India's twin security dilemma: China's Manhattan Project and Dhaka's drift

As the year draws to a close, it appears to be ending on a similar note, with Beijing claiming a breakthrough in another critical technology—one that underpins AI itself.

China has developed a prototype extreme ultraviolet (EUV) lithography machine—capable of producing cutting-edge semiconductor chips—inside a high-security laboratory in Shenzhen, southern China, according to a Reuters report.

The massive, factory-sized system has reportedly been dubbed China’s “Manhattan Project”, a reference to the top-secret US effort during World War II to develop the atomic bomb ahead of Nazi Germany in the late 1930s and early 1940s.

The development has profound implications for the global balance of technological and strategic power. At its core, it can dismantle the West’s near-monopoly over the production of the world’s most advanced chips—those that power AI systems, smartphones, and modern military platforms.

A 2024 study by the Australian Strategic Policy Institute pointed to a “stunning shift in research leadership over the past two decades towards large economies in the Indo-Pacific, led by China’s exceptional gains.

“The US led in 60 of 64 technologies in the five years from 2003 to 2007. In the most recent five-year period (2019-2023), it leads in just seven. China, which led in only three technologies in 2003-2007, now tops 57 of 64 technologies,” the report noted.

While China’s EUV machine, undergoing testing, has yet to produce working chips in public view, the achievement of developing the system itself signals a major leap forward. Significant challenges remain, including reliability, yield and scalability—areas where Western firms retain deep expertise. Yet the direction China is headed in is unmistakable.

So how did Beijing manage it?

According to Reuters, China recruited engineers who previously worked for Dutch multinational ASML (Advanced Semiconductor Materials Lithography)—Europe’s most valuable technology company. These engineers, reportedly of Chinese origin, reverse-engineered the machine over a period of nearly six years.

ASML, headquartered in Veldhoven in the Netherlands, does not manufacture chips itself. Instead, it occupies a uniquely powerful position in the global supply chain as the sole producer of EUV lithography machines, which are essential for making the smallest and most advanced integrated circuits used by companies such as Intel and Taiwan Semiconductor Manufacturing Company (TSMC).

Control over EUV technology has become one of the most formidable choke points in the global semiconductor ecosystem.

To assemble its own EUV machine, China reportedly salvaged components from older ASML systems and sourced parts from the company’s suppliers through second-hand markets. A web of intermediaries was used to procure critical components while masking the identity of the end buyer, the Reuters report said.

In an era increasingly shaped by technological supremacy, the development underscores China’s determination to overcome the barriers erected by the US and its allies to slow its progress in advanced chipmaking. Washington has spent nearly a decade pressuring ASML to restrict the sale of its most sophisticated lithography machines to China.

Only last week, US President Donald Trump approved Nvidia Corp.’s sale of H200 chips to China—more advanced than the H20 chips previously supplied, though still short of Nvidia’s cutting-edge Blackwell processors. The move highlighted Washington’s delicate balancing act: Restricting China’s most powerful capabilities without triggering a full-scale technological decoupling.

For years, analysts and government forecasts maintained that China lagged the US and its partners by at least a decade in manufacturing advanced semiconductors that form the backbone of AI systems and next-generation weapons such as drones and hypersonic missiles.

That assumption may soon need revisiting.

Hadi was shot by masked assailants in Dhaka last week while launching his campaign for the 12 February elections.

There is suspicion that the shooter may belong to a group linked to Hasina’s Awami League and may have fled to India, further inflaming already simmering anti-India sentiment in Bangladesh.

Threats have been issued against the Indian embassy in Dhaka and consulates across the country, while protesters attempting to storm an Indian consulate were pushed back by security forces. An opposition politician has even threatened to sever India’s North-East from the mainland.

With Hadi’s attacker still at large, pressure is mounting on the Muhammad Yunus-led interim government to apprehend the culprit. The administration is also under strain to revive the economy and pursue the return of Hasina to Bangladesh to face her sentence.

The interim government has been seeking Hasina’s extradition from India, where she fled after being ousted from office. Indian external affairs minister S. Jaishankar recently said Hasina could remain in India for as long as she wished. Her continued public statements and interviews with Indian media are viewed by the Yunus government as unfriendly gestures, further fuelling bilateral tensions.

From what was not long ago described as a model friendship, Bangladesh now poses one of India’s “greatest strategic challenges since 1971”, according to a parliamentary standing committee report, which cited rising extremism, attacks on minorities, and Dhaka’s growing drift away from New Delhi towards China and Pakistan.

Let me rephrase that. Trump’s economic policies seem to be coming back to bite him—and dragging down his popularity.

Remember the times—plural—when Trump described tariffs as a “beautiful” word? It now appears that tariffs are neither beautiful nor appealing to Americans, who are growing increasingly uneasy about the president’s handling of the economy, particularly the rising cost of living, healthcare expenses, and personal finances.

A PBS poll released this week put Trump’s approval rating at 36%, while a separate Reuters/Ipsos poll found that only 33% of US adults approved of how he is handling the economy.

For a president who entered the White House in January 2025 with a 47% approval rating, this is indeed bad news.

There is now widespread speculation that Trump’s 20-minute address to the nation this week was aimed at arresting the slide. “Eleven months ago, I inherited a mess, and I’m fixing it,” he said, laying much of the blame for current economic woes at the doorstep of the previous Joe Biden administration.

It remains to be seen whether the speech will have the desired effect. But judging by the polls cited above, the American public does not appear particularly optimistic about what lies ahead in 2026.

That could become a serious problem for Trump, especially if he is unable to demonstrate tangible economic improvements before then.

Elizabeth Roche is an associate professor of practice, O.P. Jindal Global University, Sonipat, Haryana.