Tech war: China chip equipment makers expect a windfall in first half amid soaring demand for local machines

China’s major semiconductor equipment makers expect strong growth in the first half of 2023, thanks to soaring demand for local products amid tight US restrictions on the export of advanced chip-making equipment to the country.

Naura Technology Group, a Beijing-based maker of etching tools, expects a year-on-year increase in profit of between 121.3 and 155.8 per cent, to between 1.67 billion (US$233 million) and 1.93 billion yuan in the first half of 2023, while revenue is expected to surge by up to 64.4 per cent to 8.95 billion yuan, according to a stock exchange filing on Saturday.

Advanced Micro-Fabrication Equipment (AMEC), another leading chip equipment maker started by US scientist Gerald Yin Zhiyao in 2004, said on the same day that it expects its revenue to grow by 28 per cent to 2.53 billion yuan in the same period, while net profit might surge by between 109.5 and 120.2 per cent to 980 million yuan-1.03 billion yuan.

The increase in expectations comes after the US and its allies intensified restrictions on China’s access to advanced chip equipment on national security grounds, to restrict China’s development of its domestic semiconductor sector.

Naura posted a 51 per cent and 143 per cent jump in revenue and profit in the first half of 2022, respectively, while AMEC saw a 47 per cent surge in revenue and an 18 per cent increase in profit over the same period.

Both companies attributed their business growth to an increase in market share, with Naura attributing the improvement to “the steady increase in market share of the company’s semiconductor equipment business and the continuous improvement in operating efficiency”. AMEC said its etching equipment “continues to be recognised by more and more domestic and foreign customers”.