Chinese Semiconductor Equipment Companies Boom as Sanctions Backfire
Preventing China from importing advanced semiconductor manufacturing equipment was supposed to strangle China’s efforts to make elite chips.
China’s response: make the very equipment the West tried to deny them. As a result, Chinese equipment vendors are steadily gaining share in global markets.
The sanctions aimed at freezing China at mature nodes have instead prompted a rapid acceleration in domestic capability. What was a niche domestic ecosystem has now become a high-growth substitute capable of rivaling Western giants.
Chinese firms accounted for approximately 38% of global fab equipment sales in 2024, up sharply from 6% in 2010. Since 2022, Dr. Castellano’s analysis has highlighted the speed at which Chinese companies are growing. For a detailed view of specific stocks to buy, consider subscribing to the Gilder’s Technology Report investment newsletter.
In 2024, Chinese equipment companies grew at roughly three times the pace of their international. Chart 1, Drawn from Dr. Castellano’ Information Network Report Global Semiconductor Equipment: Markets, Market Shares and Market Forecasts illustrates this powerfully.
Chart 1: Revenue Growth of Chinese Semiconductor Manufacturing Equipment Companies
The Chinese firms are growing from a relatively small base. But their revenues are no longer insignificant as Table 1 shows
So far in 2025, this trend has only accelerated. AMEC (SSE: 688012) and Piotech (SSE: 688072.) have moved from pilot deployments into full-scale tool shipments for advanced logic, memory, and packaging. They now supply most of Chinese etch and deposition equipment for 28nm to 5nm nodes. The lone remaining barrier is EUV lithography, still the exclusive realm of ASML.
Meanwhile, Applied Materials (NSQ: AMAT) and Lam Research (NSQ:LRCX) continue to serve global advanced-node fabs, especially those pushing below 3nm. Their revenues and margins remain strong, supported by large installed bases and recurring service streams. But in China’s mid-critical layers—etch, deposition, hybrid bonding—their market share is steadily eroding.
AMEC: High Growth Backed by R&D
AMEC reported first-half 2025 revenue of 4.96 billion yuan, up 43.9% year on year. (A yuan is about 13 cents USD.) Etching equipment, its core business, generated 3.78 billion yuan, growing 40% year on year. Net profit attributable to shareholders reached 680 to 730 million yuan, up 31.6 to 41.3%. Yet, the profit growth lagged revenue due to a sharp rise in research and development investment. AMEC’s R&D spend climbed by 520 million yuan year on year to 1.49 billion yuan in the first half, underscoring its focus on new product launches.
In the second quarter of 2025, growth accelerated as AMEC achieved revenue of 2.787 billion yuan, a 51.2% increase year on year. Net profit reached 367 to 417 million yuan, up 37 to 55.8% year on year. Non-GAAP net profit, reflecting increased R&D costs as AMEC accelerated new platform rollouts, was substantially lower, ranging between 212 and 262 million yuan reflecting short-term pressure from R&D costs. That investment is paying off as, AMEC has reduced the time required to bring new tools from concept to mass production to under two years.
Piotech: Deposition Tools Enter Mass Production
Piotech delivered equally strong momentum in Q2 2025. Revenue reached 1.21 to 1.26 billion yuan, up 52 to 58% year on year and 70.7 to 77.8% quarter on quarter. Net profit attributable to shareholders was 238 to 247 million yuan, doubling year on year.
Piotech’s strength lies in thin-film deposition and hybrid bonding equipment. Its PECVD Stack (Plasma Enhanced Chemical Vapor Deposition) is an advanced, relatively low temperature thin-film deposition process that has passed customer acceptance. The line is now shipping in higher volumes, improving the gross margin significantly in Q2 Piotech projects revenue growth from 5.41 billion yuan in 2025 to 8.51 billion yuan in 2027, with net profit expanding from 960 million yuan to 1.75 billion yuan.
Piotech’s lines complement AMEC’s building a domestic ecosystem capable of supporting China’s fabs across logic, DRAM, NAND, and advanced packaging layers.
Table 2 shows where Chinese firms concentrate their sales. AMEC and Piotech primarily focus on domestic logic, DRAM, and NAND fabs at 28nm to 5nm nodes, and currently derive little revenue from services. U.S. firms, by contrast, cover a wider technology spectrum, including 3nm and below. Much more of their revenue comes from services—with their engineers right in customer fabs—giving them higher margin stability.
AMEC’s etchers for advanced logic and memory, and Piotech’s thin-film deposition, hybrid bonding and advanced packaging together enable China to scale 28nm to 5nm capacity without U.S. tools. Applied Materials and Lam remain indispensable for the sub-3nm tier.
Investor Takeaway
The stocks of these Chinese companies are far from cheap. AMEC’s sports a 2025 forward PE ratio of more than 50! That’s expected to decline by almost half by 2027 as net profit grows. EPS will continue rising but remain volatile due to heavy R&D spending. Piotech is on a similar path, with forward PE above 45 for 2025, but expected to drop toward 25× by 2027 as net profit expands from ¥960 million to ¥1.75 billion.
These high forward PE ratios reflect the Chinese companies’ rapid revenue CAGR of 20–25% and their domestic market dominance. Both are beneficiaries of government policy to boost the domestic semiconductor industry, a course from which China is unlikely to veer.
AMEC and Piotech have reached commercial maturity, supplying China’s domestic fabs in volume. Sanctions have not stopped domestic substitution; they have accelerated it. Applied Materials and Lam Research remain essential for global sub-3nm production, but their share of China’s mid-critical layers will continue to erode.