Abstract

From 2019 to 2026, China’s semiconductor industry shifted from importing tools to building a domestic ecosystem. Driven by U.S. export controls, Chinese wafer companies and equipment makers accelerated development in lithography, etch, deposition, and process control. While a gap remains with ASML and TSMC, China has achieved functional DUV immersion, scaled domestic equipment supply, and set targets for EUV by 2030.

1. The Landscape: Wafer Companies and Fabs Leading China

Core Wafer Manufacturers

SMIC – China’s largest foundry. Testing domestic tools and pushing 7nm/5nm via DUV multi-patterning. Founder Zhang Rujing stated SMIC bought 800+ machines from AMEC.
Hua Hong, CXMT, YMTC – Focus on mature nodes, memory, and power. Beneficiaries of domestic equipment scale-up. 3b5462c0

China has been the world’s biggest buyer of wafer fab equipment for 2 years. In 2024 it purchased $41 billion, 40% of global sales. 4009

2. Building Equipment: The Domestic Ecosystem 2019-2026

Export controls starting in 2019 forced localization. By 2026 Chinese suppliers cover almost every process step: deposition, etch, cleaning, metrology. f572

Key Chinese Equipment Companies:
Company | Focus | Progress 2019-2026
NAURA Technology | Etch, PVD, CVD, furnace, cleaning | Largest domestic equipment maker. Revenue 29.8B yuan in 2024, 5x vs 2020
AMEC | CCP/ICP etch, TSV, MOCVD | Covers 30% of IC equipment categories. Aims for 60% in 5-10 years. Etch tools now support 5nm/3nm
SMEE | Lithography DUV | Most advanced: SSA600 90nm. Developing SSA800 28nm, SSA900 22nm
Yuliangsheng / SiCarrier | Immersion DUV, future EUV | Delivered 3 DUV immersion tools to fabs. Working on EUV “Mount Everest”
ACM Research, Hwatsing, Kingsemi, Piotech | Cleaning, CMP, track, ALD | Top 30 global equipment suppliers
4009f57262c09cc73b54f78f

Self-sufficiency for 7nm and below equipment is still <10%, but for cleaning and resist removal it’s ∼50%. 4009

3. Lithography Machine Progression: The Core Bottleneck

Lithography “prints” circuits on wafers. This is where China faced the hardest block.

The External Constraint

2019: US began restricting ASML EUV sales to China.
2023: US also blocked advanced immersion DUV.
ASML remains the only EUV maker, $300M per machine, shipping 60 in 2026 and 80 in 2027. 40094d87

China’s Domestic Response

Phase 1: 2019-2022 – Rely on Old DUV
Fabs used older ASML DUV, second-hand imports, and SMEE 90nm tools. SMEE SSA600 = 90nm resolution. f78f9cc7

Phase 2: 2023-2025 – Immersion DUV Breakthrough
SMIC began testing Yuliangsheng’s domestic immersion DUV in 2024-2025.

Specs: 28nm-class single exposure.
Capability: With multi-patterning can reach 7nm, possibly 5nm at low yield.
Cost/Yield issue: SMIC 5nm wafers via DUV may cost 50% more than TSMC with yields as low as 33%.
Supply chain: Mostly Chinese parts, but some still imported. Goal is full localization.
Benchmark: Similar to ASML NXT:1950i from 2008, designed for 32nm. 73c63b5434c4

Phase 3: 2026-2030 – Targeting EUV

SMEE: Developing SSA800 28nm, SSA900 22nm.
SiCarrier/Yuliangsheng: Working on China’s first EUV tool codenamed “Mount Everest”.
Analyst view: Even if SMIC integrates 28nm immersion DUV by 2027, sub-10nm will need redesigned scanners and likely won’t be domestically made before 2030. 9cc7f78f3b54

4. Latest Components in Semiconductor Projects

A modern fab needs 3,000+ tools. China’s 2019-2026 build-out focused on: 4009

A. Patterning: SMEE DUV, Yuliangsheng immersion DUV. EUV still in R&D.
B. Etch: AMEC’s VHF decoupled plasma etch, supporting 5nm/3nm.
C. Deposition: NAURA CVD/PVD/ALD, AMEC MOCVD gaining global share.
D. Cleaning/Wet: ACM Research, Kingsemi.
E. Metrology/Inspection: Raintree Scientific.
F. CMP and Edge Polish: Hwatsing. 62c03456

AMEC aims to complete 20 types of restricted thin-film equipment soon, and 40 by 2029. f572

5. Significance and Challenges

Significance

Self-reliance: The 2019 sanctions catalyzed a domestic supply chain. Gap with leaders is “continuously narrowing”.
Scale: China’s fab spending dominance funds local equipment makers.
Technology: Breakthroughs in immersion DUV and etch show capability to replicate, then iterate. f572

Challenges

Lithography gap: Still 2-3 generations behind ASML. No EUV in production.
Yield and cost: DUV multi-patterning for 7nm/5nm is expensive and low yield.
Components: Some critical lenses, lasers, optics still imported. f5723b544d87

6. Conclusion: 2019-2026 as a Foundational Era

2019-2026 was not about catching ASML in EUV. It was about survival and building the base.

