Chinese chip stocks jumped and ASML shares fell over 5% in late July on news that a Shanghai-based manufacturer had started making its own deep ultraviolet (DUV) lithography machines — the tool used to etch circuits onto silicon wafers, a process so precise that ASML is still the only company that makes a fully modern version. The headlines called it a breakthrough. The more interesting story is what happened a few months earlier, and it comes down to tacit knowledge.
Tacit knowledge is know-how that can’t be fully written down — the kind of skill that lives in hands-on repetition rather than in a manual. A recipe is explicit knowledge: anyone who reads it can follow it. Knowing exactly how much pressure to apply, by feel, so a soufflé doesn’t collapse — that’s tacit. You can watch someone do it a hundred times and still not be able to do it yourself on the first try.
Lithography machines are an extreme version of this problem. In October 2025, Chinese engineers reportedly disassembled an older ASML machine to study it — and then couldn’t put it back together. Asia Times reported that the company had to ask ASML for technical support after the reassembly failed. The parts weren’t the problem — every screw and lens can be seen and measured. What’s missing is the calibration: the precise, hands-on sequencing of adjustments, learned over years by engineers who built the machine, that gets the light source, lenses, and wafer stage aligned to a fraction of a hair’s width. None of that is printed on a spec sheet.
This is also why economic moats built on process know-how tend to be sturdier than moats built on patents alone — a patent is explicit knowledge, and explicit knowledge can be designed around or expires on a clock. It’s the same reason export controls on AI hardware worry policymakers less about the chips themselves than about the accumulated operating experience competitors can’t buy or steal.
Copying what something looks like is easy. Copying how someone learned to build it is not.
My take: Blueprints copy; hands don’t.
Not advice. Just how I see it.