SINGAPORE/BEIJING- As the US tightens its restrictions on China’s semiconductor industry, Chinese manufacturers of tools used to make chips are benefiting, with orders from the country’s foundries accelerating in recent months.
Domestic equipment manufacturers, such as toolmaker Naura and etching equipment maker AMEC, are winning a much higher proportion of tenders from Chinese foundries than in previous years, as chipmakers race to replace foreign-made equipment with domestically made alternatives, research showed.
Nearly half, or 47.25 percent , of all machinery equipment tenders by Chinese foundries from January to August 2023 were won by local manufacturers, according to an analysis of 182 tenders by Huatai Securities last month.
From July to August 2023, 62 percent were won by Chinese suppliers compared to only 36.3 percent from March to April, the brokerage’s analysts said.
It marks a turning point for the industry, reflecting acceptance that US restrictions on technology imports are unlikely to ease and could get worse and that self-reliance – as urged by Chinese President Xi Jinping – is the way forward.
The Biden administration on Tuesday expanded measures aimed at China’s chip industry that seek to stop Beijing from receiving cutting-edge US technologies to strengthen its military. The measures are expected to be updated annually.
China’s foreign ministry said on Wednesday that it has lodged a stern rebuke over the latest chip restrictions, saying that they violated the principles of the market economy and fair competition.
“Before the sanctions, top Chinese foundries would use a small amount of machines from Chinese suppliers, but they would really only experiment with new equipment when they would add new capacity,” one source briefed by the companies told Reuters.
“Now, foundries are testing out Chinese-made equipment for every foreign machine they own and if they find that it meets their needs, they replace all of them,” he said. “They want as few foreign machines as feasible.”
AMEC and Naura in particular were receiving more orders from China’s largest foundries SMIC and Hua Hong Semiconductor, he added.
AMEC, Naura, SMIC, and Hua Hong did not immediately respond to requests for comment.
The equipment-related revenue of China’s top 10 domestic equipment manufacturers grew 39 percent year-on-year for the first half of 2023, representing $2.2 billion in sales, according to a report by CINNO Research.
