GoKawiilSMIC founder Richard Chang and AMEC chairman and CEO Dr. Gerald Yin appeared together on CCTV's Dialogue program on May 17th to make a coordinated case for Chinese chipmakers to give homegrown equipment more production-line trial time, according to DigiTimes.
The strange joint TV appearance came days after Chinese industry figures told Securities Times that the next three to five years will determine whether domestically built tools can move from functional prototypes to equipment that meets the yield, throughput, and uptime demands of volume manufacturing.
China's semiconductor equipment vendors collectively posted record revenues in 2025, but profitability is under pressure from domestic price competition, and the hardest remaining bottleneck, lithography, has no credible near-term domestic solution. U.S. export controls, meanwhile, continue to tighten.
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Record revenues, falling margins
China's equipment industry grew incredibly fast last year. AMEC, the country's leading etch-tool maker, reported full-year revenue of $1.74 billion USD (12.38 billion RMB), up 36.6% year-on-year, with net profit totaling around $310 million (2.11 billion RMB), up 30.6%.
Naura Technology, the broadest-line domestic supplier, posted $3.91 billion (27.14 billion RMB) in revenue across just the first three quarters, while Piotech, which specializes in thin-film deposition, roughly doubled its nine-month revenue to $617 million (4.22 billion RMB). ACM Research, the U.S.-listed cleaning-equipment maker with the bulk of its operations in Shanghai, booked $901.3 million for the full year, up 15.2%.
Despite these lofty revenues, margins moved in the opposite direction: AMEC’s full-year 2025 gross margin fell 1.9 percentage points to 39.2%, with the third quarter alone dropping 5.8%, and ACM Research's gross margin slid from 50.1% in 2024 to 44.4% in 2025. The pattern was consistent across the sector.
This squeeze is coming from domestic competition rather than foreign pressure. With U.S., Japanese, and Dutch export controls restricting shipments of advanced tools to Chinese fabs, domestic vendors are competing fiercely with each other for orders that previously went to Applied Materials, Lam Research, and Tokyo Electron; Needham & Co. analyst Charles Shi recently told Nikkei Asia that this internal price war is the primary driver of margin erosion.
Chinese fabs are now thought to be sourcing roughly 35% of their equipment domestically, up from about 25% a year ago. Beijing's informal target for new fab construction is 50% domestic content, a threshold that YMTC's third Wuhan fab has reportedly already cleared, but the gains are concentrated in mature-node tool categories. Etch localization at mature nodes sits at roughly 50% to 60%, and resist stripping exceeds 80%. According to data from Ijiwei thin-film deposition runs from 20% to 30%, and lithography sits below 5%.
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