Naura Technology Group also attributed its 14.7 billion yuan revenue in 2022—up 51.7% from the prior year—to high local demand.

Major Chinese semiconductor equipment producers have reported noticeably high revenue and profit, according to their most recent financial disclosures, as they filled the gap left by American suppliers who stopped local operations to adhere to US trade restrictions on the mainland.

2.9 billion yuan (US$419 million) in total revenue was generated by ACM Research (Shanghai), a manufacturer of cleaning, electroplating, and packaging equipment that is the Chinese subsidiary of the US company ACM Research.

This is a significant increase from 1.6 billion yuan in 2021 due to increased domestic demand. According to its annual report, which was published in February, net profit increased to 689 million yuan from a year earlier, a 254% increase.

Annual report stated that the state-backed National Silicon Industry Group, which sells silicon wafers to chip foundries, saw a 46% increase in revenue to 3.6 billion yuan in 2022 thanks to strong demand from Chinese integrated circuit manufacturers using advanced semiconductor process nodes of 28 nanometers and above.

Sravan Kundojjala stated that senior semiconductor industry analyst at TechInsights, “the US sanctions have advanced China’s ambitions in semiconductor technology and helped boost revenue growth for Chinese equipment makers.”

Naura Technology Group also attributed its 14.7 billion yuan revenue in 2022—up 51.7% from the prior year—to high local demand.

According to its annual report, which was released in March, Advanced Micro-Fabrication Equipment, a different manufacturer of chip tools, reported 4.7 billion yuan in revenue last year, a 52.5 percent increase from 2021, and a net profit that increased by 15.6% to 1.2 billion yuan.

Some of the largest Chinese foundries, as well as domestic semiconductor testing and packaging businesses, are supplied by these manufacturers of chip-making equipment.

According to a recent South China Morning Post article, Yangtze Memory Technologies Corp. has intensified efforts to collaborate with Chinese suppliers to assist in the production of memory chips based on its ground-breaking NAND Flash architecture, Xtacking 3.0.

NAND Flash is a type of non-volatile storage technology that can preserve data even in the absence of power, making it the perfect fit for many electronic devices like solid-state drives, smartphones, tablets, and laptop computers. These developments highlight China’s semiconductor sector’s determination to keep innovating and expanding despite the challenges posed by US trade restrictions.

China’s semiconductor sector has been hit by sanctions. In order to comply with a new set of trade restrictions imposed by Washington in October of last year, US companies Lam Research Corp. and KLA Corp. scrambled to stop providing equipment and services to various Chinese chip projects. This made it possible for regional vendors to fill the market’s gap.

The American suppliers suspended their business on the mainland after the US Department of Commerce released updated policies intended to halt shipments of advanced chips and semiconductor-manufacturing technology of potential use to China’s military buildup and bid to dominate key industries.

US sanctions against China’s semiconductor industry have disrupted the market, but they have also given domestic suppliers a rare chance to better align their requirements with those of regional foundries and Beijing’s chip ambitions. Industry experts claim that China has a covert goal of sourcing up to 70% of its goods from domestic suppliers in terms of value.

The demand for locally sourced manufacturing tools and equipment is anticipated to remain strong as a result of the increased investment in new chip projects. The southern Guangdong province alone is currently developing up to 40 new semiconductor projects worth more than 500 billion yuan.

In light of US trade sanctions that prevent mainland firms from accessing cutting-edge equipment from abroad, Peter Wennink, chief executive of Dutch lithography systems manufacturer ASML Holding, recently said it was “logical” for China to develop its semiconductor-manufacturing equipment sector. Therefore, maintaining market access to China is crucial, said Wennink.

He said that one automaker in mainland China, ASML’s third-largest market after Taiwan and South Korea, intended to produce so many electric vehicles over the following three years that it would need supplies from “six or seven full-fledged logic semiconductor factories.”

Yet even chip-making equipment vendors rely on foreign technologies, from materials and key components to specific semiconductors, to make their products, according to Kundojjala from TechInsights.

“It remains to be seen how they will overcome that dependency themselves,” he said.
More than 600 Chinese companies, including some of its national tech champions, have been put on the US trade blacklist, known as the Entity List, which restricts their access to US technology, equipment and services without Washington’s approval.

The development of the Chinese chip manufacturing supply chain is also being slowed down by a few significant choke points. For instance, there are no practical domestic alternatives to the advanced lithography systems from ASML and Japanese vendors like Nikon and Canon, or the metrology tools provided by US company KLA.