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Chinese chip equipment manufacturers thrive

Chinese chip equipment producers are witnessing a significant rise in orders as the United States tightens restrictions on China’s semiconductor sector. Domestic tool manufacturers like Naura and etching device maker AMEC are obtaining more bids from Chinese foundries as companies prioritize local alternatives over foreign-made equipment. This shift towards relying on local equipment suppliers has been driven by the need to reduce dependency on foreign technologies and circumvent the export controls imposed by the U.S. government. In turn, this presents a new opportunity for domestic manufacturers to innovate and expand their footprint in the global semiconductor market, ultimately strengthening China’s homegrown semiconductor industry.

Increased bids for domestic manufacturers

Huatai Securities reported that from January to August 2023, domestic manufacturers secured nearly half (47.25%) of all machinery equipment bids placed by Chinese foundries. This number jumped to 62% between July and August, indicating a shift in the industry as businesses prepare for worsening U.S. limitations and concentrate on self-sufficiency, as promoted by Chinese President Xi Jinping. As a result, local machinery equipment manufacturers are experiencing a surge in demand, which is expected to contribute significantly to the growth of China’s domestic machinery industry. Additionally, this shift towards self-sufficiency is likely to reduce dependency on foreign imports, thereby aiding the nation in navigating the global market challenges posed by the ongoing trade restrictions.

This surge in sales highlights the growing demand for advanced technology within the country and demonstrates the strengthening capabilities of China’s local equipment manufacturers in catering to this demand. Despite this current growth, Chinese manufacturers will likely face difficulties as the U.S. and other nations’ restrictions are predicted to cease accumulating foreign-made chip equipment. The restrictions may prompt Chinese manufacturers to rely heavily on domestic technology, leading to possible limitations in innovation and the quality of their products.

Equipment-related revenue of China’s top 10 domestic equipment manufacturers increased by 39% year-on-year in the first half of 2023, generating $2.2 billion in sales. China faces challenges in developing sophisticated technologies like extreme ultraviolet (EUV) lithography machines necessary for creating advanced chips, with the U.S. restricting access to such tools. They will need to reduce dependence on foreign technologies and circumvent export controls imposed by the U.S. government — which the government will be watching for.

Featured Image Credit: Photo by Mikhail Nilov; Pexels; Thank you!

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Deanna Ritchie
Former Editor

Deanna was an editor at ReadWrite until early 2024. Previously she worked as the Editor in Chief for Startup Grind, Editor in Chief for Calendar, editor at Entrepreneur media, and has over 20+ years of experience in content management and content development.

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