Key Takeaways

Chinese semiconductor manufacturing equipment (SME) companies are gaining market share in several notable technologies, consequently eroding foreign incumbents’ market shares. From 2019 to 2024, Chinese SME firms have made notable gains in equipment used in fabrication—the first stage of chip manufacturing, particularly in chemical mechanical planarization (CMP) tools, dry etch and clean tools, and deposition tools. However, lithography, the most complex tool category, remains a critical constraint for China.¹

• CMP: Hwatsing Technology helped increase China’s market share by eight percentage points (pp) over the five-year period.
• Dry etch and clean: China gained parity with Japan in the dry stripping tool market and achieved an eight pp rise in the dry etch market. 
• Deposition: NAURA, Piotech, and AMEC played a key role in increasing China’s market share in deposition from 2% to 7% over the five-year period. 
• Lithography: ASML and Nikon continue to control the market, and China’s Shanghai Micro Electronics Equipment (SMEE) has thus far only reached a 4% market share in i-line lithography tools, which are used for legacy chip fabrication. 

In assembly, test, and packaging, China is also gaining ground. China’s market share gains in advanced packaging tools may help position the country as an important future player in this stage of the production process, which is becoming increasingly important to AI chip innovations. China’s market share gains in test tools underscores China’s ability to gain a foothold in segments with modest technical barriers.

• Advanced packaging: Most advanced packaging tools are fabrication tools specifically designed for the advanced packaging stage of the production process.² Over the last five years, Chinese firms’ most pronounced gains in advanced packaging market share occurred in the same equipment classes that propelled their growth in fabrication tools.
• Test: Since 2019, Hangzhou Changchuan and AccoTEST have driven China’s market share to almost 70% in linear and discrete test tools and have contributed to solid gains in burn-in and system-on-a-chip (SoC) test tools, while U.S. suppliers ceded ground.

While China continues to lag foreign competitors in most types of SME, Chinese companies are gaining market share in several notable segments. Looking ahead, as U.S.-led export controls further incentivize Chinese fabs to rely on and co-develop tools with domestic suppliers, market share gains from the last five years will likely help propel Chinese SME companies forward. These companies will probably reinvest some of their new revenue in R&D to make inroads in more advanced tool segments. Furthermore, these companies will likely receive additional state capital investments and subsidies. Anticipated market consolidation in the industry may bolster a handful of strong national champions, including NAURA, AMEC, Piotech, and SMEE.

Introduction

China has long sought to indigenize its semiconductor industry, accelerating its efforts over the last ten years following the launch of Made in China 2025.³ Recognizing semiconductor manufacturing equipment (SME) as a key bottleneck for China’s indigenous capabilities, the Chinese government focused on investing in domestic SME companies. Many of these, including NAURA, AMEC, and Piotech, have gained significant market share over the last five years.⁴ China primarily made these investments in the second phase of the National Integrated Circuit Industry Investment Fund (also known as Big Fund II). Chinese industry analysts suggest that equipment—particularly lithography—will remain a priority throughout the third phase of the Big Fund’s investments, which is expected to invest over $47 billion dollars in the semiconductor industry.⁵

Moreover, U.S. and allied export controls have accelerated China’s push to indigenize SME. As advanced foreign tools are restricted from the Chinese market, Chinese fabrication companies are further incentivized to co-develop and purchase domestically-made tools.⁶ This environment has almost certainly contributed to an increase in demand that has propelled Chinese SME suppliers forward over the last five years. 

This blog post analyzes data underlying the newly updated Emerging Technology Observatory’s (ETO) Supply Chain Explorer and sheds light on how market shares in different subsectors of the SME industry are evolving. We focus particularly on where China is gaining traction and the implications of these trends.⁷ We first outline the changes in market shares of key countries, highlighting China’s gains in the SME industry between 2019 and 2024. Then we conduct an in-depth analysis of China’s market share changes in equipment for: (1) fabrication; and (2) assembly, test, and packaging.

We calculated the market shares shown in the ETO Supply Chain Explorer and in this blog post from revenue data self-reported by each company to TechInsights, who supplements the survey market data with publicly available information and modeling. Market share data is a high-level, lagging indicator of innovation; it should not be used to gauge a company’s development of specific capabilities. The dataset does not capture tools developed by a conglomerate solely for their internal use—tools which would not be commercially available. Furthermore, the dataset does not identify the location of each sale, so it cannot be used to assess regional markets or shipment patterns.

