A notable shift in China's semiconductor landscape emerged recently when Richard Chang, founder of SMIC, and Dr. Gerald Yin, chairman and CEO of AMEC, called on local chipmakers to intensify their trials of domestically manufactured equipment. Their joint appearance on CCTV's Dialogue program last week aimed to address the pressing need for Chinese fabs to adopt homegrown technology amid increasing competition and supply chain uncertainties.
This call to action coincides with significant growth in the Chinese semiconductor equipment sector. AMEC reported a remarkable 36.6% year-on-year increase in revenue, reaching $1.74 billion (12.38 billion RMB) in 2025. Yet, despite these impressive figures, the industry is contending with declining profit margins. AMEC's gross margin fell to 39.2%, while ACM Research saw its margins drop from 50.1% to 44.4%. Analysts attribute this squeeze largely to heightened domestic competition, worsened by export controls limiting access to advanced foreign tools.
The Push for Local Trials
During their televised discussion, Chang and Yin stressed the importance of conducting production-line trials with domestic equipment. Chang noted that such trials are essential for improving technology and encouraged fabs to start small, using wafer batches of up to 100 to minimize risks associated with early adoption. Yin pointed out that many customers are still reluctant to fully transition from foreign to domestic equipment, often sticking to established practices.
Qualifying new tools in advanced manufacturing typically requires a rigorous timeline, usually taking 18 to 24 months to ensure reliability and efficiency. The necessity of domestic trials is highlighted by the fact that Chinese fabs are now sourcing approximately 35% of their equipment from local suppliers, up from 25% the previous year. Beijing aims for this figure to reach 50% soon, although most gains have been in mature-node equipment categories.
Challenges in Advanced Technology
Despite progress in equipment localization, significant challenges persist, particularly in lithography technology, which is essential for producing advanced semiconductor nodes. Shanghai Micro Electronics Equipment (SMEE) is currently the only Chinese manufacturer capable of producing lithography scanners, but its offerings do not match the advanced tools used in leading-edge production, which companies like TSMC rely on.
Chang and Yin's public appeal comes amid increasing urgency, as the United States continues to impose restrictions on the export of advanced semiconductor technology to China. The recent introduction of the MATCH Act, which proposes a ban on the export of DUV immersion lithography tools to China, further complicates the domestic industry's efforts to enhance its capabilities.
Future Outlook
The joint address by Chang and Yin signals a coordinated effort by Chinese industry leaders to encourage local fabs to accelerate the qualification of homegrown equipment. As competition intensifies and external pressures mount, the success of this initiative will be crucial in shaping the future of China's semiconductor industry. The next few years will be pivotal in determining whether domestic tools can meet the rigorous demands of high-volume manufacturing and whether China can reduce its reliance on foreign technology.
While the growth in local equipment production is promising, significant hurdles remain, particularly in advanced lithography. How the industry responds to these challenges will shape the future of semiconductor manufacturing in China, as the country seeks to bolster its technological independence amid geopolitical tensions.
