China's Semiconductor Equipment Self-Sufficiency Rate Rises to 21%, Domestic Manufacturers Accelerate Expansion as a Multi-Year Trend
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China's Semiconductor Equipment Self-Sufficiency Rate Rises to 21%, Domestic Manufacturers Accelerate Expansion as a Multi-Year Trend
China's wafer fab equipment (WFE) demand to reach $50 billion in 2025, with localization rate increasing from 16% to 21%. Deposition and dry etching sectors show fastest progress, with domestic players capturing 27% and 31% market share respectively. Capital expenditure expected to grow at ~35% CAGR over the next three years.
- China's WFE localization rate rises from 16% in 2024 to 21% in 2025, projected to reach 26% by 2026
- Domestic players capture 27% and 31% share in deposition and dry etching, showing strong growth
- Over the past three years, real technological breakthroughs, not geopolitical stockpiling, drove domestic supplier share expansion
- Domestic Top 10 equipment vendors' market share expected to grow from 17% in 2025 to ~25% by 2028
- Lithography and photoresist processing remain high-barrier sectors, with localization rates at only 1% and 6%
- Global equipment vendors' China revenue normalizes: ASML guides 2026 China revenue to drop to 20%, down from 33% in 2025
Report interpretation
Overview
This report updates the competitive landscape of China's wafer fab equipment (WFE) market in 2025 by benchmarking 2023-2024 data. China's WFE demand in 2025 reaches $50 billion, accounting for 41% of the global $122 billion market. Localization accelerates, with overall self-sufficiency rising from 16% in 2024 to 21%, projected to reach 26% by 2026. The report finds that while geopolitical stockpiling drove demand in 2023-2024, domestic equipment vendors' share expansion in 2025 represents genuine technological and commercial breakthroughs, reinforcing this multi-year substitution trend.
Core views
Deposition and dry etching are the fastest-growing sectors in localization. Deposition equipment achieves 27% self-sufficiency, up 67% YoY; dry etching reaches 31%, up 37% YoY. Both sectors have clear commercial success cases: domestic leaders perform close to international levels in mature nodes and are gradually penetrating more advanced nodes. NAURA's deposition market share grows from 64% in 2024 to 65%, while entering the doping sector as the second-largest domestic supplier (27% share). AMEC drives growth in both deposition and dry etching, maintaining 47-48% share in dry etching while expanding into deposition processes like LPCVD/ALD, growing share from 1% to 3% in 2024-2025. In contrast, lithography and photoresist processing remain high-barrier sectors. Lithography localization is only 1%, with ASML maintaining deep monopolistic advantages; photoresist processing localization is 6%, progressing slowly. Technical barriers and investment cycles mean domestic substitution will take years. Mid-tier sectors like process control, cleaning, and thermal processing are also accelerating. Process control grows 63% YoY, breaking 10% self-sufficiency for the first time; cleaning grows 8%; thermal processing grows 43%. These sectors are relatively mature with surmountable barriers, and domestic players have already built competitiveness. Global equipment vendors' China revenue normalizes. LRCX's China WFE revenue grows 36% YoY in 2025 (an exception), while TEL and AMAT decline 20% and 12% respectively. This reflects two trends: 2023-2024 stockpiling demand has been met, and domestic suppliers are capturing share, forcing global vendors to face intensified competition and cyclical demand changes in China.
Analysis framework
The report combines top-down and bottom-up analysis. At the macro level, it frames China's market size ($50 billion in 2025) based on global WFE demand and China's share. At the meso level, it segments sub-markets by equipment type (deposition, dry etching, etc.) to assess localization progress and technical barriers. At the micro level, it examines market share changes for domestic (NAURA, AMEC, Piotech) and global vendors in each segment. By comparing 2023-2025 data and filtering out geopolitical stockpiling effects, it confirms that domestic suppliers' growth is driven by product competitiveness and customer acceptance. Finally, based on capacity expansion plans and customer diversification trends, it projects long-term growth trajectories for domestic equipment vendors through 2026-2028.
Methodology notes
Structural changes on the supply side of China's WFE market
The report focuses on the interplay between supply-side (domestic vendors' share growth vs. global vendors' share decline) and demand-side (domestic foundries' capacity expansion cycles). Key insight: strong domestic demand (memory and logic chip capacity expansion) + government subsidies = accelerated domestic equipment penetration, creating positive feedback.
