China’s chip equipment manufacturers have experienced a significant surge in revenue, reflecting Beijing’s determination to achieve self-reliance in the semiconductor industry. In the first half of the year, the top 10 domestic equipment manufacturers generated approximately 16.2 billion Chinese yuan ($2.2 billion), representing a 39% year-on-year increase. This growth comes at a time when semiconductors, crucial components in various devices, have become entangled in the broader technology conflict between China and the U.S.
Background
As part of its strategy to cut off Beijing’s access to key semiconductor equipment and technologies, the U.S. has imposed export restrictions. Consequently, China has started to prioritize the development of its domestic semiconductor industry to reduce reliance on foreign companies hailing from tech powerhouses like the U.S., South Korea, and Taiwan. The revenue surge experienced by Chinese chip equipment manufacturers can be attributed to these efforts.
Naura Technology Group Co. emerges as the top Chinese semiconductor equipment manufacturer in terms of revenue, according to CINNO Research. The company specializes in producing tools essential for the chip manufacturing process. Naura witnessed a remarkable 68% year-on-year increase in operating revenue, surpassing other market players, with more than 7 billion yuan earned in the first half of the year.
Advanced Micro-Fabrication Equipment Inc. China (AMEC) secures the second position among Chinese domestic players. AMEC focuses on developing machines necessary for the semiconductor manufacturing process. Its revenue witnessed a 28% year-on-year rise to reach 2.53 billion yuan during the first half of the year, according to CINNO’s report.
ACM Research, specializing in manufacturing cleaning and packaging equipment for semiconductors, ranks third among Chinese players. The company experienced a notable 47% year-on-year revenue growth in the first six months of the year, amounting to 1.61 billion yuan.
Despite the steady progress made by China’s semiconductor industry, there are still challenges in acquiring access to the most advanced chipmaking tools. For instance, Dutch company ASML manufactures an expensive instrument called an extreme ultraviolet lithography machine, essential for producing cutting-edge chips. However, the Dutch government has imposed restrictions on the export of these machines to China.
This limitation has prompted Beijing to focus on developing its domestic chip equipment industry. The self-reliance strategy has gained traction as China seeks to avoid potential tensions with the U.S. Meanwhile, China’s semiconductor industry has shown some promising advancements, even in the face of U.S. sanctions. Huawei’s recent release of a new smartphone capable of connecting to next-generation 5G networks is evidence of this progress. The smartphone incorporates a chip manufactured by SMIC, surprising many industry experts as it demonstrates a higher level of technological sophistication than previously anticipated.
China’s domestic chip equipment makers are experiencing a surge in revenue, driven by Beijing’s commitment to developing a self-reliant semiconductor industry. Despite challenges in accessing advanced chipmaking tools, Chinese manufacturers like Naura Technology Group Co., Advanced Micro-Fabrication Equipment Inc. China (AMEC), and ACM Research are leading the charge in the country’s pursuit of technological independence. As China continues to prioritize the growth of its domestic chip equipment sector, it aims to reduce reliance on foreign technology and secure a prominent position in the global semiconductor market.
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