China’s semiconductor industry has experienced significant growth in the first half of the year, with the country’s top chip equipment manufacturers reporting a surge in revenue. This growth comes as part of China’s ongoing efforts to achieve self-reliance and reduce its dependence on foreign technology. Amidst the broader technology battle between the U.S. and China, semiconductors have become critical components in a wide range of products, from smartphones to satellites. In this article, we will explore the impressive revenue growth of China’s domestic chip equipment manufacturers and their progress towards advanced chipmaking, despite facing U.S. sanctions and export restrictions.
According to Shanghai-based research firm CINNO Research, the top 10 domestic chip equipment manufacturers in China recorded approximately 16.2 billion Chinese yuan ($2.2 billion) in revenue during the first half of the year, marking a 39% year-on-year increase. This surge in revenue reflects Beijing’s push for self-reliance in the semiconductor industry, as the country aims to reduce its dependence on foreign companies such as those from the U.S., South Korea, and Taiwan.
China’s domestic semiconductor industry has traditionally relied heavily on foreign companies for chip manufacturing tools, putting it behind other major players in the market. However, since facing U.S. sanctions on Chinese tech firms like Huawei and SMIC (China’s biggest chipmaker), Beijing has been compelled to boost its domestic industry, seeking self-reliance and a reduced reliance on foreign technology. This shift in strategy has led to a significant increase in revenue for China’s domestic chip equipment manufacturing firms.
CINNO Research names Naura Technology Group Co. as the top Chinese semiconductor equipment maker in terms of revenue. Naura Technology Group produces tools essential to the chip manufacturing process and reported operating revenue of over 7 billion yuan in the first half of the year, representing a 68% year-on-year increase. Advanced Micro-Fabrication Equipment Inc. China (AMEC) is the second-largest Chinese player, specializing in machines required for semiconductor manufacturing. AMEC recorded a 28% year-on-year revenue growth, totaling 2.53 billion yuan in the first half of the year. ACM Research, the third-biggest Chinese player, focuses on manufacturing cleaning and packaging equipment for semiconductors, experiencing a 47% year-on-year revenue surge to 1.61 billion yuan during the first half of the year.
Despite the recent growth in revenue, China still faces challenges in accessing the most advanced chipmaking tools. For instance, the Dutch company ASML manufactures an expensive chipmaking tool called an extreme ultraviolet lithography machine, essential for producing the most advanced chips. However, ASML is restricted by the Dutch government from exporting these machines to China. This limitation, coupled with concerns about further tensions with the U.S., has led Beijing to rely on its domestic firms for chipmaking equipment. Despite these challenges, China’s semiconductor industry has shown progress in developing more advanced chips.
Notably, China’s semiconductor industry has made strides in the development of advanced chips, even in the face of U.S. sanctions. Huawei recently launched a new smartphone that can connect to next-generation 5G networks, defying expectations imposed by the U.S. sanctions. This achievement is possible due to a chip that appears to be manufactured by SMIC, China’s biggest chipmaker. The seemingly advanced technology showcased in Huawei’s new smartphone has surprised many, as it surpasses previous expectations for what SMIC could produce.
China’s chip equipment makers have demonstrated remarkable revenue growth in the first half of the year, driven by Beijing’s pursuit of self-reliance in the semiconductor industry. Despite facing U.S. sanctions and export restrictions, China’s domestic firms have stepped up to meet the country’s chipmaking needs and reduce reliance on foreign technology. The industry’s progress towards more advanced chips, as seen with Huawei’s latest smartphone, signifies the potential for further development and competitiveness in China’s semiconductor sector. As Beijing continues to prioritize self-reliance and invest in its domestic chip manufacturing capabilities, China’s chip equipment makers are poised to play a significant role in the global semiconductor market.