China makes strides toward semiconductor independence

Foreign manufacturers of lithography and wafer processing equipment are seeing their sales drop in China. In 2024, China accounted for 41% of ASML's revenue, but this fell to 33% in 2025, with projections to decrease further in 2026. Applied Materials, another US-based company, also experienced a decline from 37% of its sales in China in 2024 to 30% in 2025.

This trend stems from two main factors. First, US sanctions prevent American and allied manufacturers from supplying China with the most advanced machinery. Dutch company ASML, a leader in lithography, is the most impacted. Second, the Chinese government is actively supporting the adoption of domestically produced equipment in its semiconductor factories. In 2025, Chinese-made tools already made up 35% of the installed base, aiming for 50% in 2026.

China has made significant progress in areas like deposition, thermal processing, etching, and cleaning. However, extreme ultraviolet (EUV) lithography machines, critical for cutting-edge chip production, remain China’s biggest weakness. It’s likely that Chinese EUV machines will arrive before the end of this decade, but none are yet in operational use.

One Chinese company making notable advances is Pulin Technology, which has developed its own nanoimprint lithography equipment. In 2025, they shipped their first advanced system to a client, marking a step toward technological independence in China’s semiconductor industry.