China Is Building a Chip-Equipment Industry Without Applied Materials - Dr. Robert Castellano's Semiconductor Deep Dive Newsletter

This article delves into the evolving landscape of China's semiconductor equipment industry, particularly its efforts to reduce reliance on Western suppliers. It highlights how China’s new policy mand... Read original →

China's semiconductor equipment sector is undergoing a structural shift driven by policy mandates. A new regulation requiring 50% domestic equipment in new fab projects is pressuring Western suppliers like Applied Materials and ASML. Although current domestic DUV systems are not yet commercially viable, companies such as Naura and AMEC are rapidly advancing, gradually replacing imported equipment. This trend is reshaping global supply chains, especially in key areas like CMP, deposition, and etch. As CXMT and SMIC expand production, demand for equipment from China Taiwan/ Taiwan, China and China Hong Kong/ Hong Kong, China will increasingly rely on local vendors. The rise of AI chips intensifies competition, forcing global players to adapt through localization and customization. Over the next 12–24 months, the industry is poised for a dual acceleration of technological substitution and policy-driven growth, with Western firms risking market share erosion if they fail to respond proactively.