In the wake of stricter tech controls, China seems to push chipmakers to use a majority of local equipment, eyeing semiconductor self-reliance and combating foreign players in a shifting market.
China is intensifying its push for semiconductor self-sufficiency with a new requirement that chip manufacturers use at least 50 per cent domestically produced equipment when expanding capacity.
According to an exclusive report by Reuters, companies seeking approval to build new fabs or upgrade existing plants must, through procurement tenders, demonstrate that half of their machinery comes from Chinese suppliers. The directive is not publicly documented but has been quietly enforced in recent months.
The measure reportedly represents one of Beijing’s most determined efforts to reduce dependence on foreign technology, particularly after the US strengthened export controls in 2023. Those restrictions limited China’s access to advanced AI chips and high-end manufacturing tools. While overseas equipment remains available in some categories, authorities are now encouraging domestic alternatives, prompting manufacturers to switch suppliers even when international options remain available.
Applications that fail to meet the threshold are often rejected. However, regulators may allow flexibility where local tools are not yet capable of supporting cutting-edge chip processes. Despite that, officials are seen to favour far higher domestic content over time, with a longer-term ambition of achieving entirely homegrown production lines.
The strategy aligns with President Xi Jinping’s call for an effort to build a complete semiconductor ecosystem. China has been investing heavily across the supply chain, supporting research, equipment development and manufacturing capability. State-backed funds, including the ‘Big Fund,’ have poured hundreds of billions of yuan into the sector to accelerate progress.
Early signs suggest the policy is reshaping the market. Demand for Chinese-made lithography parts and manufacturing tools has surged. Local equipment leaders such as Naura and AMEC are gaining market share, filing record patent applications and reporting strong revenue growth. Major Chinese fabs, including SMIC and domestic memory makers, increasingly use their technologies.
The report highlighted that this shift is boosting China’s technological confidence but squeezing foreign suppliers that previously dominated the market. Analysts say China has already achieved about 50 per cent self-reliance in some equipment categories.
