Enthralling Revenue Surge in China’s Chip Firms Amid Beijing’s Quest for Self-Reliance

Revenue from China’s top chip equipment makers surged in the first half of the year, according to research released on Thursday. This growth comes as Beijing aims to achieve self-reliance in its semiconductor industry.

In the first six months of the year, the top 10 domestic equipment manufacturers reported revenue of approximately 16.2 billion Chinese yuan ($2.2 billion), representing a 39% year-on-year increase. These findings were revealed by Shanghai-based CINNO Research.

Semiconductors, critical components used in a wide range of devices including smartphones and satellites, have become a focal point in the ongoing technology rivalry between the United States and China.

In an effort to constrain Beijing’s access to key semiconductor equipment and technologies, Washington has implemented export restrictions.

The chip supply chain is an intricate network that encompasses various companies, ranging from sellers of semiconductor design tools to manufacturers of relevant machinery. Historically, China’s domestic semiconductor industry has heavily relied on foreign companies for these tools, lagging behind countries like the United States, South Korea, and Taiwan.

Since 2019, US sanctions on Chinese technology firms such as Huawei and China’s largest chipmaker, SMIC, have compelled Beijing to strengthen its domestic industry, foster self-reliance, and reduce dependence on foreign technology.

As a result, revenues of China’s domestic chip equipment manufacturers have experienced significant growth. CINNO identifies Naura Technology Group Co. as the leading Chinese semiconductor equipment maker in terms of revenue. Naura produces tools essential for the chip manufacturing process and reported an operating revenue of over 7 billion yuan in the first half of the year, marking a 68% year-on-year increase and surpassing other companies.

The second-largest player in China’s domestic market is Advanced Micro-Fabrication Equipment Inc. China (AMEC), which manufactures machines required for the semiconductor manufacturing process. According to CINNO, AMEC’s revenue rose by 28% year-on-year to 2.53 billion yuan in the first half of the year.

ACM Research ranks as the third-largest Chinese player, specializing in the production of cleaning and packaging equipment for semiconductors. Its revenue surged by 47% year-on-year to 1.61 billion yuan in the first half of the year.

However, China still faces limitations in accessing the most advanced chipmaking tools. For instance, Dutch company ASML manufactures an expensive chipmaking tool known as an extreme ultraviolet lithography machine, crucial for producing cutting-edge chips. Export restrictions imposed by the Dutch government prevent ASML from selling these machines to China.

Despite these restrictions and concerns regarding escalating tensions with the US, Beijing has made progress in its domestic semiconductor industry. Huawei recently launched a new smartphone capable of connecting to next-generation 5G networks, despite US sanctions aimed at severing ties between the Chinese tech giant and this technology. The chipset powering this device appears to be manufactured by SMIC, surprising many as it represents an advancement beyond expectations.