Author: Zihao
In 2026, the word "first" is the most abundant term in China's semiconductor equipment industry.
From the beginning to the end of the year, domestic semiconductor equipment manufacturers have officially announced a "domestic first" almost every few days. Tandem high-energy hydrogen ion implanters, critical dimension scanning electron microscopes (CDSEM), advanced gas cluster ion beam etchers, and EUV light source prototypes—various "national firsts" and "global debuts" are dazzling. This raises a question: After so many technical hurdles have been overcome, where exactly does the overall domestic equipment manufacturing chain stand? Which segments are competitive, which remain tough nuts to crack, how do we compare with foreign giants, and where are our strengths?
01 Why So Many "Domestic Firsts" This Year
This year has seen one highlight after another for domestic equipment. In January, the first tandem high-energy hydrogen ion implanter POWER-750H, developed by the China Institute of Atomic Energy under CNNC, successfully achieved beam extraction. Official statements indicate that core indicators have reached internationally advanced levels, filling a long-standing gap in the power semiconductor manufacturing chain. In June, the first critical dimension metrology tool CDSEM, independently developed by CETC Institute 48, completed whole-machine debugging and factory inspection, and was shipped to customers. This metrology equipment, often called the "nano ruler," was previously dominated by overseas vendors. Around the same time, Naura Technology released its 12-inch advanced gas cluster ion beam etching equipment AcmeGlaion130 and launched its third-generation 12-inch all-quartz vertical silicon nitride LPCVD equipment. At an exhibition in October, Landau Suiyan showcased the most advanced domestic EUV light source prototype publicly available, claiming a local content rate of 90%.
Advanced Micro-Fabrication Equipment (AMEC) has hit the fast-forward button. It released four new products in March and six more in September, covering ultra-high aspect ratio etching, PECVD, ALD molybdenum deposition, and SiC epitaxy, achieving high-density product launches twice within half a year. By 2026, AMEC had cumulatively deployed over 8,800 reaction chambers in mass production across more than 220 production lines worldwide.
Behind this is the heat of the overall market. According to SEMI's "300mm Fab Outlook Report" released at SEMICON West, global 300mm front-end wafer fab equipment spending is expected to reach CNY 1,490 billion in 2026, a 31% increase from approximately CNY 1,130 billion in 2025, setting a historical record. Investment in subsequent years will continue to grow at double-digit rates, rising to CNY 2,270 billion by 2029.
The dense appearance of "firsts" indicates that technical bottlenecks in domestic equipment are being broken through inch by inch. Ten years ago, the industry was anxious about whether it could produce etchers or cleaners; today, the agenda has shifted to whether the entire industrial chain's equipment can be filled in—a qualitative change at the ecosystem level. However, "firsts" must be viewed calmly. There are several hurdles between a prototype and mass production, between mass production and stable large-volume delivery, and finally becoming a primary workhorse machine for top-tier fabs.
In the 2025 global equipment vendor rankings, ASML led with approximately USD 37.2 billion in semiconductor business revenue, followed by Applied Materials at around USD 27.0 billion, Lam Research at USD 23.2 billion for fiscal year 2026, with Tokyo Electron and KLA taking the fourth and fifth spots. The top five companies collectively captured nearly 70% of the global market. Naura Technology is the only Chinese company to enter the global top ten, with 2025 revenue of CNY 39.353 billion, equivalent to approximately USD 5.5 billion.
02 Competitive Segments: Where Are Domestic Advantages?
If equipment is stratified by localization rate, the top layer consists of ashing/de-scumming equipment. For mature nodes of 28nm and above, the localization rate is approximately 80% to 90%, making it the most self-sufficient segment in the entire process chain. E-Town Semiconductor, as the main beneficiary with a global market share of second place (approximately 33.7%), has helped domestic production lines largely eliminate external dependency on ashing equipment. Below this, major processes such as etching, cleaning, CMP, and thermal processing have formed scale deployments in mature nodes.
