China is struggling to draw a clear road map to achieve self-sufficiency in semiconductor production, as reliance on foreign chip-making equipment remains a weak link that could further disadvantage the domestic industry amid Washington’s plans to tighten export controls, according to industry insiders. One major challenge for China is home-made equipment, which is technologically far behind imported equipment, according to Jin Cunzhong, deputy secretary general at China Electronic Production Equipment Industry Association (CEPEA), the industry body representing more than 180 Chinese chip equipment makers. “Key equipment for semiconductor manufacturing is still reliant on foreign imports,” Jin said in slides presented at a forum in Chongqing on Wednesday. “China-made lithography equipment has not entered wafer mass production lines.” Unisoc CEO expresses relief firm has survived parent group’s debt crisis China-made equipment such as those for chemical vapour deposition and ion implantation still have a large quality gap compared with those from foreign competitors, Jin said. In 2020, the combined market share of equipment from 56 Chinese companies was just 17 per cent in the country, unchanged from 2019, despite Beijing’s efforts to reduce reliance on imported gear. Jin’s comments reflect China’s disadvantages in the ongoing US-China tech rivalry, scuppering optimism that China could quickly switch to domestic suppliers if access to foreign equipment were further restricted. The administration of US President Joe Biden is considering imposing tougher sanctions on Semiconductor Manufacturing International Corp (SMIC) , China’s top chip maker, with the National Security Council to hold a meeting about possible new restrictions on Thursday, Bloomberg News reported on Wednesday. If implemented, it could make it more difficult for China to secure much-needed equipment for its chip plants, even undermining SMIC’s plans to expand production of mature-node chips. SMIC is currently building three new plants focusing on the 28-nm node process and larger in Beijing, Shanghai, and Shenzhen. Its co-CEO Zhao Haijun has warned of possible delays in US approvals of export licences to the company’s equipment suppliers. There are growing signs that Washington is willing to take a tougher stance on mainstream technologies. The US agency responsible for screening foreign investment deals recently blocked China’s Wise Road Capital from a US$1.4 billion takeover of a South Korean chip maker. Under former president Donald Trump, the US put Huawei Technologies Co and SMIC on its Entity List in May 2019 and December 2020, respectively, barring the companies from doing business with American firms. The restrictions have not been relaxed since Biden took office. On November 25, the US commerce department also blacklisted a semiconductor subsidiary of H3C Technologies , along with 11 other Chinese entities. The Chinese government has made it clear that the country must achieve “autonomous and controllable” technologies in the semiconductor industry and overcome supply chain choke points, but it has struggled to achieve results. Efforts over the last decade to help Shanghai Micro Electronics Equipment Group develop an advanced lithography machine have made little progress. “It’s a consensus that we must achieve autonomous and controllable technologies,” Gu Wenjun, chief analyst at Shanghai-based semiconductor research firm ICwise, wrote on Weibo, a microblogging platform. “But there’s huge disagreement over how China can achieve autonomous and controllable technologies.” How China’s SMIC plans to lead Beijing’s quest for chip self-sufficiency At the same time, CEPEA’s Jin said China’s domestic semiconductor equipment makers could still benefit from growing demand at home. NAURA Technology Group, a state-backed equipment maker, sold 2.7 billion yuan (US$424 million) worth of equipment in the first half of 2021, an increase of 59 per cent year on year. However, Shanghai Micro Electronics Equipment saw sales drop by 0.2 per cent to 702 million yuan in the same period.