Chinese chip equipment manufacturers, like SiCarrier, are ramping up efforts to enhance the country’s semiconductor capabilities.

This aligns with President Xi Jinping’s goal to reduce reliance on foreign suppliers.

Domestically produced wafer fabrication equipment accounted for 11.3% of China’s purchases in 2024, up from 5.1% in 2020, following US export restrictions on advanced chipmaking tools.

These restrictions, especially on ASML’s lithography systems, have pushed Chinese firms to adopt less advanced technologies, such as SMEE’s 90-nanometer lithography systems.

Despite these challenges, China remains the largest purchaser of wafer fabrication tools, accounting for 40% of global sales in 2024.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ China’s semiconductor self-sufficiency timeline accelerating despite market headwinds

While the original article notes the current 11.3% self-sufficiency rate, industry projections suggest China’s domestic equipment capabilities could reach 50% by 2025, a significant acceleration from just 13.6% in early 2024 1.

This ambitious growth comes despite forecasts that China’s overall semiconductor equipment purchases will decline to $38 billion in 2025, down 6% from 2024 levels, following three years of continuous growth 2.

Chinese equipment makers are making notable progress in specific process segments where technical barriers are lower, with advancements in etching, cleaning, and chemical mechanical planarization (CMP) equipment 1.

The lithography segment remains China’s greatest challenge, as the article correctly identifies, with Shanghai Micro Electronics Equipment (SMEE) still unable to match the capabilities of global leaders despite years of investment.

China’s global share of semiconductor equipment purchases is expected to contract from 40% in 2024 to approximately 20% in 2025, indicating a significant market shift after years of dominance 2.

2️⃣ Export controls show limited economic impact while accelerating China’s domestic push

US semiconductor export controls have had a relatively modest economic impact on China’s broader economy, estimated at just 5 basis points drag on GDP in 2023 and a cumulative 0.8% reduction from 2024-2026 3.

The limited economic damage has allowed China to maintain its investment strategy in domestic semiconductor capabilities, with companies like Naura and AMEC seeing significant revenue growth since 2020, coinciding with the timeline when US restrictions intensified.