Cleaning equipment was one of the earliest breakthrough points for domestic tools. ACM Shanghai started with differentiated innovation, with its product line covering approximately 95% of cleaning process steps. According to Gartner statistics, its global cleaning equipment market share is about 8.3%, ranking fourth globally, while holding a 60.5% share among domestic cleaning equipment makers, trailing only Japan's DNS in overall domestic market share. ACM has also entered plating and advanced packaging equipment, delivering single-wafer cleaning systems to overseas customers in Singapore and elsewhere, marking a symbolic step from domestic competition to going global.
CMP equipment serves as a "showroom." Hwatsing Technology has virtually monopolized the domestic CMP market, accounting for over 90% of domestic CMP equipment sales. In procurement volumes by some leading domestic IC manufacturers, its share can reach over 90%. Its advanced node models have passed full-process verification at multiple top-tier fabs. Its path is representative: first achieve excellence in a single segment, then expand outward. Today, Hwatsing is also laying out ion implantation equipment.
Etching and thin film deposition are the two segments with the largest market size and highest technical content, where domestic manufacturers have made the most solid breakthroughs. AMEC's CCP etching equipment has long since entered TSMC's 5nm production line, serving as a calling card for domestic equipment reaching the world's most advanced fabs. Naura's etching and thin film deposition equipment revenues both exceeded CNY 10 billion in 2025, covering mature nodes of 28nm and above while extending to more advanced nodes. Piotech has deepened its presence in thin film deposition and expanded into hybrid bonding for advanced packaging. Etching and thin film deposition share core technology foundations such as plasma physics, vacuum chambers, and RF power. Experience accumulated in etching can be reused for deposition equipment, which is why domestic manufacturers can rapidly platformize in these two segments.
The core advantages of domestic equipment essentially boil down to three cards. First, local service: when fabs encounter issues, domestic vendors can arrive on-site within hours, offering responsive support that overseas giants cannot match. Second, cost: under equivalent performance, domestic equipment prices are typically significantly lower, with cheaper spare parts and maintenance. Third, customer verification windows: driven by supply chain security considerations, domestic fabs are more willing than ever to open production lines for domestic equipment verification. This "opportunity to be trusted" was the scarcest resource over the past decade. Skyverse Technology has cumulatively delivered approximately 2,000 metrology and inspection tools.
03 The Middle Ground: Climbing but Still Struggling
Beyond large markets like etching and cleaning, there is a "deep water zone" characterized by high technical difficulty and relatively smaller market sizes. Localization rates here hover between single digits and low teens. Ion implantation, metrology/inspection, and track/develop systems are the most typical representatives.
Ion implanters are known as one of the "four core equipment types" in chip manufacturing, but the overall domestic localization rate is around 15%, with high-current models below 10%. Crucially, the most advanced international ion implanters are banned from export to China, and even corresponding used equipment cannot be purchased. Domestic fabs are forced to use older models, directly impacting yield and stability. Players in this lane are increasing. Zhongke Xin and Keshitong are established names, while Aion Semiconductor, SRI-I, JSG, and Naura have all entered the fray. Aion has formed a full-spectrum matrix covering medium-current, high-current, high-energy, and special applications. SRI-I's high-energy and high-current models have been shipped, and JSG's silicon medium-current model is undergoing customer verification. However, almost all players have yet to turn a profit, generally remaining in a phase of high R&D investment. Ion implantation is difficult because its technical path is not transferable; its core lies in ion optics, electromagnetic mass analysis, and high-voltage acceleration, resembling particle accelerators rather than traditional process equipment. Accumulated experience from etchers cannot easily be transferred. The successful beam extraction of the first tandem high-energy hydrogen ion implanter is good news, but the road from beam extraction to stable support for mass production of advanced power devices remains long.
