Huawei is leading China's effort to eliminate foreign semiconductor technology by investing in domestic chipmaking equipment. The company is backing Yuliangsheng, a Shanghai-based manufacturer that has co-developed China's first advanced deep ultraviolet lithography (DUV) machine, according to sources. Yuliangsheng emerged from Si Carrier, a startup with close ties to Huawei, which the company has denied affiliating with.

The DUV machine is being tested by SMIC and on Huawei's production lines, initially for less complex semiconductors while engineers refine the device for advanced AI chips. Lithography remains a major hurdle for China's semiconductor self-sufficiency, as the country still relies heavily on ASML from the Netherlands. Huawei's corporate venture arm Habo and fund Shenzhen Yuanzhi Xinghuo have invested in suppliers targeting critical equipment bottlenecks.

Analyst Lin Qingyuan notes that Huawei plays a project management role in China's DUV push, requiring coordination among thousands of vendors. Yuliangsheng aims to produce 12 DUV machines by year-end, though it remains years away from matching ASML's productivity.