China's semiconductor-equipment industry is moving from isolated product breakthroughs toward a broader domestic tool chain, as local suppliers expand across etching, deposition, cleaning, polishing and process-control systems.


The shift matters for China's AI industry because leading-edge accelerators and memory chips depend on hundreds of tightly controlled manufacturing steps. Replacing a single imported tool is not enough: equipment must be validated together with materials, process recipes and a chipmaker's production line, often over several years.


Chinese suppliers still trail global leaders in important categories, particularly advanced lithography. But their progress in other process steps is making the domestic equipment market more diversified and commercially relevant.


The opportunity is expanding alongside the AI infrastructure cycle. Industry association SEMI forecasts global wafer-fab equipment sales will grow 23.1% to $143.9 billion in 2026. SEMI also expects China to remain the world's largest equipment-spending market in 2026, as local chipmakers continue investing in mature and selected advanced nodes.


From a Single Etcher to a Broader Tool Chain

AMEC is one of the earliest and most prominent examples. Founded in Shanghai in 2004, the company developed plasma-etching systems that are now used by domestic and international customers. AMEC says its etching products cover applications from 65 nanometers to 5 nanometers and more advanced processes, while its portfolio has expanded into MOCVD, LPCVD, ALD and epitaxy equipment.


The company's development illustrates a recurring pattern in China's semiconductor-tool sector: experienced engineers return from overseas companies, build a product in a narrow category, validate it at a domestic fabrication plant and then expand into adjacent processes.


Piotech followed a similar route in thin-film deposition. Founded in 2010, the company has developed PECVD and SACVD systems and broadened its product coverage as Chinese fabs sought more domestic options.


Hwatsing Technology, which grew out of research at Tsinghua University, focuses on chemical mechanical planarization, or CMP. Its equipment has entered production lines operated by major Chinese chipmakers. ACM Research Shanghai has built a portfolio around wafer-cleaning systems, while Shanghai Micro Electronics Equipment remains a closely watched company in domestic lithography.


NAURA Technology Group has taken a platform approach. Through internal development and acquisitions, its portfolio spans etching, physical and chemical vapor deposition, oxidation and diffusion, cleaning and other process equipment. The company reported 2025 revenue of RMB 39.35 billion, up 30.85% year on year. Revenue from its integrated-circuit equipment business grew by more than 50%, according to its annual report.


The growth is being supported by heavy engineering investment. NAURA recorded RMB 5.44 billion in R&D expenses in 2025, an increase of 46.96%. AMEC reported RMB 3.74 billion in R&D investment, up 52.65% and equal to 30.23% of revenue. AMEC said its development cycle for a new tool had fallen from three to five years to two years or less, while its pipeline covered more than 20 new products across six categories.


Chipmakers Are Becoming Development Partners

Semiconductor tools cannot be deployed like ordinary factory machinery. A new system must prove process stability, yield and compatibility with a fab's existing production environment. Qualification can take years, and a failed test may delay adoption even when a tool performs well in a laboratory.


That makes local chipmakers more than customers. They also provide production lines where new equipment can be tested and refined. SMIC has played a particularly important role by validating tools from a range of domestic suppliers, helping them move from prototypes into volume manufacturing.


This “use-driven development” model creates a feedback loop: local fabs gain alternative suppliers, while equipment makers receive process data and engineering experience that would otherwise be difficult to obtain.


Export controls have accelerated the search for alternatives. Since 2019, the United States has progressively tightened restrictions affecting Chinese access to advanced semiconductor manufacturing equipment, components and maintenance. The controls have raised costs and created operational uncertainty, but they have also pushed more investment and engineering resources toward domestic suppliers.


Progress Is Uneven, but the Market Is Expanding

Industry estimates cited in Chinese coverage put the overall localization rate for domestic semiconductor equipment at roughly 20% in 2025, up from less than 5% in earlier years. The figure varies significantly by process category and should not be read as evidence that the entire tool chain has reached the same level of maturity.


China has made more visible progress in etching, thin-film deposition, cleaning and CMP than in advanced lithography. Even within categories where domestic tools are available, adoption depends on the process node, customer and production stage.


Official data nevertheless point to rapid growth in the broader electronics and semiconductor economy. China's Ministry of Industry and Information Technology said integrated-circuit output rose 23.1% year on year in the first half of 2026. The State Council, citing official data, reported that the value of China's integrated-circuit exports increased 88.7% over the same period, supported in part by global demand related to artificial intelligence.


The growth of domestic tool suppliers does not mean China has eliminated its dependence on foreign technology. Rather, it shows that the country is building a larger base of companies capable of competing for production-line validation. The next test is whether those suppliers can sustain yield, reliability and service at scale - and whether they can make progress in the most technically demanding gaps that remain.


Editorial Notes

The source article's claim that Samsung Electronics and SK Hynix were evaluating AMEC equipment was omitted because no primary confirmation was located.

The source article's localization-rate estimate is retained with explicit attribution and a category-level caveat.

Promotional language and unsupported predictions were removed.