As Chinese chipmakers snap up local gear, self-sufficiency drive faces commercial test

Chinese chipmakers are pushing for greater local sourcing of production equipment in a bid to bolster self-sufficiency, with domestic toolmakers racing to meet strict standards for reliable and consistent equipment used in high-volume wafer production. Several new fabrication plants, or fabs, have set targets for local equipment, with one Wuxi-based customer aiming for 80% localisation, according to Jie Chen, chairman of Britech Semiconductor Equipment (Shanghai) Corp. Flash memory maker Yangtze Memory Technologies Corp, which previously relied on American-made tools for half of its equipment, is now working towards a fab that relies mainly on domestic machinery.

However, the transition from technical viability to commercial reliability poses a challenge, with Chen describing the industry's progression from a "zero-to-one" phase into a "2.0 era." Fabs require absolute consistency across multiple chambers and machines, and Chinese toolmakers will face the ultimate test when they can win top overseas clients without a home-turf advantage.

Beijing's push for reduced reliance on foreign suppliers extends to upstream materials suppliers as well. Xian ESWIN Material Technology, the largest manufacturer of unprocessed 12-inch silicon wafers in China, reported that domestic machinery made up 52% of its production equipment in June, up from 42% in 2024, with a goal of reaching 58% by 2027.

These ambitious mandates are driving growth for domestic toolmakers. Naura Technology Group, China's largest chip-equipment maker, reported a first-half revenue growth of about 25% year-on-year, while etching tool producer Advanced Micro-Fabrication Equipment (AMEC) saw a nearly 35% revenue increase. Domestic suppliers have also been gaining share in the semiconductor equipment market, currently accounting for about 23% of sales in China, projected to rise to 39% by 2030.

The equipment sector's growth is expected to continue, with Goldman Sachs projecting spending on wafer-fabrication equipment in China to rise from US$44.3 billion in 2025 to US$60.7 billion in 2028.