Asia-Pacific
China enforces 50% domestic equipment rule for chipmakers to boost local supply chain
China requires chipmakers to use at least 50 % domestically made equipment for new capacity, reshaping semiconductor supply chains.
Headline
China requires chipmakers to use at least 50 % domestically made equipment for new capacity, reshaping semiconductor supply chains.
Context
• China is requiring chipmakers seeking to build or expand production capacity to procure at least fifty % of their equipment from domestic suppliers, a move aimed at enhancing semiconductor self-sufficiency. • The rule, part of a broader “whole nation” strategy, is reshaping procurement and may squeeze foreign tool makers, though flexibility remains for advanced lines where local technology is limited. China is mandating that semiconductor manufacturers must use at least 50 % domestically made equipment when building or expanding chip production facilities, according to three people familiar with the matter who spoke to Reuters.
Evidence
Pending intelligence enrichment.
Analysis
The requirement is not yet publicly documented, but firms seeking state approval to add capacity have been told that procurement tenders must demonstrate that half of the equipment they plan to use will be sourced from Chinese suppliers. Authorities typically reject applications that fail to meet the threshold, although they allow flexibility where local technology is not yet available, particularly for advanced chipmaking lines. The rule forms part of China’s broader “whole nation” approach championed by President Xi Jinping, intended to reduce reliance on foreign semiconductor technologies amid tightened U.S. export controls introduced in 2023 that restricted sales of advanced chips and manufacturing tools to Chinese companies. By enforcing the domestic content rule through procurement tenders , Beijing is encouraging companies to replace foreign equipment from the United States, Japan, South Korea and Europe with locally developed alternatives wherever possible. Chinese equipment makers are already responding. For example, Naura Technology is testing its etching tools on a seven-nanometre production line at Semiconductor Manufacturing International Corporation (SMIC), while rival Advanced Micro-Fabrication Equipment (AMEC) has reported strong growth, suggesting a rapid advancement of local capabilities as these firms seek to meet the procurement thresholds.
Key Points
- What happened: Beijing mandates 50 % domestic equipment for new and expanded chip capacity
- Why it’s important
Actions
Pending intelligence enrichment.
