SMIC founder Richard Chang and AMEC CEO Gerald Yin publicly urged Chinese fabs to test domestic chipmaking tools on active production lines, signaling Beijing’s intensifying push for self-sufficiency amid tightening U.S. export controls.
Record Revenues, Falling Margins
China’s semiconductor equipment vendors posted record revenues in 2025, but profitability eroded under domestic price competition. AMEC reported full-year revenue of $1.74 billion, up 36.6% year-on-year, while net profit rose 30.6% to $310 million. Naura Technology generated $3.91 billion in the first three quarters alone; Piotech roughly doubled nine-month revenue to $617 million; and ACM Research booked $901.3 million for the full year, up 15.2%.
Gross margins, however, declined across the sector. AMEC’s full-year gross margin fell 1.9 percentage points to 39.2%, with a 5.8-point drop in Q3. ACM Research’s margin slid from 50.1% in 2024 to 44.4%. The pattern was consistent, driven not by foreign pressure but by an internal price war as domestic vendors compete for orders previously held by Applied Materials, Lam Research, and Tokyo Electron.
Domestic Content Gains, but Lithography Remains a Chokepoint
Chinese fabs now source roughly 35% of equipment domestically, up from 25% a year ago, with an informal target of 50% for new fab construction. Gains are concentrated in mature-node categories: etch localization at mature nodes reaches 50% to 60%, resist stripping exceeds 80%, and thin-film deposition ranges from 20% to 30%. Lithography localization, however, sits below 5%.
Shanghai Micro Electronics Equipment (SMEE), China’s only volume supplier of lithography scanners, produces a 90nm-class ArF system. A 28nm-class tool remains unconfirmed in mass production. The Shanghai Yuliangsheng immersion DUV scanner, under test at SMIC and linked to Huawei-backed SiCarrier, targets 28nm production by 2027. Sub-10nm lithography on purely domestic equipment is unlikely before 2030.
A Coordinated Public Appeal
Chang and Yin’s joint appearance on CCTV’s *Dialogue* program on May 17 was a state-sanctioned appeal to Chinese fabs. Chang argued that domestic equipment cannot improve without real production-line trials, recommending starting with small wafer batches of up to 100 wafers before scaling. Yin noted that Chinese customers default to foreign tools out of habit and that even leading vendors’ new systems typically require two to three years of tuning.
Industry-standard qualification for a new etch or deposition tool on a leading-edge line runs 18 to 24 months. Yin highlighted AMEC’s entry into large flat-panel display equipment, a category previously 100% imported, claiming a working prototype in 12 months and a production-line shipment within 18 months. SMIC has reportedly purchased at least 800 AMEC tools, though TSMC has not publicly confirmed AMEC’s role in its production lines.
Outlook
The Chang-Yin broadcast is best viewed as part of Beijing’s response to tightening U.S. export controls, including the MATCH Act, which would ban DUV immersion lithography exports to China. While domestic equipment makers have made measurable progress in mature-node categories, lithography remains the critical bottleneck, with no credible near-term solution. The next three to five years will determine whether Chinese-built tools can transition from functional prototypes to volume production equipment—a timeline that will shape the global semiconductor supply chain.
