China's semiconductor equipment industry has entered a sustainable development stage.
According to the latest data from the China Semiconductor Industry Association, the domestic semiconductor equipment self-replacement rate has risen from 25% in 2025 to 35%, exceeding the previous expectation of 30%. According to the S-shaped growth curve (introduction period 0-10%, acceleration period 10%-40%, maturity period 40%-80%), the localization of equipment has entered the core climbing stage of the acceleration period. The growth rate after this will be much faster than that of the introduction period and the early stage of the acceleration period. Regarding the rapid acceleration period of the domestic semiconductor equipment self-replacement rate, a detailed analysis will be carried out from the following aspects.
I. China's semiconductor equipment industry has entered a sustainable development stage
After years of development, China's semiconductor industry has gradually entered a virtuous cycle, transitioning from the investment stage to the harvest stage. Semiconductor equipment, as the upstream link of the industry and the downstream link of capital transmission, when it enters the profit-making stage, it indicates that the entire semiconductor industry has entered a sustainable development stage, no longer relying solely on capital investment for driving. Currently, the revenue of Chinese equipment enterprises is increasing year by year, and their profit levels are also continuously rising. Beijing Huacun has seen continuous growth in net profit for 8 consecutive years, Shengmei for 7 consecutive years, and Hua Hai Qingke for 4 consecutive years. Other leading enterprises, if not making extraordinary research and development investments, their profit trends are similar to those of the above-mentioned enterprises. With the improvement of China's semiconductor manufacturing and design capabilities, domestic chips have gained recognition in both domestic and international markets, providing a broad market for China's semiconductor equipment. With technological progress, the revenue and profit of equipment enterprises have risen simultaneously, and the entire industry has entered a stage of input and output in a virtuous cycle, naturally ensuring the rapid development of the industry.
II. The semiconductor industry ecosystem has significantly improved
Both the investment intensity of enterprises in research and development, the professionalism of technology finance, and the collaboration between upstream and downstream have all improved significantly. Firstly, Chinese semiconductor equipment companies have continuously and actively invested in research and development for many years. The top five equipment companies in the domestic semiconductor equipment market have seen their R&D investment increase continuously for several years, and this growth even lasted longer than the periods of continuous revenue and profit growth. Especially, Umicore even allocated nearly one-third of its revenue in 2024 to R&D, an increase of 90% compared to the previous year. The continuous growth in R&D investment naturally leads to an acceleration in technological reserves; Secondly, technology finance has become increasingly professional, and industrial capital is willing to invest in cutting-edge, difficult, and bottleneck areas. The key to this is the significant success of national financial policy tools, as a large number of semiconductor innovation enterprises, including many semiconductor equipment enterprises, have listed on the Sci-Tech Innovation Board while operating at a loss, raising a large amount of funds. With the promotion of these valuable funds, many innovative enterprises have gradually achieved profitability, creating today's technology bull market, and proving the correctness of the Sci-Tech Innovation Board system. The success of the Sci-Tech Innovation Board and the Growth Enterprise Market has opened a channel for investment in technological innovation, attracting a large amount of capital to invest in outstanding innovative enterprises; Finally, some outstanding equipment enterprises have connected the production line verification channels. Due to the extremely high threshold for Fab production line equipment verification, only a few elite equipment enterprises can convince Fab to accept domestic equipment to enter the production line. Once the equipment enters the production line for actual use, it can quickly promote the growth of domestic equipment.
III. Chinese semiconductor equipment enterprises are in a state of fierce competition
Apart from the leading enterprises, there are numerous emerging companies. Many key projects are being advanced simultaneously by multiple branches, and the industry as a whole is showing a multi-branch attack posture. Equipment localization is a grand and arduous task. It requires not only the leading enterprises to play the role of the main force but also the emerging enterprises to make their own distinctions, providing an additional guarantee for equipment localization. Moreover, equipment localization is ultimately a market-oriented behavior, and it requires sufficient market competition. Only when the entire industry is prosperous can the equipment problem be solved. The intense competition is a major characteristic of the Chinese market and especially the technological competition. Although enterprises are under great pressure, objectively speaking, it has accelerated the progress of domestic equipment and increased the failure tolerance rate of equipment localization. Taking the film sedimentation equipment with the largest market demand as an example, there are both leading enterprises making efforts and emerging enterprises achieving remarkable results.
