China chipmakers gain global share

Semiconductor equipment is the machinery layer underneath the whole chip industry. If you can’t buy the tools, you can’t build the fabs that make the chips. That was the logic behind U.S. export controls on China. But the new wrinkle is that Chinese toolmakers are now growing faster inside that pressure cooker, not despite it but partly because of it. Chinese vendors still trail the giants by a lot, but their share is moving up in a way that now looks structural, not temporary. (congress.gov) ### What exactly are these companies making? They make wafer-fab equipment — the machines that etch patterns, deposit thin films, polish wafers, clean surfaces, inspect defects, and package chips. Think of them as the machine tools for the digital economy. The famous choke point is lithography, where ASML still dominates, but a fab needs far more than lithography to run, and that broader tool sta(congress.gov) Piotech, Hwatsing, and Kingsemi have been gaining ground. (cset.georgetown.edu) ### So what changed now? The latest market data show Chinese semiconductor-equipment vendors at 6.5% of the global wafer-fab-equipment market in 2025, up from 5.6% in 2024 and just 1.2% in 2021. That is still tiny next to Applied Materials, Lam, Tokyo Electron, or ASML. But the direction matters — especially because the gains are concentrated in categories China can actually scale, not in the hardest frontier tools yet. (aol.com) ### Where are the gains showing up? Mostly in the “good enough and everywhere” parts of the tool chain. CSET’s breakdown shows notable Chinese gains from 2019 to 2024 in CMP, dry etch, clean tools, and deposition. In deposition, China’s share rose from 2% to 7% over five years. In some test-tool segments, Chinese firms are already much stronger. But lithogra(aol.com) Nikon still control the serious end of that market. (cset.georgetown.edu) ### Why didn’t sanctions stop this? Because sanctions changed demand as much as supply. Once Chinese fabs saw that foreign access could tighten further, they had a reason to qualify local tools faster. That creates a feedback loop — more domestic orders, more revenue, more R&D, better products, then more domestic orders again. The U.S. controls were designed t(cset.georgetown.edu) build out the rest of the stack with more urgency. (congress.gov) ### Are Chinese fabs still buying foreign tools? Yes — and that is the catch. China is not replacing foreign equipment cleanly in one shot. It is running a dual-track strategy. Domestic suppliers posted record 2025 revenues, but Chinese fabs also imported record volumes of U.S.-branded tools routed through Singapore and Malaysia, while direct imports from the U.S. fell to an eight-year low. So th(congress.gov).” It is both at once. (eenewseurope.com) ### Why is this spilling into displays and friendshoring? Because once policymakers see one hardware supply chain tilt toward China, they start scanning the adjacent ones. A Reuters-linked report this week said U.S. policy circles are looking at tariffs on Chinese display cells, partly out of fear that another critical electronics layer could become too depe(eenewseurope.com)ide allied networks, even if it costs more. (moderndiplomacy.eu) ### What does this mean for the big incumbents? They still dominate. China’s rise does not mean ASML or Applied Materials suddenly lose control of the high end. It means the market is bifurcating. Foreign leaders keep the frontier. Chinese firms get stronger in mature and mid-tier tools, especially inside the world’s biggest equipmen(moderndiplomacy.eu)s serious challenger if the learning curve is steep enough. (cset.georgetown.edu) ### Bottom line The real story is not that China has cracked every chip bottleneck. It hasn’t. The story is that export controls are producing two outcomes at once — constraining China at the frontier while helping local equipment champions grow everywhere else. That makes the global chip supply chain more regional, more political, and harder to unwind. (congress.gov)