Chinese Semiconductor Vendors Post Record Revenues Amid Fierce Price Wars And Shrinking Margins

China’s semiconductor equipment vendors have posted record revenues in 2025, with AMEC, Naura Technology, Piotech, and ACM Research leading the charge. However, despite these impressive financial numbers, margins have fallen as domestic competition intensifies. The squeeze on margins is largely driven by internal price wars between Chinese vendors, who are competing fiercely for orders that previously went to established foreign suppliers.

The situation has become increasingly pressing, with industry figures indicating that the next three to five years will determine whether domestically built tools can meet the demands of volume manufacturing. The lack of credible near-term domestic solutions in lithography, particularly in this critical chokepoint, poses a significant challenge.

SMIC founder Richard Chang and AMEC chairman and CEO Dr. Gerald Yin recently appeared together on CCTV’s Dialogue program to make a coordinated case for Chinese chipmakers to give homegrown equipment more production-line trial time. The joint TV appearance was a public appeal to Chinese fabs, urging them to prioritize the development and testing of domestic tools.

Chang argued that domestically built equipment can’t improve without real production-line trials, emphasizing the importance of starting with small wafer batches before scaling up to minimize risks. Yin echoed this sentiment, noting that Chinese customers still default to foreign tools out of habit, even when new systems from leading vendors require significant tuning time upon deployment.

Industry-standard timelines for qualifying a new etch or deposition tool on a leading-edge production line typically run 18 to 24 months from installation to qualified production status. This process tests reliability, particle contamination, process drift, and throughput under sustained operation, ensuring that the equipment can produce high-quality wafers under real-world conditions.

AMEC’s recent entry into the large flat-panel display equipment segment is a notable example of China’s progress in this area. The company reportedly built a working prototype within 12 months, met customer specifications four months later, and shipped the tool to a production line within 18 months total. While these claims have not been independently verified, they highlight AMEC’s growing capabilities and its ability to compete with established foreign suppliers.

AMEC also claims that SMIC has purchased at least 800 of its tools, a figure Chang cited on the CCTV broadcast. Additionally, AMEC asserts that its etch technology is used in TSMC’s supply chain at nodes from 65nm down to 5nm and 3nm. While TSMC has not publicly confirmed the scope of AMEC’s role in its production lines, these claims demonstrate the growing importance of domestic equipment in China’s chipmaking ecosystem.

Despite these successes, the lack of a credible near-term domestic solution in lithography remains a significant challenge. Shanghai Micro Electronics Equipment (SMEE), the only Chinese supplier of lithography scanners in any volume, produces a 90nm-class ArF system. While a 28nm-class tool is reportedly in development, it has not yet entered mass production, and details are scarce.

The situation is further complicated by Washington’s efforts to restrict the export of DUV immersion lithography tools to China. The MATCH Act, introduced last month, names and designates several Chinese equipment vendors as “Covered Facilities” and would impose a country-wide prohibition on exporting these tools to China. As of the time of writing, the bill is currently sitting in a Senate Committee.

China criticized the legislation less than a week before the duo’s state-sanctioned television address to chipmakers. The broadcast itself can be viewed as part of Beijing’s response: a coordinated message that domestic fabs need to accelerate qualification of Chinese-built alternatives before the remaining supply lines are cut.

In recent years, China’s semiconductor equipment vendors have made significant progress in developing and testing domestic tools. However, the lack of credible near-term domestic solutions in lithography poses a significant challenge. The situation is further complicated by Washington’s efforts to restrict the export of DUV immersion lithography tools to China, which could significantly impact China’s chipmaking ecosystem.

China’s semiconductor equipment industry has the potential to drive economic growth and competitiveness by reducing dependence on foreign suppliers and establishing a more robust domestic industry. With continued investment, innovation, and collaboration between Chinese fabs and domestic equipment vendors, China can establish a world-class industry that contributes significantly to the country’s economic development.

The next three to five years will determine whether domestically built tools can meet the demands of volume manufacturing, and China’s equipment vendors must work together to overcome the remaining hurdles in lithography and other areas. With continued investment and innovation, China has the potential to establish a world-class semiconductor industry that drives economic growth and competitiveness.

As the situation continues to evolve, it is essential for stakeholders to remain vigilant and proactive. The success of China’s semiconductor equipment industry will depend on its ability to develop a robust and sustainable domestic ecosystem that can compete with the best in the world. With continued investment, innovation, and collaboration between Chinese fabs and domestic equipment vendors, China has the potential to establish a world-class industry that drives economic growth and competitiveness.

The development of China’s semiconductor equipment industry is a complex and multifaceted challenge that requires coordination and cooperation between Chinese fabs and domestic equipment vendors. Ultimately, China’s success in the global semiconductor industry will depend on its ability to develop a robust and sustainable domestic ecosystem that can compete with the best in the world.

With the help of domestic equipment vendors like AMEC, Naura Technology, Piotech, and ACM Research, China is taking steps towards reducing its dependence on foreign suppliers and establishing a more robust domestic industry. However, the journey ahead will be long and challenging, requiring continued investment, innovation, and collaboration between Chinese fabs and domestic equipment vendors.

In the coming years, it is essential that Chinese fabs prioritize the development and testing of domestic tools, focusing on areas like lithography where significant progress is still needed. By doing so, they can minimize their reliance on foreign suppliers and reduce the impact of export restrictions.

As the situation continues to evolve, it is crucial for stakeholders to remain vigilant and proactive. The future of China’s chipmaking ecosystem will depend on its ability to accelerate qualification of Chinese-built alternatives, particularly in the area of lithography. With continued investment and innovation, China can establish a world-class semiconductor industry that drives economic growth and competitiveness.

China has the potential to drive economic growth and competitiveness by reducing dependence on foreign suppliers and establishing a more robust domestic industry with the help of domestic equipment vendors like AMEC, Naura Technology, Piotech, and ACM Research. The next three to five years will determine whether domestically built tools can meet the demands of volume manufacturing, and China’s equipment vendors must work together to overcome the remaining hurdles in lithography and other areas.

With continued investment, innovation, and collaboration between Chinese fabs and domestic equipment vendors, China has the potential to establish a world-class industry that drives economic growth and competitiveness. The development of China’s semiconductor equipment industry is a complex challenge that requires coordination and cooperation between Chinese fabs and domestic equipment vendors.

In conclusion, China’s semiconductor equipment vendors have made significant progress in recent years, but the lack of credible near-term domestic solutions in lithography poses a significant challenge. The situation is further complicated by Washington’s efforts to restrict the export of DUV immersion lithography tools to China, which could significantly impact China’s chipmaking ecosystem.

Ultimately, China’s semiconductor equipment industry has the potential to drive economic growth and competitiveness by reducing dependence on foreign suppliers and establishing a more robust domestic industry with the help of domestic equipment vendors like AMEC, Naura Technology, Piotech, and ACM Research.

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