Foundries' procurement decisions' impact on equipment vendors' market structure
The report analyzes downstream foundries' (e.g., SMIC, Hua Hong) procurement strategy of 'de-Americanization prioritized over full localization,' which benefits Japanese vendors (e.g., Tokyo Electron) more. Simultaneously, domestic brands' multi-customer coverage strengthens, supporting future growth.
Differences in domestic equipment penetration speeds across process nodes
The report implies an S-curve logic: domestic equipment in mature nodes is in accelerated penetration (deposition, dry etching), while advanced nodes remain early-stage, and high-barrier sectors (lithography) are still in infancy. This explains the wide variation in localization rates (27-31% vs. 1-6%).
Domestic equipment vendors' cost and technology maturity curves
The report notes 'performance gaps between domestic and international equipment in mature nodes are limited,' meaning domestic brands have moved right along the cost-quality improvement curve, supporting competitiveness in cost-sensitive mature nodes.
China foundries' capacity expansion cycles driving long-term equipment demand trends
The report emphasizes 'domestic brands' share expansion is a multi-year trend,' based on downstream players (especially memory customers) recently raising multi-year capacity expansion plans and AI-driven logic chip demand. This is a clear signal of an upward capacity cycle.
Foundries' proactive procurement of Japanese and Chinese equipment due to geopolitical and supply chain risks
The report observes declining China revenue for US global vendors (AMAT, LAM) while Japanese (TEL) and Chinese brands benefit, reflecting customers' 'multi-source procurement' and 'risk hedging' behavior. This is a strategic procurement shift, not short-term arbitrage.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- NAURA (688012.CH)Domestic equipment leader, benefiting from deposition and dry etching, entering doping as a second growth curve
- Strengths
- Broadest product line (PVD, CVD, Dry Etch, Thermal, Cleaning), diversified customers (logic, DRAM, NAND), deep technical积累 and foundry partnerships
- Weaknesses
- Faces AMEC competition in dry etching and deposition; slow progress in new sectors (doping, photoresist processing)
- Comparison
- vs AMEC: NAURA focuses more on mature nodes and diversified products; vs Piotech: NAURA has clearer deposition优势
- Risks
- Lacks breakthroughs in high-barrier sectors like lithography and process control; geopolitical supply chain disruptions; downstream demand cyclicality
- AMEC (688012.CH)Dry etching专家 expanding into deposition, best technical reputation, highest global recognition
- Strengths
- Highest technical水平和 global recognition in dry etching (widely regarded as China's best), rapidly expanding into deposition (ALD, LPCVD, EPI)
- Weaknesses
- Narrower product line than NAURA, higher customer concentration; new entrant in deposition, needs time to gain traction
- Comparison
- vs NAURA: AMEC focuses on high-difficulty sectors, smaller share but higher growth potential; vs global vendors: AMEC's dry etching already internationally competitive
- Risks
- Deposition expansion成败直接影响 long-term growth; needs to enter higher-end sectors like lithography and process control
- PiotechDeposition innovator, strong product R&D, W2W/C2W hybrid bonding for advanced packaging
- Strengths
- Strong deposition (PECVD, HDPCVD, SACVD, ALD) innovation,显著 customer feedback on技术进步; early mover in advanced packaging (W2W/C2W hybrid bonding)
- Weaknesses
- Relatively smallest规模, deposition share下滑 due to revenue recognition delays; low国际化程度
- Comparison
- vs NAURA/AMEC: Piotech more focused on specific工艺和高端领域; vs global vendors: accelerating product innovation cycles
- Risks
- Advanced packaging still early-stage, commercialization timeline uncertain; revenue recognition delays hurt market perception; international expansion needs strengthening
- Tokyo Electron (TEL)Biggest winner among global vendors from 'de-Americanization,' gaining China revenue share
- Strengths
- 2025 China dry etching and deposition share higher than AMAT/LAM, benefiting from 'multi-source procurement' and 'de-Americanization,' most trusted Japanese brand
- Weaknesses
- Overall China revenue share仍需关注 domestic substitution erosion risks
- Comparison
