China's Strategic Shift: Boosting Domestically Made Semiconductor Equipment

China mandates chipmakers to use at least 50% domestic equipment in new capacity expansions, pushing for a self-sufficient semiconductor supply chain. This policy reflects Beijing's response to U.S. export restrictions and underscores the nation's commitment to advancing local technology, with significant industry impacts.

China is implementing a new policy requiring chipmakers to use at least 50% domestically produced equipment when expanding capacity, sources report. This move is part of Beijing's broader strategy to build a self-sufficient semiconductor supply chain amidst tightening U.S. technology export restrictions.

The mandate, though not publicly documented, necessitates Chinese firms to favor local suppliers over foreign ones, particularly from the U.S., Japan, South Korea, and Europe. The restriction is relaxed for advanced chip production lines due to current limitations in domestic technology. Authorities are reportedly aiming to rely entirely on Chinese-made equipment eventually.

This shift has sparked innovation and growth within China's chip production sector. Key domestic firms like Naura are achieving milestones in advanced etching tools, and state orders for domestic lithography machines are surging. Beijing's financial backing, through initiatives like the "Big Fund," is further accelerating local industry development.

(With inputs from agencies.)