China enforces 50% domestic equipment rule for new chip fabs, aims for full localization
China has quietly implemented a new regulation requiring semiconductor manufacturers to use at least 50% domestically produced equipment when expanding production capacity. While not yet formalized in public policy, the rule has been enforced in recent months through government approval processes for new or expanded fabrication plants.
Applicants must now submit documentation proving that at least half of their equipment procurement budget is allocated to Chinese suppliers. According to sources familiar with the matter, applications that fail to meet this threshold are typically rejected. Officials have clarified that the 50% figure is a minimum baseline, not a long‑term target. China's ultimate goal is full localization of wafer and chip manufacturing equipment.
Regulators are applying the rule flexibly, especially for advanced process nodes where domestic equipment still lags behind global leaders. Mature process fabs face the strictest enforcement, while advanced nodes may receive temporary exemptions due to technological limitations.
Data shows that in 2025, state‑owned Chinese chip manufacturers purchased 421 sets of domestic lithography machines and related components, totaling approximately 850 million yuan (about 119 million USD). These purchases primarily included dry ArF and KrF models, which are more suitable for mature process chips.
By comparison, ASML's financial report for Q4 2024 lists the average price of a dry ArF lithography machine at 27.9 million USD, a KrF machine at 14.46 million USD, and an immersion DUV ArF machine-used for advanced nodes-at 82.5 million USD. In 2024, ASML shipped 52 KrF, 65 i‑line, 28 dry ArF, 129 immersion ArF, and 44 EUV lithography machines globally.
ASML is a Dutch multinational corporation and the world's leading supplier of photolithography systems for semiconductor manufacturing. Founded in 1984 and headquartered in Veldhoven, ASML specializes in advanced lithography technologies including deep ultraviolet (DUV) and extreme ultraviolet (EUV) systems. Its machines are critical for producing cutting‑edge chips used in smartphones, servers, and AI applications. ASML's dominance in EUV technology has made it a strategic player in the global semiconductor supply chain, and its systems are used by top chipmakers including TSMC, Intel, and Samsung.