Metrology and inspection equipment is one of the segments with the lowest localization rate, previously below 10%. Fabs have extremely high trust thresholds for this equipment because, although it does not directly manufacture chips, it determines whether a wafer is a pass or a fail; any minor defect can scrap an entire batch. However, progress in the last two years is visible to the naked eye. Skyverse has mass-produced and verified equipment types accounting for over 70% of the total quality control equipment market. Bright-field/dark-field defect detection has achieved high-ratio replacement in four major fabs. Yunwei Semiconductor's mask inspection equipment has reached top-tier international levels and offers complete substitution. Dongfang Jingyuan Electron has achieved CDSEM measurement repeatability of 0.15 nanometers, and CETC Institute 48's first CDSEM has also been delivered to customers. Nevertheless, industry insiders admit that when top-tier fabs make new purchases, they still retain imported equipment as benchmark standards. Domestic equipment must verify performance by replicating overseas tool results through matching comparisons. This wall of trust has not yet been fully demolished.
Track/develop system equipment has a localization rate of about 6%. This sector has long been monopolized by Tokyo Electron and DNS. Kingsemi, ACM, and others are entering verification with leading storage customers. While the replacement space is huge after breakthroughs, it is currently still in the introduction phase.
04 The Hardest Nuts Remain Lithography and Bonding
If the deep water zone is hard, lithography scanners and hybrid bonding are "harder still," representing areas where domestic equipment truly struggles to reach.
Lithography is the largest single category in semiconductor equipment and has the lowest localization rate, under 1%, relying almost entirely on ASML, Nikon, and Canon. Shanghai Micro Electronics Equipment (SMEE) is the sole domestic mainstay. Exhibited I-line scanning projection lithography machines have a resolution of 280nm, KrF dry lithography machines have a resolution of 110nm, and cumulative customer output exceeds 10 million wafers. Further upstream, EUV lithography machines are an unavoidable ceiling. Landau Suiyan's EUV light source prototype claims a 90% localization rate, but the remaining 10% often involves the most critical components, such as special optical materials, ultra-high precision sensors, or specific laser components. The logic of semiconductor equipment dictates that if any component is cut off, the entire machine becomes scrap. The head of Zeiss Semiconductor stated publicly that China lags behind the West by about 15 years in EUV technology. UBS analysts infer that China may need at least 10 years to potentially build machines capable of replacing ASML's top-tier equipment. From light source prototypes to commercialization, domestic EUV faces a long engineering journey.
D2W hybrid bonding equipment in advanced packaging is another tough nut. In the post-Moore era, advanced packaging has become a key path for sustaining computing power growth, and bonding equipment directly determines chip performance and yield. Domestic players like iSABers, Piotech, Wisdom Semiconductor, and Xingkong Technology have launched hybrid bonding products. However, practitioners speak frankly: W2W processes are already mature; the real battle is D2W. Currently, D2W hybrid bonding equipment is primarily monopolized by BESI in the Netherlands. Globally, only TSMC possesses D2W process mass production capabilities. Domestic manufacturers are almost all in the verification stage, lacking mature products for mass production deployment. D2W is difficult for three reasons: lack of downstream traction (no domestic D2W mass production customers to define process parameter needs); scarce verification resources (high-value wafer materials in top fabs are limited, making it hard for new entrants to get production line verification opportunities); and high cross-segment collaboration thresholds (hybrid bonding requires integration with front-end process capabilities like lithography compensation, constituting a system engineering challenge).
05 What Makes Foreign Giants Strong?
Foreign equipment giants dominate the high-end market through decades of accumulation and first-mover advantages.
In lithography, ASML monopolizes EUV scanners. It achieved 250-watt light source power in 2018 and demonstrated kilowatt-class EUV light sources in April 2025—an engineering level short-term unreachable by domestic light source prototypes. ASML's dependence on the Chinese market is also deepening. Sales to China surged 109% quarter-over-quarter in Q3 2026, with China's share jumping from 14% to 23%, expected to contribute about 20% of annual revenue. Since 2023, mainland China was once its largest global market, with shares exceeding 30% in 2024 and 2025. This contrast is subtle: on one hand, sales to China rise steadily; on the other, high-end models are restricted. What is sold to you is always the "good enough but not top-spec" batch.
