The rule just isn’t publicly documented, however chipmakers searching for state approval to construct or develop their crops have been advised by authorities in current months that they need to show by way of procurement tenders that at the very least half their tools will probably be Chinese language-made, the folks advised Reuters.
The mandate is without doubt one of the most important measures Beijing has launched to wean itself off reliance on international expertise, a push that gathered tempo after the U.S. tightened expertise export restrictions in 2023, banning gross sales of superior AI chips and semiconductor tools to China.
Whereas these U.S. export restrictions blocked the sale of a number of the most superior instruments, the 50% rule is main Chinese language producers to decide on home suppliers even in areas the place international tools from the U.S., Japan, South Korea and Europe stay out there.
Functions failing the edge are sometimes rejected, although authorities grant flexibility relying on provide constraints, the folks stated. The necessities are relaxed for superior chip manufacturing traces, the place domestically developed tools just isn’t but absolutely out there.
“Authorities want whether it is a lot greater than 50%,” one supply advised Reuters. “Finally they’re aiming for the crops to make use of 100% home tools.”
China’s trade ministry didn’t reply to a request for remark. The sources didn’t want to be recognized because the measure just isn’t public. ‘WHOLE NATION’ APPROACH
China’s President Xi Jinping has been calling for a “complete nation” effort to construct a totally self-sufficient home semiconductor provide chain that includes hundreds of engineers and scientists at firms and analysis facilities nationwide.
The trouble is being made throughout the broad supply-chain spectrum. Reuters reported earlier this month that Chinese language scientists are engaged on a prototype of a machine able to producing cutting-edge chips, an end result that Washington has spent years attempting to stop.
“Earlier than, home fabs like SMIC would like U.S. tools and would probably not give Chinese language companies an opportunity,” a former worker at native tools maker Naura Know-how stated, referring to the Semiconductor Manufacturing Worldwide Company.
“However that modified beginning with the 2023 U.S export restrictions, when Chinese language fabs had no selection however to work with home suppliers.”
State-affiliated entities positioned a report 421 orders for home lithography machines and elements this 12 months price round 850 million yuan, based on publicly out there procurement information, signaling a surge in demand for domestically developed applied sciences.
To help the native chip provide chain, Beijing has additionally poured a whole bunch of billions of yuan into its semiconductor sector by way of the “Large Fund”, which established a 3rd part in 2024 with 344 billion yuan ($49 billion) in capital.
WINNERS AND LOSERS
The coverage is already yielding outcomes, together with in areas corresponding to etching, a vital chip manufacturing step that includes eradicating supplies from silicon wafers to carve out intricate transistor patterns, sources stated.
China’s largest chip tools group, Naura, is testing its etching instruments on a cutting-edge 7nm (nanometre) manufacturing line of SMIC, two sources stated. The early-stage milestone, which comes after Naura just lately deployed etching instruments on 14nm efficiently, demonstrates how rapidly home suppliers are advancing.
“Naura’s etching outcomes have been accelerated by the federal government requiring fabs to make use of at the very least 50% home tools,” one of many folks advised Reuters, including that it was forcing the corporate to quickly enhance.
Superior etching instruments had been predominantly equipped in China by international companies corresponding to Lam Analysis and Tokyo Electron, however are actually being partially changed by Naura and smaller rival Superior Micro-Fabrication Tools (AMEC) , sources say.
Naura has additionally confirmed a key companion for Chinese language reminiscence chipmakers, supplying etching instruments for superior chips with greater than 300 layers. It developed electrostatic chucks – units that maintain wafers throughout processing – to switch worn elements in Lam Analysis tools that the corporate might not service after the 2023 restrictions, sources stated.
Naura, AMEC, YTMC, SMIC, Lam Analysis, and Tokyo Electron didn’t reply to requests for remark.
China’s progress is being seen with concern by world opponents, as international suppliers are squeezed out of the China market.
Naura filed a report 779 patents in 2025, greater than double what it filed in 2020 and 2021, whereas AMEC filed 259, based on Anaqua’s AcclaimIP database, and verified by Reuters.
That is additionally translating into sturdy monetary outcomes. Naura’s income for the primary half of 2025 jumped 30% to 16 billion yuan. AMEC reported a 44% soar in first-half income to five billion yuan.
Analysts estimate that China has now reached roughly 50% self-sufficiency in photoresist-removal and cleansing tools, a market beforehand dominated by Japanese companies, however now domestically led by Naura.
“The home tools market will probably be dominated by two to a few main producers, and Naura is unquestionably one in every of them,” stated a separate supply.
