China Hits 35% Localization Rate for Chip Manufacturing Equipment

China has reached a 35% localization rate for semiconductor manufacturing equipment, marking a significant step in its drive toward technological self-sufficiency. According to the China Semiconductor Industry Association, this milestone reflects an aggressive national effort to insulate the domestic chip industry from external supply chain shocks by increasing the share of domestic tools used in fabrication.

While this indicates growth in the production of general manufacturing equipment, the industry continues to struggle with the most complex elements of the production line. Reports indicate that critical high-precision components, specifically vacuum valves and RF power sources, remain heavily dependent on foreign suppliers. Some estimates suggest as much as 80% of these specific parts are sourced from abroad, creating a persistent vulnerability in the supply chain.

The Push for Self-Sufficiency

This acceleration in domestic production is a direct response to intensifying US-led export controls. For years, Washington has tightened restrictions on the sale of advanced chip-making tools—such as extreme ultraviolet (EUV) lithography machines—to Chinese firms. By funding domestic alternatives and incentivizing local manufacturers, Beijing aims to mitigate the impact of these sanctions and ensure that its semiconductor roadmap is not dictated by foreign policy.

Strategic Vulnerabilities

Despite the overall increase in localization, the reliance on foreign-made vacuum valves and RF power sources creates a strategic bottleneck. These components are essential for the operation of advanced etching and deposition tools. Without the ability to produce these high-precision parts domestically, China cannot fully localize the production of the most advanced lithography tools. This leaves the industry exposed to geopolitical volatility, as a sudden cutoff of these niche components could halt the production of domestic tools even if the larger machinery is designed locally.

The Path Forward

Industry observers are now watching whether China can pivot its focus from general equipment to these specialized sub-components. The next phase of localization will likely require deeper breakthroughs in materials science and precision engineering to replace the remaining foreign-sourced hardware. Until these core components are secured, the 35% localization figure remains a partial victory in a broader struggle for semiconductor independence. The ability to master these precision elements will determine if China can truly decouple its high-tech future from foreign supply chains.