China’s Steady Progress and Remaining Hurdles

Between 2019 and 2024, China gained market share across six equipment segments: CMP tools, etch and clean tools, deposition tools, handlers and probers, test tools, and advanced packaging tools. In comparison, the United States only gained market share in two segments—advanced packaging and other assembly and packaging tools—though its 28 percentage point (pp) surge in advanced packaging is the largest market share increase recorded by any country. The Netherlands gained 11 pp in lithography tools, which is roughly equivalent to the market share lost by Japan, underscoring ASML’s growing strength. 

In many subsegments, China’s position evolved from negligible to double-digit market shares in just a few years. Its progress, often led by one or two domestic champions, signals a growing ability to compete in specialized segments. 

Fabrication

Of the major equipment types used for fabrication, China accounted for three of the top five largest gains in market share between 2019 and 2024: CMP tools (+8 pp), etch and clean tools (+6 pp), and deposition tools (+6 pp).

Chemical Mechanical Planarization (CMP) Tools

China’s impressive market share increase in CMP tools—driven almost entirely by Hwatsing Technology—and the United States’ significant drop in market share suggests that China has had notable success in carving out a foothold in this lower-complexity equipment segment that is critical to advanced chip fabrication.⁸ The United States’ Applied Materials retains a decisive lead as of 2024, but Hwatsing’s increased coordination with Chinese fabrication companies may help the company make further progress in the market in coming years. 

CMP tools are used to flatten wafer surfaces dozens of times during the fabrication process. While these tools are critical, they are less complex than other fabrication tools. China’s eight pp gain in market share stands out relative to the United States’ 7 pp loss in market share between 2019 and 2024. Notably, China’s market share in CMP equipment rapidly jumped from just 1.5% in 2022 to almost 11% in 2023. Nonetheless, the United States retains the highest market share at 60%. 

Etch and Clean Tools

China’s market share gains in etch and clean tools shows that Beijing’s industrial policy investments and acquisition playbook can lead to real gains. In the dry stripping tool subsegment, China’s market share gains are dependent on Mattson Technology and domestic newcomers NAURA and AMEC, which both received investments from China’s Big Fund.⁹ China is now tied with Japan for the top spot in dry stripping tools and increased its share of the dry etch market as U.S. and Korean suppliers lost market share. If trends continue, Chinese firms would further solidify their position in this segment. 

Etching tools take the patterns created by lithography tools and engrave them into wafers, while cleaning tools strip away the remaining photoresist left over after a lithography step. In etch and clean tools, China reached its highest market share in 2024, jumping to almost 9% from under 3% in 2019. Within the segment, China has made more significant progress in dry etch tools than wet etch tools, which is notable as the former is generally more essential for advanced process nodes.¹⁰ China accounts for almost 11% of the dry etch and clean tools subsegment, gaining over eight pp between 2019 and 2024. 

Since 2019, China has gained 9 pp in the dry etch tool segment. Over the period, every other country lost market share, including the United States (-4 pp). Nonetheless, U.S. companies still account for more than half of the market (59%), followed by Japan (29%), and China (11%). Chinese companies NAURA and AMEC both increased their market share by 4 to 5 pp, each accounting for around 5% of the market in 2024. 

In dry stripping tools—a relatively small, specialized $300 million market¹¹—China gained 17 pp, tying Japan as the leading supplier with 35% of the market. Mattson Technology, a U.S.-based firm acquired by Beijing E-Town in 2016 (which has since been added to the Entity List¹²), is the leading supplier of dry stripping tools, followed by Japan’s Kokusai. NAURA, the Chinese equipment supplier, also entered the market for the first time in 2024, already accounting for 7% of the market. While China and Japan both gained market share, the United States (Lam Research) and South Korea (PSK) both lost almost 13 pp.

Deposition Tools

China’s push to develop indigenous deposition equipment is starting to show progress, though U.S. companies maintain a firm grip on most deposition subsegments, particularly physical vapor deposition (PVD) and chemical vapor deposition (CVD). By 2024, Chinese suppliers increased their overall market share in deposition to 7%, up from only 2% in 2019. The progress rests on state-backed champions NAURA, Piotech, and AMEC, with NAURA jumping from 1% to 10% market share over five years in the PVD market. Though the United States’ position remains strong, if Beijing is able to capitalize on progress made to develop more advanced tools, U.S. companies may soon face stronger headwinds.

