China’s drive for self-sufficiency in chip manufacturing equipment advanced so rapidly in 2025 that even the country’s planners were caught by surprise, as the ratio of domestically developed semiconductor equipment surged to 35% by the year’s end, up from 25% in 2024. The ratio was higher than the target of 30%, set in early 2025 to encourage China’s semiconductor industry to favor local suppliers over U.S. rivals such as Applied Materials, Lam Research and KLA. Progress had been particularly evident in critical segments such as etching and thin-film deposition, where adoption of local equipment had surpassed 40%, thanks to the progress of local manufacturers such as Naura Technology Group and Advanced Micro-Fabrication Equipment.
The 5-nanometer-grade etching machine made by Advanced Micro-Fabrication had entered validation for Taiwan Semiconductor Manufacturing Co’s advanced process lines. Oxidation and diffusion furnaces from Naura accounted for more than 60% of the 28 nm production lines at Semiconductor Manufacturing International Corp (SMIC), China’s top foundry. Naura’s order backlog now extended into the first quarter of 2027. Piotech doubled its share of plasma-enhanced chemical vapor deposition equipment at Yangtze Memory Technology’s 3D NAND production lines, bringing the company’s equipment share to 30% from 15%.
China has been working hard to reduce its reliance on imported chip equipment, particularly from the U.S., since Washington imposed export restrictions in 2022. Chinese developers of new semiconductor lines are explicitly required to source at least 50% of tooling domestically. China was projected to maintain its position as the world’s largest market for semiconductor equipment through 2027, boosted by continuous capital investment in both legacy and advanced manufacturing nodes, according to industry association SEMI.
Chinese investors are putting money into key suppliers of chip equipment. Piotech’s share price in Shanghai has jumped 150% over the past year, while Naura gained 75% and Advanced Micro-Fabrication surged 85%. China is encouraging the development of domestic chip equipment through financing support from the China Integrated Circuit Industry Investment Fund, known as the “Big Fund”. Its third phase recently announced a CNY2 billion investment into the sector, specifically targeting research and development (R&D) of core components for etchers and lithography systems, the South China Morning Post reports.
