China Pushes for Greater Self-Reliance in Semiconductor Manufacturing Equipment
Recent reports indicate that the Chinese government is intensifying efforts to boost domestic production within its semiconductor industry. According to sources cited by Reuters, Chinese semiconductor manufacturers are now being required to source at least 50 percent of their chipmaking equipment from local suppliers when constructing new fabrication plants or expanding existing ones. While there is no formal regulation in place, local authorities have reportedly instructed chipmakers to submit procurement tenders demonstrating that at least half of their equipment purchases are from Chinese companies.
This policy shift has become evident as multiple Chinese firms have applied to build new semiconductor fabs or extend current facilities. The move aligns with China’s broader strategy to achieve greater self-sufficiency in semiconductor manufacturing, especially amid ongoing global technology export restrictions.
Challenges in Replacing Imported Semiconductor Equipment
It is important to note that not all equipment used in semiconductor fabs is directly involved in chip production. While Chinese manufacturers have made progress in developing some of the necessary machinery, the most advanced tools—such as cutting-edge photolithography systems—are still dominated by international suppliers like Dutch company ASML. These advanced machines are critical for producing the latest generation of chips, and replacing them with domestic alternatives remains a significant challenge.
Despite these hurdles, China is making substantial investments to strengthen its local semiconductor equipment sector. In 2025, Chinese companies reportedly placed orders for 421 domestically produced lithography machines and related components. Additionally, the government has allocated approximately US$49 billion to support the growth and innovation of the domestic semiconductor industry.
Progress Among Chinese Semiconductor Equipment Manufacturers
Leading Chinese chip equipment manufacturer Naura is currently testing etching equipment capable of producing 7-nanometer chips. While this technology still lags behind the capabilities of global leaders such as Intel, Samsung, and TSMC, it represents a significant step forward for China’s domestic industry. Naura has also developed equipment for etching chips with more than 300 layers and is expanding its portfolio to gradually replace imported machinery from American and Japanese suppliers.
Naura’s main domestic competitor, Advanced Micro-Fabrication Equipment (AMEC), is also experiencing rapid growth. In 2025, Naura reported a 30 percent increase in revenue, while AMEC saw a 44 percent rise, reflecting the growing demand for locally produced semiconductor equipment.
Outlook for China’s Semiconductor Self-Sufficiency
China’s ambition to rely exclusively on domestically manufactured chipmaking equipment is a long-term goal that faces considerable obstacles, particularly in matching the technological advancements of established global players. However, the current policy direction and significant financial backing suggest that China is committed to reducing its dependence on foreign technology and building a more resilient semiconductor supply chain.