China moved from <20% equipment coverage to near-complete process coverage except advanced lithography. SMIC’s testing of domestic immersion DUV and the emergence of NAURA, AMEC, SMEE in the global top 30 signal this shift. 73c6f572

The next 5 years will determine if “Mount Everest” EUV and SSA800/900 DUV can close the gap for sub-7nm. For now, China’s strategy is: dominate mature nodes with domestic tools, and use DUV ingenuity to push advanced nodes until EUV arrives.

As analyst Lin Qingyuan put it: if successful, this breakthrough lets Chinese companies build more advanced machinery. f78f

Comprehensive Analysis and Thesis

China’s Semiconductor Industry (2019–2026): Wafer Companies, Manufacturing Equipment, Components, and Lithography Machine Development

Executive Summary

Between 2019 and 2026, China’s semiconductor industry underwent one of the fastest industrial transformations in modern history. Triggered by export controls, supply-chain disruptions, and the strategic goal of semiconductor self-sufficiency, China invested hundreds of billions of yuan into virtually every layer of the semiconductor ecosystem—from silicon wafers and fabrication equipment to electronic design automation (EDA), process chemicals, advanced packaging, and lithography.

Despite substantial progress, China has not yet achieved full independence in the most advanced semiconductor technologies. Strong gains have occurred in mature-node manufacturing, etching, deposition, cleaning, and wafer production, while EUV lithography remains beyond commercial domestic capability. DUV lithography, advanced packaging, and mature-node fabrication have become major strengths. (South China Morning Post)

Chapter 1

China’s Semiconductor Ecosystem

The semiconductor industry consists of several interconnected sectors:

Sector	Purpose
Silicon wafers	Base material for chips
Semiconductor equipment	Machines that manufacture chips
Lithography	Printing transistor patterns
Deposition	Thin-film creation
Etching	Material removal
Cleaning	Surface preparation
Metrology	Measurement
Inspection	Defect detection
CMP	Surface polishing
Packaging	Final chip assembly
Testing	Functional verification
Materials	Chemicals, gases, photoresists

China invested heavily across all of these sectors after 2019.

Chapter 2

Major Chinese Silicon Wafer Companies

China significantly expanded domestic silicon wafer production.

1. Shanghai Silicon Industry Group (NSIG)

Produces:

300 mm wafers
200 mm wafers
SOI wafers
Epitaxial wafers

Applications:

AI chips
Automotive chips
Memory
Power electronics

2. Zhonghuan Semiconductor

Specializes in:

Large-diameter silicon crystals
Integrated circuit wafers
Solar-grade silicon

3. GRINM Semiconductor

Focus:

Compound semiconductor substrates
Gallium arsenide
Indium phosphide

4. Simgui Technology

Manufactures:

SOI wafers
MEMS wafers
RF device substrates

5. National Silicon Industry Group

Develops:

12-inch wafers
Advanced silicon materials
High-purity crystal growth

China has set ambitious localization targets for silicon wafers, reflecting its broader supply-chain strategy. (The Economy)

Chapter 3

Semiconductor Equipment Manufacturers

China has rapidly developed domestic suppliers across many equipment categories.

Major companies include:

Naura Technology Group
AMEC (Advanced Micro-Fabrication Equipment)
SMEE (Shanghai Micro Electronics Equipment)
Piotech
Kingsemi
ACM Research (China operations)
Hwatsing Technology
Kingsemi Equipment
Beijing E-Town Semiconductor

These firms now compete in etching, deposition, cleaning, polishing, packaging, and certain lithography applications. (South China Morning Post)

Chapter 4

Wafer Fabrication Equipment

Modern chip factories require hundreds of specialized machine types.

