China is imposing a requirement for chipmakers to use at least half of their equipment from domestic suppliers when adding new manufacturing capacity, according to Reuters citing three individuals with knowledge of the policy.
The move, which is not publicly documented, forms part of Beijing’s broader effort to enhance self-sufficiency in its semiconductor sector amid ongoing tensions with the United States.
Sources told Reuters that Chinese semiconductor firms seeking government approval to construct or expand fabrication facilities have, in recent months, been instructed to demonstrate through procurement tenders that a minimum of 50% of their equipment is sourced from Chinese manufacturers.
Proposals that do not meet this threshold are generally rejected, though officials make certain exceptions if supply limitations exist. The rules are also eased for advanced production lines where domestic equipment is not yet widely available.
Beijing’s policy comes as one of its most substantial steps to reduce reliance on foreign technology, a drive that has accelerated since Washington tightened export controls in 2023, blocking sales of sophisticated AI chips and semiconductor tools to China.
The 50% local equipment mandate is nudging Chinese companies to shift toward domestic suppliers, even in segments where foreign machinery from the United States, Japan, South Korea, and Europe can still be accessed.
One individual told Reuters that authorities would prefer the proportion to exceed 50%, with a long-term goal for new plants to eventually operate with entirely Chinese-made equipment.
