Investment Rating - The report maintains a "Positive" investment rating for the semiconductor and semiconductor production equipment industry [11]. Core Insights - The lithography machine is considered the crown jewel of the semiconductor industry, characterized by its complex components designed to achieve ultra-fine precision. The development of lithography machines has evolved through three major eras, with significant breakthroughs in key technologies leading to the dominance of companies like Nikon and ASML over their competitors. The report suggests that China's lithography machine industry can leverage its latecomer advantage to focus on overcoming core challenges and ultimately achieve self-sufficiency [4][10]. Summary by Sections Lithography Technology - Lithography is a critical process in semiconductor manufacturing, utilizing light-sensitive photoresist to transfer patterns from masks to wafers. The resolution of lithography machines is influenced by the wavelength of the light source, numerical aperture (NA), and process factor (k1). The evolution of lithography technology has seen a transition from mercury lamps to KrF, ArF, and currently to EUV light sources [7][22][28]. Key Components of Lithography Machines - The lithography machine consists of three core components: 1. **Light Source System**: Provides the energy for exposure, with the most advanced sources using CO2 lasers to generate EUV light [8]. 2. **Optical System**: Optimizes the light path and minimizes aberrations, with EUV systems relying entirely on mirrors due to the poor penetration of EUV light [8]. 3. **Wafer Stage System**: Controls the movement of the wafer and mask, crucial for the exposure process [8]. Historical Overview of Lithography Leaders - The lithography machine industry has experienced shifts in leadership across three eras, beginning with early American companies like GCA and Perkin Elmer, followed by Japanese firms Nikon and Canon, and currently dominated by ASML through technological advancements such as dual-stage and immersion lithography, as well as EUV technology [9][10]. Prospects for Domestic Lithography in China - China's lithography machine industry has made significant progress since the implementation of the "02 Special Project" in 2006, with domestic manufacturers like Shanghai Micro Electronics achieving advancements in the mid-to-low-end market. However, challenges remain in the high-end lithography machine sector [10].