Extreme ultraviolet lithography (EUVL) using 13.5 nm wavelength light is the leading candidate to succeed 193 nm immersion lithography, enabling semiconductor chips with features smaller than 22 nm. Several major programs worldwide have developed this technology in recent years [D. A. Tichenor , OSA Proceedings on Soft X-Ray Projection Lithography, edited by A. M. Hawryluk and R. H. Stuten (1993), Vol. 18, p. 79; H. Kinachita, OSA Proceedings on Soft X-Ray Projection Lithography, edited by A. M. Hawryluk and R. H Stulen (1993), Vol. 18, p. 74; J. P. H. Benschop, W. M. Kaiser, and D. C. Ockwell, Proc. SPIE 3676, 246 (1999)] and in 2006, ASML shipped the first EUV Alpha Demo tools (NA=0.25 full-field scanners) to IMEC in Belgium [A. M. Goethals , Proc. SPIE 6517, 651709 (2007)] and CNSE in Albany [O. Wood , Proc. SPIE 6517, 6517-041 (2007)], USA. Currently the development of preproduction tools with targeted shipment of 2009 is well under way. This paper discusses the most critical items for EUVL development, namely, EUV imaging and EUV sources. Furthermore, it elaborates on the necessary development of masks and resists and, for example, quantifies how resist diffusion length can impact imaging capabilities. Results obtained and lessons learned with the Alpha Demo tools are discussed, as well as potential solutions to some of the remaining challenges. Additionally, this paper explains how EUV can realize high productivity (>100 wafers/h) and high resolutions (< 22 nm) to continue the cost-effective shrink of semiconductors for several generations.