How China narrows the chip manufacturing equipment gap with the world

Data released by research company Global Net (Japan) in mid-February showed that, for the first time in history, three Chinese semiconductor equipment manufacturers entered the top 20 in the world in terms of revenue, including Naura Technology Group, Advanced Micro-Fabrication Equipment Inc China (AMEC) and Shanghai Micro Electronics Equipment (SMEE). Expanding the list to 30 will include two more businesses from China: ACM Research and Hwatsing Technology.

Of the three companies above, Naura ranked 5th, up from 8th place in 2022. The company is currently only behind “giants” ASML, Applied Materials, Lam Research and Tokyo Electron.

In China, Naura is the largest semiconductor equipment manufacturer, specializing in thin film etching (PVD/CVD), oxidation and cleaning tools. Established in 2001, Naura is the leading choice in replacing imported equipment. The company has not announced its 2025 revenue, but according to financial services provider Suntime, the figure is in the range of 46.8-52 billion yuan ($6.74-7.49 billion).

AMEC first appeared on Global Net’s list and ranked 13th. The company develops acid etching equipment that is almost among the most advanced. In chip manufacturing, etching is a key process that selectively removes unwanted layers of material from silicon wafers to create precise 3D patterns, circuits, and transistor structures.

Meanwhile, SMEE, which specializes in photolithography machines that print electronic circuits on silicon wafers, won 20th place. According to experts, although the technology generation gap with ASML is still very far, the presence of the Shanghai-based company shows China’s domestic capacity in this important and challenging segment.

China Daily commented that the three companies’ entry into the Global Net list is an important milestone for China’s semiconductor industry. Before the US imposed a series of restrictions, China had only one representative in the top 20. But after 2022 – when the bans became more stringent, self-control efforts helped the country’s semiconductor businesses grow strongly.

“This collective rise is seen as a direct response to US-led semiconductor export controls, which have pushed China towards greater self-sufficiency in chip manufacturing,” China Daily comment.

Roger Sheng, Vice President in charge of research at Gartner (USA), assessed that China is making rapid progress in semiconductor manufacturing equipment. “It can be said that the technology gap between Chinese companies and the world’s leading enterprises is continuously narrowing,” he assessed. “This progress is the effort of domestic manufacturers, especially to upgrade technology and expand production, even in the context of limited access to US technology and equipment.”

Theo Technology News Chinaadvanced chip manufacturing involves more than 1,000 process steps, with each step requiring specialized equipment. China has a great advantage in the supply chain, but domestic enterprises also have autonomy in most stages, from deposition, photolithography to cleaning. Under the support of the government, the semiconductor manufacturing ecosystem is on a strong development path with the participation of large enterprises and a wave of emerging startups. Xinhua China is currently the world’s largest market for chip manufacturing equipment, helping to provide a strong launch pad for domestic businesses.

In a meeting mid-last year, Mr. Yin Zhiyao, Chairman and General Director of AMEC, said that the company’s product portfolio includes 30% of all types of integrated circuit devices, aiming to provide 60% of all types of high-end integrated circuit devices in the next 5-10 years. AMEC will also soon complete the development of more than 20 types of thin-film equipment that are subject to international export restrictions for the domestic market, aiming to increase to 40 types by 2029. Thin-film equipment is a type of specialized machinery used to deposit layers of conductive, insulating or semi-conducting materials at the atomic level onto silicon wafers.

Despite achieving impressive numbers in terms of revenue and rankings, experts assess that China still has a lot of work to do, especially in core technologies. For example, SMEE currently only produces DUV deep ultraviolet lithography machines serving the 90-28 nm maturation process, which is still very far from the EUV ultraviolet lithography technology that ASML holds, which can make chips under 5 nm.

In fact, at the 28 nm process and above, China is increasingly self-reliant in equipment. This is the segment that accounts for the majority of global chip demand, serving automobiles, industry, home appliances and many basic AI applications. Reducing import dependence in this group helps China maintain production activities even when exports are squeezed.

Late last year, China was said to have successfully built a prototype of a sophisticated chip-making machine in a secret project, an important step towards chip autonomy. According to sources of Reutersthe system successfully generated ultraviolet light but did not produce a fully functioning chip. However, it is still considered a breakthrough, exceeding Western predictions.

Theo EconomistChina’s domestic equipment is poor in terms of stability, error rate, and performance. These are all factors that determine costs and the ability to expand production. However, with the current growth rate, the country’s semiconductor industry is improving day by day with increasingly positive results.

The Global Semiconductor Industry Association (SEMI) with more than 3,000 member companies estimates that worldwide semiconductor manufacturing equipment revenue will reach 133 billion USD in 2025, surpassing the record of 104.3 billion in 2024 and setting an all-time high.