stock surges 466% on its first trading day. The company, formerly ChangXin Memory Technologies, is the largest memory manufacturer in China and the fourth-largest in the world (after SK Hynix, Samsung, and Micron), with a 9% global market share. It now has the second-highest market cap of any Chinese company after Tencent. CXMT doesn’t make the most leading-edge HBM for AI chips, but supplies DRAM to consumer tech manufacturers and data centers. Nvidia may guarantee $250-350B of financing for an OpenAI data center. SB Energy, a subsidiary of SoftBank, is developing a massive 10 GW data center on federal land in Ohio at a total cost of over $500B. The financing guarantee would allow SB Energy to borrow money at lower rates, and possibly allow OpenAI to spend more on Nvidia chips. China begins manufacturing DUV machines. Deep ultraviolet (DUV) lithography machines print intricate nanoscale patterns on silicon wafers, a critical step in chipmaking. The new machines, built by an unnamed state-backed company, will be shipped to local chipmakers including SMIC, Hua Hong Semiconductor, and CXMT. China is still behind on the most advanced extreme ultraviolet (EUV) lithography, which is solely produced by Dutch company ASML. ASML stock fell 6% on the news. Dario Amodei explains Anthropic’s position on open models: open-weight models without dangerous capabilities are a public good, and Anthropic has never supported a full ban. However, we should be worried about the CCP using them for repression, as well as cyber/bio/alignment risk. To that end, we should not sell chips to China, crack down on distillation, and require mandatory safety testing for all sufficiently capable open and closed models. China threatens to respond if the US sanctions their AI labs. The Chinese Ministry of Commerce said US accusations of distillation were “smears” and that China will “take all necessary measures” to defend its rights and interests against any action that substantively harms them. DeepSeek has suspended its recent funding round after comments from a private investor call with CEO Liang Wenfeng were leaked. Written by @theojaffee. Read more at our link in bio.