Chinese Gain Share in Semiconductor Markets

The global semiconductor industry is being realigned by geopolitical pressure, backfiring U.S. policy and the accelerating rise of China’s manufacturing capacity. The root cause of this shift remains U.S. sanctions restricting China’s access to advanced tools but simultaneously accelerating its investment in homegrown capability.

Illustrating the volatility caused by inconsistent policy was a U.S. announcement allowing Nvidia to resume H200 GPU sales to China. That briefly suggested a softening of restrictions. But in reality, it highlighted the fragility of the policy and reinforced China’s resolve to become self-sufficient.

Against this backdrop, the latest market data show market share gains by Chinese companies in both semiconductor equipment and silicon wafers. In both arenas, Chinese firms continue to increase their presence at the expense of long-established global leaders, while U.S. and Japanese suppliers face a more fragmented and regionally bifurcated market.

Equipment market share shifts toward China

China’s share gains in wafer-fab equipment are now visible across the top 10 rankings. Applied Materials (AMAT) lost share as Lam Research (LRCX) strengthened its etch portfolio and KLA (KLAC) expanded inspection and metrology revenue. Tokyo Electron (TOELY), Hitachi High-Tech, Screen, and ASM International (ASMI) show mixed movement, while Naura and AMEC continue to rise due to sustained domestic buying by Chinese fabs. The reshuffling of shares reflects both China’s internal demand and the impact of sanctions that redirected investment from foreign suppliers toward domestic alternatives.

Revenue performance across the global semiconductor equipment industry over the first three quarters of 2025 versus the same three quarters of 2024 shows a clear divergence between Chinese and non-Chinese suppliers. The seven leading non-Chinese equipment companies collectively recorded just 3.4% year-over-year growth reflecting flat demand outside China and continued restrictions on sales to China.

In China, the tale of 2024-25 is much different. Chinese equipment suppliers delivered 35.9% growth over the same period. This gap indicates that China’s gains are not the result of isolated outperformance by smaller players, but rather a broad-based expansion. Global equipment growth is now increasingly bifurcated along geopolitical lines, to the benefit of Chinese suppliers.

So do silicon wafer revenues

In the silicon wafer market—where producers of blank wafers sell directly to chip fabricators—we see much the same pattern. Chinese fabs increasingly get their wafers from domestic suppliers. Revenue growth among Chinese wafer manufacturers is accelerating as domestic fabs increasingly localize their materials supply. Shanghai Silicon Industry (NSIG) saw sales rise by more than 30%. Zhonghuan Semiconductor also saw growth, though not as dramatic. The increases were driven by higher 12-inch wafer demand as the domestic fabs grow, by increased customer qualification, as Chinese wafer makers get better, and state-directed investment too boost capacity.

In addition, 12-inch (300 mm) silicon wafers provide roughly 2.25 times the chip yield of 8-inch wafers. This efficiency advantage has made them the standard substrate for advanced chips with smaller dimensions. China’s production of 12-inch silicon wafers continues to expand rapidly, with ESW (Yi Siwei), Shanghai Silicon Industry, and Zhongxin Wafer posting the largest absolute gains between 2024 and 2025. Altogether, Chinese monthly capacity nearly doubled from 1,770 wafers/month to 3,120 wafers per month. That will materially reduce Chinese purchases from non-Chinese suppliers, pinching economies of scale and diminishing learning curve effects.

What has been lost

Here we see the real tragedy of U.S. policy disrupting the once-thriving China-U.S. semiconductor eco system. That policy:

• Reduces the revenue base for non-Chinese vendors, even if global demand remains healthy.
• Accelerates the rise of Chinese wafer suppliers, which are moving up the quality curve faster than expected, which could eventually compress margins for traditional global leaders.
• Political volatility now creates market uncertainty as policy shifts may increase or restrict cross-border technology flows at any time.

Looking ahead, the interplay between sanctions, domestic Chinese investment, and global technology roadmaps will continue to push the bifurcation of the industry, with China developing increasingly complete supply chains. Investors should anticipate that Chinese suppliers will remain on an upward trajectory, while multinational incumbents may face slower growth unless geopolitical conditions shift materially.

Data in this article come from my reports “Global Semiconductor Equipment: Markets, Market Shares, Market Forecasts” and “Comprehensive Technical-Marketing Report on Semiconductor Consumables,” both available at The Information Network website.