- vs AMAT/LAM: TEL grows faster in China; vs European/Swedish vendors: TEL更贴近 China customer需求
- Risks
- Long-term domestic供应商 share acceleration; TEL must maintain技术领先 and cost competitiveness
- ASML (EUR 1,700)Absolute lithography leader, 91% China WFE share, but faces long-term domestic substitution pressure
- Strengths
- Monopolizes DUV and EUV lithography, Chinese customers have no alternatives, stable revenue
- Weaknesses
- China contribution declining from 41% in 2024, 33% in 2025; 2026 guidance further down to 20%, reflecting long-term normalization
- Comparison
- vs process control, dry etching等 competitive sectors, lithography remains deeply monopolized but market growth slowing
- Risks
- Geopolitical risks, long-term China lithography breakthroughs, customer multi-sourcing strategies
Key data
- China WFE Self-Sufficiency Rate21% in 2025, up 5 percentage points from 16% in 2024Projected to reach 26% in 2026, ~25% by 2028 (accounting for global vendors' rebound)
- China WFE Absolute Demand$50 billion in 202541% of global $122 billion total
- Deposition Localization Rate and Growth27% self-sufficiency, 67% YoY growthNAURA's share grows from 64% to 65%; AMEC enters deposition, share up from 1% to 3%
- Dry Etching Localization Rate and Growth31% self-sufficiency, 37% YoY growthAMEC and NAURA each hold 47-48%, stable competition but room for future rivalry
- Process Control Localization Rate and Growth10% self-sufficiency, 63% YoY growthFirst time breaking 10%, low base but exceeding expectations
- Lithography Localization RateOnly 1% self-sufficiencyASML monopolizes; domestic players like SMEE still in early stages
- Domestic Top 10 Vendors' Market Share Expansion17% in 2025 → ~25% by 2028, ~35% CAGRCompared to global peers' single-digit growth, domestic brands grow significantly faster
- Global Vendors' China Revenue NormalizationASML 2026E guidance drops to 20% (vs. 33% in 2025), similar declines for AMAT/TEL/LRCX/KLAReflects 2023-2024 stockpiling demand exhaustion and intensified domestic competition
Impact & implications
The report's findings have three investment implications. First, domestic equipment vendors (NAURA, AMEC, Piotech) are in a long-term share expansion phase, but speed and ceilings depend on specific sectors—deposition and dry etching are the most certain, while lithography and process control require further observation. Second, global vendors (ASML, TEL, AMAT, LRCX, KLA) must prepare for normalized competition in China, with 2026-2027 revenue shares and growth rates declining—not due to absolute market shrinkage but relative and proportional declines. Third, Chinese foundries are pursuing 'multi-source procurement' and 'risk hedging,' balancing international brands' technical superiority with domestic brands' supply chain autonomy. This mid-to-long-term trend will support domestic vendors' expansion in mature, cost-sensitive nodes while pushing them to accelerate technological upgrades for advanced nodes.
Risks
- Geopolitical and export control changes creating uncertainty for global vendors' China revenue and domestic substitution pace
- Downstream foundry capacity expansion cycle reversal, 2026-2027 China WFE demand可能 flatten or decline, impacting domestic vendors' high-growth expectations
- Domestic high-end equipment (lithography, process control, doping)技术 breakthroughs fall short, localization stalls below 30%
- Domestic equipment reliability and consistency issues暴露 in mass production, damaging customer信心 and slowing share expansion
- Global vendors (especially ASML, AMAT)降价 and technical cooperation intensifying, squeezing domestic vendors' margins and expansion speed
- Domestic供应商 financing and R&D constraints, lengthening product cycles, missing market windows
What to watch
- 2026 domestic foundries' (especially YMTC, SMIC) actual capacity investment and equipment procurement plans, confirming memory and logic chip expansion sustainability
- Domestic equipment commercialization progress in advanced nodes (sub-7nm), especially AMEC's breakthroughs in doping and process control
- ASML's 2026 actual China revenue and growth rate vs. guidance, gauging global vendors' China normalization真实进度
- Domestic equipment reliability and defect rate benchmarking, assessing mass production readiness
- Global supply chain sanctions升级 and impact on domestic vendors' component/material supply