China to make steady progress in chip equipment self-sufficiency amid gradual market recovery, UBS survey finds

China’s chip equipment self-sufficiency rate will keep increasing in the next few years, especially in the less-advanced equipment sector, amid a gradual market recovery and ongoing geopolitical tensions, according to research by UBS Securities.

The semiconductor equipment self-sufficiency rate is expected to increase in less-advanced sectors which account for around 70 per cent of the total market, such as etching and cleaning machines, Jimmy Yu, a China technology analyst at UBS Securities, said at a media briefing in Shanghai on Wednesday.

“You cannot assume that domestic companies will take up 100 per cent of the [Chinese] market, but it is reasonable to make the assumption of a market share of around 60 per cent [in some sectors],” said Yu.

Meanwhile, China still accounts for a relatively lower proportion of the global market for chip design, Yu said. But he added that nearly half of chip buyers in the country have signalled increasing willingness to raise their usage of domestically-developed chips.

According to the UBS survey, 11 per cent of the integrated circuit (IC) product purchasing managers said that they are “much more” actively considering using domestic chips compared with two years ago, while 39 per cent said they are “a little more” willing to do so.

“Looking forward to the next three years, the adoption rate of domestically-developed chips will gradually increase to between 30 and 50 per cent, which is quite high,” said Yu.