Generally speaking, deposition tools coat the wafer with ultra-thin layers of materials. Fabrication of every chip relies on deposition tools, but the most advanced nodes (i.e., 14nm and below) demand especially precise techniques. At the cutting edge, subsegments such as atomic layer deposition (ALD) layer films atom-by-atom—which is critical to achieve chip performance for the most advanced fabrication processes.¹³

The United States remains the top supplier of deposition tools, accounting for 61% of the market, followed by Japan (15%), the Netherlands (11%), and China (7%). The United States’ market share has remained relatively steady. Japan lost roughly 5.5 pp, and China gained what Japan lost. 

Within the deposition segment, China gained market share in the following subsegments: deposition tools for semiconductors other than integrated circuits (deposition for non-IC) (+13 pp), physical vapor deposition tools (+9 pp), tube-based diffusion and deposition (+8 pp), and chemical vapor deposition tools (+6 pp). Over the last five years, China emerged as the leading supplier of other deposition tools for non-IC items, moving from fourth to first. China did not gain market share in the most advanced deposition segment—atomic layer deposition—and held less than 1% of the market in 2024.

China has made significant strides in the physical vapor deposition market, accounting for over 10% of the market, trailing only the United States, which remains a strong leading supplier with 86% of the market. Notably, while China gained 9 pp of its 10% market share over the last five years, Japan lost 4 pp. China’s growth in this market segment is driven entirely by NAURA, which increased its market share from just 1% in 2019 to 10% in 2024.

In the chemical vapor deposition tool market, the story is similar: China emerged as the second leading supplier of tools accounting for 7% of the market, though the United States continues to have a firm hold on the market segment with 78%. China’s growth was driven by two Chinese firms: Piotech (+4 pp) and NAURA (+2 pp). Notably, Piotech gained nearly all of its market share in just the last two years. In addition to Piotech and NAURA, AMEC entered the CVD market for the first time in 2024. Despite their progress, these Chinese companies lag far behind Applied Materials and Lam Research in market share.

Lithography Tools

China’s near-zero gain in the overall lithography market underscores how little headway domestic suppliers have made in the most complex SME segment. Even in the i-line lithography tool segment—tools for legacy chip fabrication—China has only maintained a modest 4% market share. This demonstrates that lithography remains the critical chokepoint where foreign incumbents maintain a formidable lead. 

In the lithography tool segment, China gained a negligible share of the market between 2019 and 2024. The Netherlands remains the leading supplier of lithography tools (79%), followed by Japan (17%). 

Assembly, Test, and Packaging (ATP)

China’s market share gains are also visible across advanced packaging and test tools, though Chinese companies continue to lag significantly behind foreign suppliers. In the ATP market segments, China gained market share in advanced packaging tools (+4 pp) and test tools (+5 pp), while it lost market share in the other (conventional) assembly and packaging tool segments. 

Assembly and Packaging Tools

China is positioning itself to be an important player in the supply chain for advanced packaging—technology needed to tightly integrate chiplets. Chinese companies are gaining some market share in advanced packaging tools, particularly in etch and clean tools for advanced packaging. As of 2024, however, U.S. and Japanese firms maintain significant leads, mirroring their positions in fabrication tools. In other assembly and packaging segments, including tools for bonding and packaging chips, China has lost market share since 2019.

In the advanced packaging tools segment (i.e., fabrication tools for advanced packaging), China accounts for 7% of the market, trailing the United States (65%) and Japan (15%). Within the subsegments, China gained market share in etch and clean tools for advanced packaging (+10 pp) and deposition tools for advanced packaging (+3 pp), but lost market share in both lithography tools for advanced packaging (-2 pp) and CMP tools for advanced packaging (-2 pp). 

In the etch and clean tools for advanced packaging segment, China trails the United States and Japan, though appears to be catching up to Japan quickly. This is driven by AMEC and NAURA, the latter of which entered the market for the first time in 2024. In deposition tools for advanced packaging, China has already surpassed Japan and is now the second leading supplier, though it remains significantly behind the United States. The leading Chinese supplier is NAURA, though Piotech also entered the market in 2024.

While U.S. and Japanese incumbents still hold significantly more market share than Chinese entrants in advanced packaging tools, their recent gains could indicate that China-headquartered outsourced semiconductor assembly and test (OSAT) companies—four of the top ten by 2024 revenue¹⁴—are increasing their procurement of domestic tools.

Test Tools

China has made progress in test tools, such as linear and discrete test tools, burn-in test tools, and system-on-a-chip (SoC) test tools, demonstrating rapidly advancing domestic capabilities in segments where technical barriers are relatively lower compared with fabrication equipment. 