Core categories include:

Front-End

Crystal pullers
Wafer slicing
Grinding
Polishing
Cleaning

Lithography

Stepper
Scanner
Mask aligner
Overlay systems

Deposition

CVD
PVD
ALD
Epitaxy

Etching

Dry etching
Plasma etching
ICP etching
Reactive ion etching

Cleaning

Megasonic cleaning
Wet benches
Single-wafer cleaning

Implantation

Ion implantation
Dopant activation

Thermal Processing

Rapid thermal annealing
Diffusion furnaces
Oxidation furnaces

CMP

Chemical mechanical polishing
Slurry systems
Pad conditioning

Inspection

Optical inspection
Electron beam inspection
Defect review

Metrology

CD measurement
Film thickness
Overlay accuracy

Chapter 5

Components Inside Semiconductor Manufacturing Equipment

Every semiconductor machine contains numerous precision subsystems:

Industrial robots
Vacuum chambers
Laser systems
Precision optics
Motion stages
Air bearings
Magnetic levitation
Piezo actuators
Wafer handling robots
Gas delivery systems
High-vacuum pumps
RF plasma generators
Temperature controllers
CCD/CMOS cameras
X-ray systems
Spectrometers
AI control computers
Industrial PLCs
Edge computing controllers
Ultra-pure water systems
Chemical delivery modules
Electrostatic chucks
Power supplies
Servo motors
Linear motors
Nanometer positioning systems
Cleanroom enclosures
HEPA filtration
Optical sensors
Metrology software
Machine-learning process optimization

Chapter 6

Lithography Machine Evolution (2019–2026)

Lithography is the most technologically demanding step in semiconductor fabrication.

2019

China relied largely on imported DUV systems. EUV lithography systems from the Netherlands were not available due to export restrictions.

2020

Chinese companies intensified research into:

Precision optics
Laser sources
Motion control
Optical stages
Alignment systems

2021

SMEE continued development of domestic lithography platforms, with commercial strengths in packaging, MEMS, LED, and mature-node applications while pursuing more advanced DUV capabilities. (Semiconductor Expo)

2022

Investment accelerated in:

Precision mirrors
Lens polishing
Motion stages
Photoresist chemistry
Mask technology

2023

Domestic development expanded in:

Immersion lithography research
Advanced packaging lithography
High-precision alignment
Overlay improvement

2024

China strengthened:

Optical component manufacturing
Laser systems
High-precision manufacturing
Domestic supply chains

2025

Chinese equipment makers significantly increased their share of domestic semiconductor equipment purchases, especially in etching and deposition. Reports indicated domestic equipment adoption exceeded government targets in several segments. (South China Morning Post)

2026

China continues to commercialize more domestic semiconductor equipment across mature and some advanced manufacturing processes. Public evidence indicates continued progress in DUV-related technologies and equipment localization, but there is no verified evidence that China has commercially deployed a domestically produced EUV lithography machine. Advanced lithography remains an area where foreign technology leadership persists. (The Economy)

Chapter 7

Lithography Progression

Generation	Approximate Wavelength	Typical Use
Contact lithography	365 nm	Early ICs
i-line	365 nm	Mature processes
KrF	248 nm	Legacy logic
ArF Dry	193 nm	Mid-generation nodes
ArF Immersion	193 nm	Advanced DUV
Multiple Patterning	193 nm	Extends DUV capability
EUV	13.5 nm	Leading-edge nodes

Chapter 8

Major Technological Challenges

China continues to face challenges in:

EUV light sources
Ultra-precision mirrors
High-NA optics
Advanced photoresists
Precision mask manufacturing
Defect-free optics
Nanometer-level positioning
Advanced metrology
High-end inspection systems

These areas remain among the most difficult parts of the semiconductor manufacturing ecosystem. (The Economy)

Chapter 9

Areas of Rapid Progress

China has made notable advances in:

Silicon wafer manufacturing
Etching systems
Deposition equipment
Cleaning equipment
CMP equipment
Packaging
Testing
Industrial robotics
Process automation
AI-assisted manufacturing
Compound semiconductors
Power semiconductor production

Chapter 10

Future Outlook (2026–2035)

Likely areas of continued development include:

Higher domestic equipment adoption
Improved 300 mm wafer production
More advanced DUV lithography
Greater use of AI in process control
Expanded advanced packaging (2.5D and 3D integration)
Improved metrology and inspection capabilities
Continued investment in domestic supply chains

At the same time, leading-edge EUV lithography and some of the most advanced semiconductor manufacturing technologies are expected to remain technically challenging and highly competitive globally.

Conclusion

From 2019 to 2026, China’s semiconductor industry evolved into one of the world’s largest and fastest-growing ecosystems. Domestic firms achieved major gains in wafer production, etching, deposition, cleaning, packaging, and mature-node manufacturing. Government investment and localization policies accelerated adoption of Chinese-made equipment, increasing domestic market share substantially. However, the industry still relies on foreign technology in several critical areas—particularly advanced lithography, high-end metrology, and inspection—making these the next major frontiers for China’s semiconductor ambitions. (South China Morning Post)

Thesis Article: China’s Wafer, Equipment, and Lithography Progression. Wafer Companies, Building Equipment, and the Race for Semiconductor Self-Sufficiency