External challenges catalyzing semiconductor supply chain self-sufficiency

China's semiconductor supply chain companies are making steady progress in core technologies and materials as US-led export controls and the possibility of more restrictions on advanced chip-making equipment catalyze the country's drive for greater self-sufficiency.

For instance, there is "significant progress" in the domestic production potential of photoresist, the light-sensitive "ink" essential for etching microscopic circuits onto silicon wafers, sources from leading Chinese chipmakers like Semiconductor Manufacturing International Corp and Huahong Group told China Daily.

Jiangsu Nata Opto-electronic Material, which has developed one of China's first batches of self-developed photoresist for ArF DUV (argon fluoride deep ultraviolet) lithography — a type of high-end photoresist — said the company's revenue from ArF photoresist exceeded 10 million yuan ($1.44 million) in 2024, and it maintained a stable supply of ArF photoresist in 2025.

Meanwhile, in 2025, three Chinese chip equipment manufacturers ranked among the world's top 20 by sales volume for the first time, according to data from Japanese research firm Global Net.

This marks a rise from just one company in 2022, prior to the stricter US government restrictions, underscoring China's accelerated progress in bolstering the domestic supply chain.

The sales ranking reveals a climb for State-backed Naura Technology Group, which jumped from eighth place in 2022 to fifth in 2025. It now only trails global giants ASML, Applied Materials, Lam Research and Tokyo Electron.

Founded in 2001, Naura has not yet disclosed its annual revenue for 2025, and Global Net based the ranking partly on estimated data. Financial services provider Suntime compiled forecasts from multiple securities companies to estimate Naura's revenue to stand between 46.8 and 52 billion yuan in 2025.

New to the list at 13th place is Advanced Micro-Fabrication Equipment Inc China, or AMEC, whose etching equipment technology is now close to the cutting edge.

In chip making, etching is the key process of selectively removing unwanted material layers from a silicon wafer to engrave precise 3D patterns, circuits and transistor structures.

Shanghai Micro Electronics Equipment, specializing in lithography machines that "print" circuit patterns onto silicon wafers, secured the 20th position. While acknowledging generational gaps with market leader ASML, the Shanghai-based company's presence highlights China's domestic capability in this most critical and challenging segment.

Expanding the list to the top 30 would include two more Chinese firms — ACM Research and Hwatsing Technology.

Roger Sheng, vice-president of research at US market research company Gartner, said: "It's fair to say that Chinese companies' technological gap with international industry leaders is continuously narrowing. This progress has provided strong support for domestic chip manufacturers in their technological upgrades and production expansion efforts, even amid restrictions on access to US technology and equipment."

"With the exception of lithography machines, domestic tools are now being increasingly used in Chinese semiconductor factories. For instance, in etching, Naura has become a key equipment provider for production of a Chinese company's advanced memory chips."

Yin Zhiyao, chairman and general manager of AMEC, said at a meeting in May 2025 that the company's product portfolios include 30 percent of all the integrated circuit equipment categories, and it aims to collaborate with partners to offer 60 percent of all high-end IC equipment categories over the next five to 10 years.

The progress is an outcome of Chinese companies' hard work and big investment in beefing up technological prowess, but a gap still exists in core equipment such as lithography machines, and more efforts are needed to achieve breakthroughs, experts said.

China's massive domestic market, now the world's largest for chipmaking equipment, also provides a powerful launchpad. The global semiconductor industry association SEMI, which has more than 3,000 member companies, estimated that worldwide sales of semiconductor manufacturing equipment would reach $133 billion in 2025, surpassing the previous record of $104.3 billion in 2024 and setting an all-time high.

The Chinese mainland is projected to maintain the leading position through 2027, as domestic chipmakers continue to invest in both mature and select advanced chip manufacturing technologies, SEMI said.