SMIC Founder and AMEC CEO Urge Chinese Fabs to Test Domestic Chipmaking Tools on Active Production Lines — Equipment Makers Post Record Revenue but Falling Margins

Why It Matters

Accelerating domestic tool qualification is essential for China’s chip self‑reliance, while shrinking margins and looming export bans threaten the profitability of home‑grown equipment firms and could reshape the global semiconductor supply chain.

Key Takeaways

• AMEC revenue hit $1.74 bn, but gross margin fell to 39.2%
• Chinese fabs now source ~35% of equipment, up from 25% last year
• Domestic etch and resist‑stripping tools reach 50‑80% localization
• Lithography remains a choke point; only 90 nm ArF scanners are mass‑produced
• U.S. MATCH Act could ban DUV immersion tools, tightening export controls

Pulse Analysis

China’s semiconductor‑equipment sector posted a spectacular revenue surge in 2025, with AMEC reporting $1.74 billion, Naura $3.9 billion and Piotech $617 million. The growth reflects a rapid shift toward domestic sourcing as U.S., Japanese and Dutch export controls tighten. Yet the boom masks a margin squeeze: AMEC’s gross margin fell to 39.2% and ACM Research’s to 44.4%, driven by fierce price competition among Chinese vendors scrambling for orders that once went to Applied Materials, Lam Research and Tokyo Electron. The internal price war erodes profitability just as the industry seeks to close the technology gap.

In response, SMIC founder Richard Chang and AMEC chief Gerald Yin appeared on CCTV to publicly press fabs to trial home‑grown tools on live production lines. Their appeal stresses a staged rollout—starting with small wafer batches of up to 100 wafers—to mitigate risk while gathering real‑world reliability data. The push aligns with a broader rise in domestic content, now about 35% of fab equipment, up from 25% a year ago, with mature‑node etch and resist‑stripping tools reaching 50‑80% localization. AMEC’s claim of delivering a 150‑ton flat‑panel display tool from prototype to production in 18 months illustrates the ambition, though independent verification remains limited.

Lithography remains the sector’s Achilles’ heel. China’s only volume‑produced scanner, SMEE’s 90 nm ArF system, lags far behind the sub‑10 nm tools needed for leading‑edge nodes. The emerging Yuliangsheng immersion DUV scanner, a replica of an early‑2000s ASML model, targets 28 nm production by 2027, but true high‑end lithography is unlikely before 2030. Compounding the challenge, the U.S. MATCH Act—recently passed by the House—targets DUV immersion equipment for a blanket export ban, potentially cutting off the last major source of advanced scanners. If enacted, the legislation could accelerate China’s push for domestic qualification but also heighten the financial strain on equipment makers already grappling with margin pressure.