China Mandates 50% Domestic Chip Equipment

China has introduced a new, undocumented policy requiring chipmakers to use at least 50% domestically made equipment for new capacity, aiming for a self-sufficient semiconductor supply chain. This mandate, accelerated by United States export restrictions in 2023, is pushing Chinese manufacturers to prioritize domestic suppliers even when foreign alternatives from Japan, South Korea, and Europe are available. President Xi Jinping's 'whole nation' approach and significant state funding through the 'Big Fund' are supporting this initiative. The policy is already yielding results, with companies like Naura Technology and Advanced Micro-Fabrication Equipment demonstrating rapid advancements in etching tools and experiencing substantial revenue growth and increased patent filings. This shift is causing concern among global competitors as foreign suppliers like Lam Research and Tokyo Electron are being squeezed out of the China market.