I think ASMLs business in China will be finished. It will face competition in China from SMEE with its increasingly advanced DUV machines (SMEE 22nm vs ASML 38nm) It will also not be able to sell EUV in China as the US Government says it can't.ASML might still have some room to breathe if they can sell EUV machines (there'll still be some demand in the next decade, since ASML machines currently have 3x more productivity compared to the Changchun prototype). TSMC would probably take advantage of presumably cheaper Chinese lithographic machines once the productivity rate goes up.
The real hurt will be with Cymer. If Harbin Institute of Technology gets their DPP to 300W power levels, then Cymer's LPP is finished (as of 2010, DPPs generally had lower power levels that LPPs, but enjoyed lower power consumption per photon levels, and had smaller logistical and maintainance footprints).
I believe Changchun Institute chose the DPP for a reason, other than efficiency & long term benefit. Their EUV machine using a DPP Light Source will enable it to sidestep and avoid alot of ASML Patents. It will also develop a different product to US based Cymer and avoid accusations of copying by Americans. This will allow potential global export of its EUV machines once the Patent issue is not a factor.
Yes.....they have to work to increase the productivity and increase power levels of the DPP.