[Alpha Biz= Paul Lee] China has reportedly issued informal guidelines requiring domestic semiconductor manufacturers to use at least 50% locally made equipment when building or expanding production lines.

Citing three industry sources, Reuters reported on December 30 that companies seeking government approval for new or expanded fabs in recent months had to demonstrate that over half of their equipment purchases were from domestic suppliers. One source said, "Authorities prefer a much higher ratio than 50% and ultimately aim for 100% Chinese-made equipment in factories."

The move aligns with President Xi Jinping’s strategy to establish a self-sufficient semiconductor supply chain. According to Reuters, the guidelines are fundamentally reshaping purchasing behavior at Chinese fabs, which previously favored U.S.-made equipment, including at leading foundries such as SMIC.

A former employee at Chinese equipment maker Naura noted that U.S. export controls in 2023 forced Chinese fabs to rely on domestic suppliers. The policy is already showing results: Naura is testing etching equipment on SMIC’s 7nm production line, and its first-half revenue surged 30% year-on-year to CNY 16 billion (≈ KRW 3.3 trillion).

Meanwhile, U.S. and Japanese equipment makers, including Lam Research and Tokyo Electron, face serious challenges as domestic companies like Naura and AMEC rapidly replace them. In areas such as photoresist removal and cleaning equipment, China’s self-sufficiency is estimated to have reached roughly 50%, with the market increasingly dominated by a few domestic players.

 

 

 

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