Why India should have its own Manhattan Project as China makes EUV breakthrough in AI chipmaking

China's breakthrough in Extreme Ultraviolet (EUV) lithography for semiconductor manufacturing from its so-called 'Manhattan Project' is a leap forward in the nation's race towards self-reliance in artificial intelligence hardware. It also offers important lessons for India. Recent reports suggest that China built a ‘working prototype’ for indigenous EUV lithography. This is the world's first serious challenge to Dutch company ASML's monopoly in manufacturing EUV lithography machines. It is time to understand EUV lithography and why countries like India should launch their own mission-mode projects to achieve self-sufficiency in AI chipmaking.

What is EUV lithography machine and why is there a race to build them?

EUV lithography is the key technology that enables making the world's most advanced semiconductor chips. EUV lithography uses extreme ultraviolet light with a wavelength of 13.5 nanometres (nm) to print microscopic circuits on silicon wafers. This enables the manufacture of 5 nm, 3 nm and even smaller chips used for AI computing. These chips power smartphones, advanced computing systems, defence equipment and data centres. Smaller transistors improve computing speed, energy efficiency and processing power.

EUV manufacturing is extraordinarily complex. It requires extremely high precision, ultra-sophisticated optics, powerful light sources and consistently high production yields.

The Chinese project, often compared to the US Manhattan Project that developed the world's first nuclear weapons during the Second World War, brings together Huawei, state-backed research institutes and engineers who previously worked with ASML, the world's only commercial supplier of EUV lithography machines. Each of these machines costs approximately US$250-400 million.

The Chinese researchers, working in a high-security laboratory in Shenzhen are targeting the production of functional chips using EUV technology by 2028. Commercial production might realistically start in 2030.

China could commercialise EUV technology soon. What would it mean for the world?

Since 2019, US-led export restrictions prevented China from purchasing ASML's EUV systems, forcing it to develop indigenous alternatives. Once China develops the capability to manufacture chips using indigenous EUV lithography machines at scale, it could significantly reduce its dependence on foreign semiconductor equipment.

Domestic production of advanced chips would strengthen China's AI, electric vehicle, telecommunications and defence industries.

Increased chip production could also improve global supply and reduce costs over time.

A Chinese success in in commercialising EUV machines could make it eventually emerge as an exporter of advanced lithography equipment, creating competition in a market currently dominated by a single company, ASML.

US-China technology rivalry and China's EUV lithography breakthrough

ASML spent nearly two decades perfecting commercial EUV technology. China is now attempting to close that gap. If Beijing succeeds in commercialising indigenous EUV systems, it would weaken the effectiveness of US export controls that limited China's access to advanced semiconductor manufacturing. This could force the US and its allies to invest even more heavily in next-generation semiconductor manufacturing, while further intensifying the global technology race.

Why India should have its own Manhattan Project

This is where the India Semiconductor Mission (ISM) becomes important. India has approved projects worth over ₹1.6 trillion covering semiconductor fabrication plants, Outsourced Semiconductor Assembly and Test (OSAT) facilities, Assembly, Testing, Marking and Packaging (ATMP) units, and compound semiconductor projects. ISM 2.0 focuses on strengthening semiconductor equipment, materials, research, chip design and advanced packaging.

Yet, India still lacks leading-edge chip fabrication capability, a domestic semiconductor equipment ecosystem and sufficient high-end manufacturing expertise.

While India is globally recognised for its chip design talent, it continues to depend heavily on imports for advanced semiconductor manufacturing. This is why India needs its own "Manhattan Project" for semiconductors.

Such a project can succeed only through sustained government support, long-term investment and close collaboration between research institutions, universities and industry in AI hardware and semiconductor manufacturing.

Expanding research and development, strengthening semiconductor talent, attracting global technology partnerships, and building domestic capabilities in chip design, packaging, materials and manufacturing equipment should be national priorities.

Achieving Atmanirbhar Bharat, or self-reliance, will require greater private investment, policy stability and a realistic long-term strategy rather than relying solely on short-term subsidies.