Key Points
- China now requires new chip factories to use at least 50% local equipment.
- The rule is an unwritten mandate from the government to promote self-sufficiency.
- Chinese equipment makers like Naura are seeing a massive increase in sales and revenue.
- The ultimate goal is for Chinese plants to use 100% domestic equipment.
China is pushing its chipmakers to buy local. According to new reports, the government is now requiring new factories to use at least 50% domestically made equipment. This rule, which isn’t publicly documented, is a major step in Beijing’s plan to build a semiconductor industry that doesn’t rely on foreign technology.
This aggressive push for self-sufficiency has become a top priority since the U.S. tightened its export rules in 2023. Those rules prevented China from acquiring the most advanced AI chips and chipmaking tools.
Now, Chinese manufacturers are being told to choose local suppliers even for machines that they can still buy from Japan, South Korea, or Europe. If a factory’s plan doesn’t meet the 50% threshold, it will likely be rejected.
This “whole nation” approach, as President Xi Jinping calls it, is already making a big impact. Chinese equipment makers such as Naura and AMEC are experiencing a significant surge in demand. Before U.S. restrictions, Chinese chipmakers such as SMIC preferred to buy American-made tools. Now, they have no choice but to work with domestic companies, which is forcing local firms to innovate and improve their technology at a rapid pace.
The results are starting to show. Naura is already testing its advanced etching tools on a 7-nanometer production line, a critical step toward making high-end chips. The company is also filing for more patents and reporting record revenue.
While this is great news for Chinese firms, it is causing significant concern for global competitors such as Lam Research. They are quickly losing market share in one of the world’s most important tech hubs.
Beijing’s ultimate goal is to achieve 100% self-sufficiency. With billions of dollars pouring in from the government’s “Big Fund,” China is investing heavily across the entire chip supply chain. While they still have a long way to go to catch up with global leaders, this 50% rule is a clear sign that the global semiconductor landscape is changing rapidly.