IV. The Opportunities Brought by AI
AI is the best gift that Heaven has bestowed upon China's semiconductor industry at the most opportune moment. The impact of AI on China's semiconductor industry has three aspects. First, the equalizing effect of new technologies. The advantages of international giants in traditional fields are difficult to be challenged. After the rise of AI, Chinese enterprises did not fall far behind international giants in terms of technology, thus enabling the entire semiconductor industry chain in China to enjoy the benefits of AI. Second, AI significantly boosts the demand for chips in the market. The computing power of AI itself corresponds to a huge demand, generating a large number of new demands. Moreover, under the impetus of the AI wave, emerging industries such as consumer electronics, the Internet of Things, and automotive electronics have developed rapidly, driving the rapid expansion of the semiconductor industry scale. Third, AI technology itself also promotes the technological iteration in all aspects of the chip industry, from the manufacturing process to research and development, where AI improves industrial efficiency. Under the combined effect of these factors, AI has had a huge promoting effect on China's semiconductor equipment. According to SEMI statistics, global semiconductor sales will increase by 19% to 628 billion US dollars in 2024, breaking through 600 billion US dollars for the first time. It is expected to maintain double-digit growth in 2025 and will exceed 1 trillion US dollars in 2030. With the development of the application terminals of artificial intelligence, the performance requirements for semiconductor equipment and the requirements for three-dimensional integration technology are becoming increasingly higher. AI has driven the extraordinary growth of semiconductor demand. Huawei recently publicly announced that it will launch three series of chips within three years, requiring the construction of massive production capacity. The next decade will be a golden opportunity period for the semiconductor supply chain, presenting huge growth opportunities for domestic equipment manufacturers. The huge demand for domestic AI chips has driven domestic high-end storage chip equipment manufacturers to enter first-line Factories.
V. Abundant Momentum for Domestic Equipment Development
Firstly, China has a large pool of talents. Although there is still a shortage of high-end talents at present, China has a large talent base and a large number of returnees from overseas. China has already gathered the world's largest contingent of equipment talents. Currently, China's semiconductor equipment industry offers the most industrial experience opportunities. These talents have ample growth opportunities. With time, the semiconductor equipment talent pool in China will surely evolve from "the largest" to "the strongest". Secondly, China has abundant industrial funds. Although many enterprises are facing difficulties in financing at present, China's industrial capital is very abundant. Previously, major projects relied on the central government, but now the level of social capital has significantly improved. Although major projects still require the impetus of the central government, the central government's funds can significantly leverage social capital. The data disclosed by Huaxin Investment, the sole management institution of the large fund, shows that the ratio of social capital leveraged by the first phase of the large fund is approximately 1:3.7. This indicates that social capital not only has the enthusiasm to invest in semiconductors but also has the ability to do so. Thirdly, local governments have sufficient development momentum. Over the years, local governments have continuously invested in the semiconductor equipment industry. Compared with semiconductor manufacturing and design, the equipment industry requires higher mechanical manufacturing capabilities, which gives more localities the opportunity to enter the semiconductor industry through equipment as a starting point.
Conclusion
The domestication of semiconductor equipment in China has a strong industrial logic, as well as strong human resources, capital, market, and a strong will to grow. After years of development, the semiconductor industry layout has been completed, and outstanding enterprises have gained market recognition. The entire industry has entered a virtuous cycle stage. Therefore, when an industry opportunity arises, the semiconductor equipment industry will inevitably enter an acceleration stage. Under this development speed, the great cause of domestication of semiconductor equipment in China will surely be accelerated and completed.