In etching, Lam Research holds a global market share of approximately 52.7%. The top five vendors collectively account for 86.3%. Lam achieved a market share gain of about 210 basis points in 2025, relying on process advantages in high-end etching equipment. In metrology, KLA holds a 46.2% market share in overlay metrology in China, accounting for nearly half the territory. These giants maintain barriers that domestic manufacturers find difficult to breach in the short term regarding advanced node process know-how, years of accumulated customer trust, global service networks, and core component supply chains.
However, foreign giants also have weaknesses. First, price and response speed: equipment is expensive, spare parts are costly, services are slow, and localization is insufficient. Second, regulatory backlash: the more advanced the node, the more constrained by export controls, inadvertently ceding the Chinese market to domestic vendors. This is precisely the root cause of the verification window for domestic equipment. Third, the risk of "over-reliance on a single market": if the revenue share from China is too high, geopolitical policy changes could cause severe fluctuations in these giants' earnings.
06 Gaps, Shortcomings, and a Truthful Statement
Placing localization rates side by side leads to a clear conclusion. Ashing, cleaning, and CMP have approached or exceeded half self-sufficiency. Etching, thin films, and thermal processing have gained a foothold in mature nodes. Metrology, ion implantation, and track/develop systems are still climbing during introduction. Lithography and EUV remain almost entirely dependent on imports. Overall, according to South Korean media reports, the domestic share of installed equipment in Chinese fabs has risen to approximately 35%. In the first half of 2026, eight equipment companies saw revenue growth ranging from 13.8% to 69%.
But the most critical fault line lies in process nodes. Equipment localization rates for 28nm and above have exceeded half, but the self-sufficiency rate for etching in 14nm and below advanced nodes is less than 15%, with overall advanced node localization also under 15%. Using mature node equipment and processes to bypass EUV for advanced nodes incurs continuous costs in yield and economics. Domestic equipment no longer lacks "zero-to-one" firsts; what is missing is "one-to-N" mass production stability, advanced node process verification, and autonomy in core components. The 10% imported components in EUV light sources are the most realistic reflection of this.
Another hidden concern is profitability. Ion implantation manufacturers are generally loss-making. Most players in metrology and track/develop systems are still enduring high R&D investments. Equipment localization is a marathon, not a sprint. Industry health is judged not just by the existence of first units, but by whether these enterprises can survive on operating cash flow and roll forward investment into next-generation R&D. The easy parts are done; the rest are hard nuts. This statement reflects both the current status and a warning.
Objectively speaking, domestic semiconductor equipment stands at a critical coordinate point. In terms of scale, China has become the world's largest equipment procurement market, providing domestic vendors with a soil for verification and application unavailable in other countries. Technically, etching, cleaning, and CMP have secured a place in the global industrial chain. Platform-type leaders are emerging; the volume and product breadth of AMEC and Naura now qualify them to compete with second-tier foreign vendors. Structurally, players are emerging across the entire chain, from process equipment to metrology, packaging equipment, and core components, with the ecosystem taking shape.
The shortcomings are equally glaring. The lithography gap, the long struggle for EUV, the trust thresholds in ion implantation and metrology, the mass production void in D2W bonding, and the autonomy of core components—none of these can be solved by single-point breakthroughs. They require collaborative verification across the industrial chain and long-term, high-intensity investment. The advantage of foreign giants lies in barriers built over decades; the advantage of domestic equipment lies in close-proximity service, lower costs, and a home market willing to give it a chance.
Returning to the initial question: Where exactly does domestic equipment stand? The answer is: Large markets have been navigated; the deep water zone is still being chewed through; the hardest part, lithography, still requires effort. The significance of the "first" lies not in the prototype itself, but in letting every link in the industrial chain know that someone is walking this path, and the hardest stretch has already been traversed.