U.S. Export Controls Drive 473% Revenue Surge for China's Top Chip Toolmakers Since 2019

BEIJING – Chinese semiconductor equipment manufacturers have experienced a significant boom, with their combined revenue soaring by 473% since 2019. This remarkable growth, which has seen four out of five top firms report record profits in 2024, is largely attributed to U.S. export controls that have compelled Chinese chipmakers to prioritize domestic suppliers.

The strategic shift highlights an unintended consequence of Washington's policies, as noted by Nikkei Asia: > "U.S. export controls have created a golden era for Chinese suppliers of semiconductor equipment, as almost all the country's top chipmakers have switched as much as possible to locally made equipment." This move towards self-reliance has fostered an environment where local toolmakers, previously overlooked in favor of Western alternatives, are now gaining critical collaboration and market share.

Prior to the "chip war," Chinese fabrication plants (fabs) like SMIC typically relied on Western tool suppliers due to perceived ease and lower risk. However, with restrictions limiting access to international solutions, domestic alternatives have become essential. While one Chinese chip equipment executive conceded, > "To be honest, most domestically built equipment still can't match the performance of leading international solutions," they added, "But at this stage, chipmakers have no choice. They need to use them as a baseline and keep giving them a chance, even if it means risking impacts on production quality."

This necessity has spurred unprecedented collaboration. An engineer at Naura, a leading Chinese equipment manufacturer, revealed that > "Chipmakers will share the big data, formulas and parameters that they run with international leading machines with local vendors to help fine-tune the equipment performance." This direct engagement accelerates the refinement of Chinese-made tools. Companies like NAURA Technology Group and Advanced Micro-Fabrication Equipment (AMEC) have seen substantial revenue increases, with NAURA's revenue growing by 48.3% and AMEC's by 48.9% in 2024.

The rapid advancement of China's domestic semiconductor tool industry has raised concerns among some U.S. experts. Meghan Harris, a former U.S. senior administration official, stated, > "We are at risk of running our own equipment manufacturers into the ground." She further warned, > "The worst-case scenario is that Chinese toolmakers become not only domestically competitive [but] even internationally competitive, which is coming... Once that starts, it will be very difficult to stop."

China's semiconductor equipment market saw significant expansion, with its share of global equipment sales rising to 38% in 2024 from 6% in 2010. The overall revenue of domestic semiconductor equipment companies grew by over 17.6% to USD 4 billion in 2023, with a localization rate of 11.7%, projected to reach 13.6% in 2024. Despite these gains, challenges remain, particularly in advanced lithography, where China still lags behind global leaders like ASML.