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It is reported that China is to mandate chipmakers to use at least 50% of domestically made equipment for adding new capacity, as Beijing looks to keep up the push in building a self-sufficient semiconductor supply chain.The sources noted however that the rule is not one that will be publicly documented. But should chipmakers seek state approval to build or expand their plants, they are said to have been told to show proof in their procurement tenders that at least half their equipment are Chinese-made.The push here is quite a significant one by Beijing, who seem to be happy to double down and hunker down by stripping itself of any reliance on foreign technology. That especially after the US has continued to tighten technology export restrictions since 2023, having banned sales of advanced AI chips and semiconductor equipment to China.But with this new mandate, it even sees China look to alienate supply of foreign equipment from the likes of Japan, South Korea, and Europe in favour of domestic suppliers.That being said, the sources said that local authorities will grant flexibility depending on supply constraints. In particular, areas where domestically developed equipment is not yet fully available. However, applications which typically fail to meet the 50% threshold should be rejected.One of the sources mentioned that:”Authorities prefer if it is much higher than 50%. Eventually they are aiming for the plants to use 100% domestic equipment.”As Beijing continues down this path, the big winner seems to be China’s largest chip equipment group, Naura Technology. That’s one big name to keep an eye out for next year alongside its smaller rival, Advanced Micro-Fabrication Equipment (AMEC).Chinese firms will be looking to turn to these two names, especially in the area of chip etching during microfabrication – which is a crucial step in the manufacturing process.
This article was written by Justin Low at investinglive.com.
💡 DMK Insight
China’s new mandate for chipmakers could shake up global supply chains and impact tech stocks. By requiring at least 50% domestic equipment for new semiconductor capacity, Beijing is doubling down on its self-sufficiency goals. This move not only affects Chinese manufacturers but also has ripple effects on global tech firms reliant on semiconductors. Traders should keep an eye on companies like TSMC and Intel, which may face increased competition or supply chain disruptions. The semiconductor sector is already volatile, and this regulation could exacerbate that, especially if it leads to delays in production or increased costs. On the flip side, this could present opportunities for domestic equipment manufacturers in China, potentially boosting their stock prices. For traders, monitoring the performance of semiconductor ETFs and related stocks will be crucial in the coming weeks. Watch for any announcements from major chipmakers regarding their compliance with this mandate, as it could trigger significant market movements.
📮 Takeaway
Keep an eye on semiconductor stocks and ETFs; any compliance announcements could lead to volatility, especially in the next few weeks.
