China Orders Chipmakers to Use at Least 50% Domestic Equipment in New Capacity
China is requiring semiconductor manufacturers to use at least 50% domestically made equipment when adding new production capacity, according to three people familiar with the matter, as Beijing intensifies its drive to build a self-sufficient chip supply chain.
The requirement is not publicly documented, but chipmakers seeking government approval to build or expand factories have been told in recent months that they must demonstrate—through procurement tenders—that at least half of their equipment will be sourced from Chinese suppliers, the people said.
The mandate represents one of Beijing’s most significant efforts to reduce reliance on foreign technology. The push accelerated after the United States tightened export controls in 2023, restricting sales of advanced AI chips and key semiconductor manufacturing equipment to China.
Although U.S. export curbs blocked access to some of the most advanced tools, the new 50% threshold is prompting Chinese manufacturers to favor domestic suppliers even in segments where foreign equipment from the United States, Japan, South Korea, and Europe is still available.
Applications that fail to meet the requirement are typically rejected, the people said, though regulators may allow some flexibility depending on supply constraints. The rules are also more relaxed for advanced chipmaking lines, where Chinese-developed equipment is not yet widely available.
