The acceleration of China's semiconductor manufacturing equipment localization is gaining momentum, largely driven by ongoing geopolitical tensions. Leading domestic equipment manufacturers, including NAURA and SiCarrier, are now introducing tools capable of supporting near-cutting-edge manufacturing processes. Industry analysis suggests that over 65% of the equipment imported by Yangtze Memory Technologies Corp (YMTC) in 2024 was sourced domestically. This rapid progress indicates that Chinese firms may quickly narrow the technological gap with established American and Japanese equipment giants.
SEMICON China Draws Unprecedented Global Attention
The global semiconductor industry's eyes turned to Shanghai in March 2025 for SEMICON China, the world's largest exhibition for semiconductor manufacturing equipment and materials. The event shattered attendance records, drawing over 180,000 visitors—a 13% increase from the previous year and nearly double the attendance of SEMICON Japan held in December 2024.
The high level of international interest was particularly notable. Multiple Japanese industry leaders, including Nikon, Canon, and Screen Holdings, exhibited at the show. A managing executive officer at ADVANTEST, the world's largest semiconductor test equipment maker, observed a significant influx of Japanese analysts and media personnel, highlighting the event's growing importance on the global stage.
Driving Forces Behind China's Domestic Push
The push for self-reliance is primarily a response to escalating export controls initiated by the United States. Since 2018, the U.S. government has steadily tightened restrictions on the export of high-tech equipment to China. By 2023, this effort expanded into a coordinated policy with allies Japan and the Netherlands, specifically prohibiting the sale of extreme ultraviolet (EUV) lithography systems and advanced etching tools required for leading-edge semiconductor fabrication.
While these restrictions have indeed created significant hurdles for China's pursuit of the most advanced chipmaking nodes, they have conversely accelerated the domestic development and adoption of equipment for near-cutting-edge or "N+1" generation processes. This strategic shift is building a more self-sufficient semiconductor supply chain within China for all but the most advanced logic chips, which remain dependent on EUV technology.
YMTC: A Case Study in Rapid Localization
The progress is best exemplified by Yangtze Memory Technologies Corp (YMTC), a major producer of NAND flash memory and a key competitor to companies like Kioxia. Analysis presented at SEMICON China indicated that 65% of the manufacturing equipment installed in YMTC's facilities throughout 2024 was sourced from Chinese suppliers.
This is a strategically significant achievement because NAND flash memory can be manufactured using advanced deep ultraviolet (DUV) lithography tools without requiring EUV technology. Consequently, Chinese equipment makers have found a viable and large-scale market to validate and improve their tools, enabling production that is very close to the technological frontier.
Key Domestic Players and Their Technological Roadmaps
The exhibition floor at SEMICON China was dominated by Chinese manufacturers showcasing a wide array of equipment capable of handling numerous fabrication steps.
NAURA (Northern Huachuang) stands as the flagship of China's equipment industry. Founded in 2001 and backed by state ownership, it offers a comprehensive product portfolio that includes etching, deposition, cleaning, and diffusion systems. Its broad approach is often compared to industry giants like Applied Materials and Tokyo Electron. TechInsights ranked NAURA as the world's 10th largest semiconductor equipment manufacturer by sales in 2023, marking the first time a Chinese company entered the top ten.
A major highlight at NAURA's booth was a demonstration targeting 6nm process technology. The presentation detailed a approach using multi-patterning techniques—a process that repeatedly applies lithography and etching steps—to create intricate circuit patterns without the need for EUV lithography machines.
Other emerging contenders like SiCarrier, CETC Electronics Equipment Group, and MEGAROBO Technologies also presented new product lines, signaling a deepening and broadening of China's domestic equipment ecosystem. NAURA and others are also expanding into advanced packaging, offering etching and physical vapor deposition (PVD) systems for 2.5D and 3D packaging applications, which are critical for future performance gains.
The collective advancement of these companies suggests a concerted national strategy to build a complete and competitive semiconductor manufacturing supply chain from within. For those tracking this rapid evolution, explore more industry strategies and deeper market analyses.
Frequently Asked Questions
What is multi-patterning, and how does it relate to EUV?
Multi-patterning is a technique that uses existing DUV lithography tools to create chip features smaller than the light's wavelength would normally allow. It involves splitting a complex pattern into multiple, simpler patterns and exposing them in sequence. While effective, it is more complex and costly than using a single EUV exposure, which is why EUV is preferred for the most advanced nodes.
Why is NAND flash production a focus for Chinese equipment makers?
Producing advanced NAND memory does not require EUV lithography, which is currently restricted for export to China. This makes the NAND sector an ideal proving ground for domestic Chinese equipment manufacturers to develop and refine their near-cutting-edge technologies without facing an immediate technological blockade.
How quickly is the technology gap closing?
While a significant gap remains in the performance and reliability of some tools, the pace of development and adoption in China is extremely rapid. The achievement of supporting a majority of YMTC's production with domestic tools in a short timeframe demonstrates an accelerated closing of this gap for specific processes and technologies.
What are the main challenges facing Chinese semiconductor equipment companies?
Key challenges include mastering the extreme precision and reliability required for high-volume manufacturing, developing advanced software for process control, and innovating in materials science. Furthermore, navigating ongoing international export controls on key components for their own tools remains a hurdle.
Which semiconductor manufacturing steps have been localized first?
Processes like etching, cleaning, deposition, and chemical mechanical planarization (CMP) have seen rapid localization. Lithography, especially for advanced nodes, remains the most significant challenge, though domestic companies are making progress with DUV solutions.
Is this shift only benefiting Chinese chipmakers?
Primarily, yes. The drive for self-sufficiency is creating a protected market for domestic equipment manufacturers. However, foreign memory producers with fabs in China, like Samsung and SK Hynix, may also source some non-restricted tools from local suppliers for cost or logistical reasons.