China now requires chip factories to use 50% homegrown equipment, marking a major escalation in the country’s push for semiconductor self-reliance. The new requirement signals Beijing’s determination to reduce dependence on foreign chipmaking tools as global technology tensions continue to reshape supply chains.
The policy is expected to have far-reaching consequences for China’s semiconductor industry as well as global equipment suppliers.
China Now Requires Chip Factories to Use 50% Homegrown Equipment
The announcement that China now requires chip factories to use 50% homegrown equipment applies to both new fabrication plants and, in some cases, upgrades of existing facilities. Under the policy, chipmakers operating in China will need to source at least half of their manufacturing equipment from domestic suppliers.
This includes tools used in etching, deposition, cleaning, testing, and other critical chip production processes. The move is aimed at accelerating the growth of China’s local semiconductor equipment ecosystem.
Why China Is Pushing for Domestic Chip Equipment
The decision that China now requires chip factories to use 50% homegrown equipment is driven by geopolitical and economic realities. Export controls imposed by the US and its allies have limited China’s access to advanced chipmaking tools, particularly in cutting-edge nodes.
By mandating domestic equipment usage, China aims to reduce vulnerability to external restrictions and ensure continuity in semiconductor production. The policy also seeks to channel massive demand toward Chinese equipment makers, helping them scale faster and improve technology capabilities.
Impact on China’s Semiconductor Industry
As China now requires chip factories to use 50% homegrown equipment, domestic suppliers are expected to see a surge in orders. Chinese firms specializing in wafer processing tools, inspection systems, and testing equipment stand to benefit the most.
However, the transition may not be seamless. Domestic equipment often lags behind global leaders in terms of yield, reliability, and performance. Chipmakers may face short-term efficiency challenges as they integrate more locally produced tools into advanced manufacturing lines.
Global Equipment Makers Face New Pressure
The policy that China now requires chip factories to use 50% homegrown equipment also presents challenges for international semiconductor equipment companies. China has been one of the largest markets for chipmaking tools, and reduced access could impact revenues for foreign suppliers.
Industry analysts say global vendors may still retain a presence in high-end segments where Chinese alternatives are not yet competitive, but their overall market share is likely to decline over time.
Strategic Importance Beyond Economics
When China now requires chip factories to use 50% homegrown equipment, the move goes beyond industrial policy. Semiconductors are viewed as a strategic asset tied to national security, economic resilience, and technological leadership.
By strengthening domestic control over the chip supply chain, China aims to secure its long-term ambitions in areas such as artificial intelligence, electric vehicles, telecommunications, and defense technologies.
Challenges in Achieving the 50% Target
Despite strong political backing, meeting the goal that China now requires chip factories to use 50% homegrown equipment will not be easy. Advanced chip manufacturing relies on highly specialized tools that take years to perfect.
Experts note that while China has made progress in mature-node equipment, achieving comparable performance at advanced nodes remains a significant challenge. Continued government funding and industry collaboration will be crucial.
What This Means for the Global Chip Landscape
The shift where China now requires chip factories to use 50% homegrown equipment further accelerates the fragmentation of the global semiconductor ecosystem. Instead of a single, highly integrated supply chain, the world is moving toward more regionalized and politically aligned chip networks.
This could increase costs, slow innovation in the short term, and reshape competitive dynamics across the semiconductor industry.
Final Thoughts
The policy that China now requires chip factories to use 50% homegrown equipment marks a decisive step in China’s semiconductor strategy. While it creates challenges for both domestic chipmakers and global suppliers, it also underscores Beijing’s long-term commitment to technological independence.
As implementation unfolds, the effectiveness of this mandate will depend on how quickly Chinese equipment makers can close the technology gap and support large-scale, reliable chip production.
