YMTC stands out as the clear leader in China's semiconductor equipment localization efforts, with an adoption rate of 45%, far exceeding both the national average and other major domestic fabs, according to estimates from Morgan Stanley. This aggressive push aligns with its strategic goal of building fully self-reliant NAND production lines amid tightening U.S. export controls. However, a 45% adoption rate is considerably lower than 100%.
Among YMTC's domestic suppliers are AMEC (etching tools, chemical vapor deposition tools), Naura Technology (etching tools, CVD tools), and Piotech (atomic layer deposition tools, CVD tools). While Chinese companies are known for world-class etching and deposition tools, it is unclear whether YMTC can source lithography tools that it needs from local suppliers.
For now, the best Chinese lithography tool is currently produced in high volume by Shanghai Microelectronics Equipment (SMEE). The SSX600 from SMEE can make logic chips on a 90nm process technology, though it is working on more advanced tools.
Other major Chinese chipmakers are progressing with equipment localization more cautiously, and at a significantly lower pace compared to YMTC. SMIC, China's largest foundry, shows a 22% localization rate at its Jingcheng fab, and 18% at its Lingang fab. These results reflect the gradual substitution of foreign tools, likely limited by reliance on advanced lithography systems that China cannot yet produce domestically.
All in all, this is a rather impressive example of industrial policy. And I say this as someone who has a very negative view of the CCP.