China tells chipmakers to use homegrown chipmaking tools for 50% of new capacity — decree designed to squeeze foreign suppliers out of supply chain

China has mandated that chipmakers must use at least 50% domestically produced equipment for new semiconductor manufacturing capacity, aiming to reduce reliance on foreign suppliers. While waivers are granted for advanced fabs, the Chinese industry currently lacks the capacity to produce enough lithography systems. The rule, though not formally published, requires companies seeking government approval for fabs to show that half of their equipment spending goes to Chinese suppliers. Flexibility is allowed on a case-by-case basis, especially for advanced nodes facing local tool shortages.