China gained 24 pp in linear and discrete test tools, 9 pp in burn-in test tools, and 5 pp in SoC tools. China is the only country that gained market share in linear and discrete test tools and has solidified its position as the leading supplier with 69% of the market, followed by the United States, which has lost 10 pp and now accounts for 16% of the market. China entered the burn-in test tools segment in 2021 with just under 2% of the market and now accounts for 9% of the market. In the SoC test tools segment, China entered the market in 2020 and has claimed 5% of the market so far. Overall in test tools, Hangzhou Changchuan Technology and AccoTEST are China’s leading suppliers.

Conclusion

Over the last five years, China steadily grew its position in various SME segments. Chinese companies, however, continue to face formidable barriers in gaining market share in the highly complex segments, especially lithography. In the coming years, the key question will be whether China utilizes its progress to date as a springboard to achieve breakthroughs in more advanced SME segments. 

Appendix

Appendix Table 1: Names of Chinese companies

English Name	Chinese Name
Hwatsing Technology	华海清科股份有限公司
NAURA	北方华创科技集团股份有限公司
Piotech	拓荆科技股份有限公司
AMEC	中微半导体设备（上海）股份有限公司
Hangzhou Changchuan	杭州长川科技股份有限公司
AccoTEST	北京华峰测控技术股份有限公司
SMEE	上海微电子装备（集团）股份有限公司

1. See Appendix Table 1 for the Chinese character names of all China-headquartered companies discussed in this report.
2. CSET’s definition of advanced packaging tools only includes fabrication tools designed for advanced packaging processes and does not include assembly, packaging, or test tools designed for advanced packaging. This means, for instance, that revenue from hybrid bonding tools and advanced thermocompression bonding (TCB) tools is organized under bonding tools, not under advanced packaging. Since 2024, TechInsights refers to advanced packaging as “wafer level packaging.”
3. PRC State Council, “Notice of the State Council on the Publication of Made in China 2025” [国务院关于印发《中国制造2025》的通 知], trans. CSET (CSET, March 8, 2022), https://cset.georgetown.edu/wpcontent/uploads/t0432_made_in_china_2025_EN.pdf.
4. https://perma.cc/CR7B-K6KX.
5. https://perma.cc/KW5R-3743; https://www.bloomberg.com/news/articles/2025-06-27/china-s-50-billion-chip-fund-switches-tack-to-fight-us-curbs.
6. https://asia.nikkei.com/Spotlight/Most-read-in-2021/US-China-tech-war-Beijing-s-secret-chipmaking-champions.
7. The data discussed in this blog post is CSET’s analysis of TechInsights’ Chip Market Research Services Equipment Database, last updated by TechInsights in May 2025 and last accessed by CSET in June 2025.
8. Hwatsing Technology is a Tianjin-based equipment manufacturer of CMP tools who intends to break Applied Materials’ dominance in the segment. In 2013, Tsinghua Holdings and the Tianjin Municipal Government established Hwatsing Technology, which emerged from research conducted at Tsinghua University starting in 2000. According to the company’s 2024 annual report, leading Chinese fabrication companies like Semiconductor Manufacturing International Corporation (SMIC), Hua Hong Semiconductor Group, YMTC, and CXMT are incorporating Hwatsing tools into their fabrication processes, which is helping the company in its research and development efforts. Recognizing the importance of Hwatsing to China’s semiconductor indigenization ambitions, the U.S. Department of Commerce in December 2024 added the company to the Entity List.
9. https://perma.cc/N6B5-94QU, https://www.chinatalk.media/p/chinas-sme-industrial-policy-in-5.
10. “Advanced process technologies rely more on dry etching [than wet etching] to form desirable patterns and shapes on wafers.” https://newsroom.lamresearch.com/etch-essentials-semiconductor-manufacturing; https://www.globalwellpcba.com/wet-etching-vs-dry-etching/; https://www.thierry-corp.com/plasma-knowledgebase/dry-etching-and-wet-etching.
11. In 2024, the size of the dry stripping tools market was about $300 million. In comparison, in the same year, the size of the dry etch tools market was about $18.5 billion (CSET analysis of TechInsights data).
12. https://www.federalregister.gov/documents/2024/12/05/2024-28267/additions-and-modifications-to-the-entity-list-removals-from-the-validated-end-user-veu-program.
13. https://semiengineering.com/enabling-advanced-devices-with-atomic-layer-processes/; https://newsroom.lamresearch.com/Tech-Brief-A-Look-at-Atomic-Layer-Deposition-ALD; https://resources.pcb.cadence.com/blog/2024-the-gaafet-fabrication-process.
14. https://marklapedus.substack.com/p/ase-amkor-top-osat-rankings-but-china.