Etching is one of the most critical equipment types in chip manufacturing. According to MIR DATABANK data, China's domestication rate for etching equipment (calculated by sales revenue) reached 41% in Q2 2026, with a full-year forecast of 45%. This indicates that local vendors have secured the majority of new orders for mature process nodes, but substitution in high-end segments such as advanced logic and 3D NAND has only just begun. At the same time, the U.S. "MATCH Act" proposes a 75% self-sufficiency rate as a condition for lifting controls—marking the first direct link between domestication rates and international regulations.
01、What Etching Does and Where the 41% Figure Stands
Chip manufacturing involves three repetitive processes on silicon wafers: printing patterns, adding materials, and removing excess material. Etching is the third step, using plasma to selectively remove unwanted portions from the wafer surface to create circuit structures. As chip architectures become more complex and stacking layers increase, the number of etching steps and equipment usage also rise. According to MIR DATABANK data, etching is the second-largest category among front-end equipment, after lithography. The Chinese market size was approximately CNY 52 billion in 2025, accounting for about 20% of the front-end equipment market.
According to MIR DATABANK data, the trajectory of the domestication rate is not uniform: it was 3% in 2017, 28% in 2024, 37% in 2025, 40% in Q1 2026, reaching 41% in Q2 2026, with a full-year forecast of 45%.
There were some fluctuations in 2025, not due to a regression in domestic equipment capabilities, but rather the pace of revenue recognition. Typically, several quarters pass from shipment, installation, and acceptance to final revenue confirmation. While shipments of domestic machines increased, revenue recognition lagged; concurrently, foreign suppliers concentrated deliveries in certain production lines, expanding the denominator for market share calculations and diluting the value-based share of local vendors.
02、Market Growth Driven Primarily by Memory Demand
According to MIR DATABANK data, the Chinese etching equipment market size was approximately CNY 16 billion in Q2 2026, representing a year-on-year growth of about 28%, outperforming the overall wafer fabrication equipment market for two consecutive quarters. The primary driver comes from memory: increasing stacking layers in3D NAND leads to more etching steps, while DRAM process upgrades also boost etching equipment demand.
Public information corroborates this trend. According to reports by National Business Daily, CXMT initiated bidding in Q2 2026, planning to expand capacity by 50,000 to 60,000 wafers per month for the full year; YMTC started equipment bidding for its Fab 2 on May 14.
03、Regulatory Adjustments and High-End Substitution Challenges
To understand the "MATCH Act," one must first grasp the original control logic. Since late 2021, the U.S. has restricted exports of wafer fabrication equipment used for 14nm logic chips, 18nm DRAM, and NAND with 128+ layers to China, requiring U.S. licenses for Chinese customers. These restrictions apply to specific fabs: supplying an advanced-process fab requires a license, while purchasing similar equipment for another mature-process fab under the same company does not face identical restrictions.
This created a loophole. Companies could procure advanced equipment under the name of mature fabs and subsequently transfer them to advanced production lines upon arrival, making post-hoc verification of equipment placement difficult. Factory-based controls manage factories, not companies.
The "MATCH Act" proposed by the U.S. Congress in April 2026 addresses this issue by shifting the unit of control from factory to company. If entities like CXMT, YMTC, SMIC, or Hua Hong are listed, all their facilities (including mature-process fabs) must apply for licenses to purchase advanced equipment, with approvals denied by default. The scope of control extends from selling new equipment to re-export, maintenance, and spare parts—prohibiting both sales and repairs. The Act also introduces a previously unseen provision: a 75% self-sufficiency threshold. If China achieves a 75% self-sufficiency rate for a specific type of equipment, the U.S. will no longer restrict exports of that equipment to China. For the first time, the tightening or loosening of controls is directly linked to China's level of domestication.
Etching was explicitly included in the Act because the initial draft named "cryogenic etching equipment." This type of equipment is specifically used for high-aspect-ratio silicon etching with smooth sidewall requirements, corresponding to advanced device structures like FinFET and GAA. According to Reuters, the July revision removed this nationwide ban but retained export restrictions on advanced equipment and maintenance license requirements for the aforementioned companies. The removal of the ban suggests industry opposition was effective; the retention of restrictions indicates that high-end etching remains a focal point of controls.
The progress of domestic equipment can be assessed through the semi-annual reports of two leading companies. AMEC reported revenue of approximately CNY 6.7 billion in H1 2026, up about 35% year-on-year, with net profit excluding non-recurring items doubling year-on-year. The company attributed this growth to increased shipments of high-end products for key etching processes in advanced logic and memory devices. New models targeting ultra-high aspect ratio etching have completed laboratory testing, with Beta units undergoing client verification; high-selectivity equipment for 7nm and below is planned for delivery to clients for process verification within 2026. NAURA reported revenue of approximately CNY 20.2 billion in H1 2026, up about 25% year-on-year, attributing growth to increased market share in multiple equipment types including etching and thin-film deposition.
Combined, these two companies illustrate the current state of domestic etching: "mass production in mature processes, verification in high-end segments." This dictates the pace of substitution: orders driven by mature process expansion and memory capacity increases can quickly convert into revenue, whereas transitioning high-end machines from verification to volume orders takes several quarters. Achieving the jump from 41% to 45% relies largely on mature process and memory expansion; further progress depends on whether high-aspect-ratio etching for advanced logic and 3D NAND can enter mass production. Key observation points include: the verification progress of domestic high-end models, the proportion of domestic equipment in memory fab tenders, and whether U.S. controls loosen given the 75% threshold.