China Bifurcation

Spotlight · SMIC, CXMT, YMTC, Naura, AMEC, Huawei · export controls and domestic substitution

Chinese vendors now supply at least 47% of China's data center AI accelerators, but only 18% of the lithography tools in its fabs. The split is furthest where China can design around the West and least where it needs a scanner, and Western toolmakers still earn about a third of their revenue in China.

Chinese suppliers' share of what China buys, by layer: AI accelerators at least 47% of units in the first half of 2026 (IDC, named vendors), etch and deposition tools over 40%, all fab tools 35%, metrology tools 25%, lithography tools 18% (2025, China Semiconductor Industry Association and Anue via TrendForce), EDA software about 15 to 20% (industry estimate). China's share of Western toolmakers' revenue: ASML about 33% in 2025, Lam Research 35% in the quarter ended September 2026, Tokyo Electron 34.1% in the year to March 2026, KLA 30% in the year to June 2026, Applied Materials 28% in the year to October 2025. CHINESE SUPPLIERS' SHARE OF CHINA'S OWN PURCHASES AI accelerators 47% 1H 2026 Etch and deposition tools 40%+ 2025 All fab tools 35% 2025 Metrology tools 25% 2025 Lithography tools 18% 2025 EDA software 15 to 20% ESTIMATE IDC VIA REUTERS (OCT 2026); CSIA AND ANUE VIA TRENDFORCE (JAN 2026). CHINA'S SHARE OF WESTERN TOOLMAKERS' REVENUE ASML 33% 2025 Lam Research 35% SEP 2026 QTR Tokyo Electron 34.1% FY TO MAR 2026 KLA 30% FY TO JUN 2026 Applied Materials 28% FY TO OCT 2025 COMPANY REPORTS. CHINA BOUGHT $49.3B OF $135.1B OF TOOLS IN 2025 (SEMI).
Chinese AI accelerators, 1H 2026
47%+ of units
Domestic fab tools, 2025
35%
Domestic lithography
18%
China's tool purchases, 2025
$49.3B of $135.1B
China suspensions end
Nov 2026
Hub
Spotlights

The split

The Split Is Furthest in AI Chips and Least in Lithography

Chinese vendors supply at least 47% of China's AI accelerators but only 18% of the lithography tools in its fabs.

Chinese suppliers' share of China's own purchases
LayerDomestic sharePeriodSource
AI accelerators, data centerAt least 47% (Huawei 28%, T-Head 7%, Cambricon 5%, Kunlunxin 4%, Hygon 3%)First half of 2026IDC via Reuters
Etch and thin-film deposition toolsOver 40%2025Jiemian News via TrendForce
All fab tools35%, up from 25% in 2024; target was 30%2025China Semiconductor Industry Association via TrendForce
Metrology tools25%, up about 10 points from 20222025Anue via TrendForce
Lithography tools18%, up about six points from 20222025Anue via TrendForce
EDA softwareAbout 15 to 20% (analog about 35%, digital under 15%)2026Industry research estimate

The gap between the top and bottom of this table is the shape of the split. Chinese AI chips can be designed at home and made on SMIC's deep ultraviolet (DUV) processes, so Beijing's buying rules and US limits on NVIDIA moved share quickly. Lithography cannot move that way: SMEE has no scanner in volume production at the nodes SMIC runs, and EUV is not available at all. NVIDIA still held 34% of China's data center accelerator units in the first half of 2026, with its sales limited by US licensing.

Two chains

Two Chains, Still Joined at the Tools

Two semiconductor supply chains. The Western-aligned chain runs from ASML, Applied Materials, Lam Research, KLA and Tokyo Electron tools, Synopsys and Cadence design software, TSMC, Samsung and Intel foundries, SK hynix, Samsung and Micron memory and TSMC, ASE and Amkor packaging to NVIDIA, AMD and hyperscaler chips. The Chinese chain runs from Naura, AMEC, Piotech and SMEE tools, Empyrean and Primarius software, SMIC and Hua Hong, CXMT and YMTC memory and JCET and Tongfu packaging to Huawei, Cambricon and T-Head chips. Links that still cross: Western tools already installed in China and their service, licensed DUV scanners, licensed EDA and stockpiled HBM flow to China; gallium, germanium and rare earths under Chinese licensing, and mature-node chips, flow out. TOOLS DESIGN SOFTWARE FOUNDRY MEMORY PACKAGING AI CHIPS WESTERN-ALIGNED CHAIN CHINESE CHAIN ASML, Applied, Lam, KLA, TEL Synopsys, Cadence, Siemens TSMC, Samsung, Intel SK hynix, Samsung, Micron TSMC CoWoS, ASE, Amkor NVIDIA, AMD, Google, AWS Naura, AMEC, Piotech, SMEE Empyrean, Primarius SMIC, Hua Hong CXMT, YMTC JCET, Tongfu Huawei, Cambricon, T-Head INSTALLED TOOLS, SERVICE, DUV LICENSED EDA (CUT MAY TO JUL 2025) STOCKPILED HBM (CUT DEC 2024) MATURE-NODE CHIPS 28NM AND ABOVE GALLIUM, GERMANIUM, RARE EARTHS (LICENSED) ARROWS BETWEEN THE ROWS ARE THE LINKS THAT STILL CROSS; DASHED IS CUT FOR NEW SALES. THE TOOL LINK IS THE ONE THE MATCH ACT WOULD TARGET; THE MATERIALS LINK IS CHINA'S LEVER.
China has built a second chain at every stage. The two still cross at the tools already installed in Chinese fabs and at the materials China refines.

Most Chinese chipmaking still runs on Western tools bought before the controls tightened, and they need spare parts and field service to keep running. That service link is what the proposed US MATCH Act would license, and what Beijing's reported rule that new capacity source at least half its tools at home is meant to replace. Running the other way, China licenses exports of gallium, germanium, antimony, tungsten and seven rare earths; see Critical Elements.

By layer

Where Each Layer Stands in 2026

China and the Western-aligned chain by layer, October 2026
LayerChinaWestern-alignedGapDirection
Leading-edge foundrySMIC N+2 (7nm class) in volume; N+3 in Kirin 9030 and 9050, all DUVTSMC N2 in volume; Intel 18A; Samsung SF2Three or more nodesWidening without EUV
Mature foundrySMIC, Hua Hong at 28nm and above; SMIC 93.7% utilized, 90.2% of revenue from China (2Q 2026)TSMC, GlobalFoundries, UMC, SamsungLittle at 28nm and aboveChina gaining share
DRAM and HBMCXMT DDR5 in volume; HBM3E in small-scale production (August 2026)SK hynix, Samsung, Micron shipping HBM4About two to three years on HBMNarrowing
NANDYMTC 3D NAND competitive on layersSamsung, SK hynix, Micron, KioxiaWithin a generationNarrowest gap
ToolsNaura, AMEC competitive at 28nm; 35% domestic share; no EUVASML sole EUV maker; Applied, Lam, KLA, TELLargest; lithography furthest behindSlowest to close
EDA and IPEmpyrean, Primarius at mature nodes; no production-ready digital synthesis or place and routeSynopsys, Cadence, Siemens EDALarge at the leading edgeExposed to licensing
AI chipsHuawei Ascend, Cambricon, T-Head, Kunlunxin on SMIC; HBM limitedNVIDIA, AMD, hyperscaler ASICs on TSMC N3 and N2Large per chip; offset by chip countMost complete split

The Huawei view of the same chain, from Kirin phone chips to Ascend superpods, is on Huawei and HiSilicon. Chinese EDA's gaps are on EDA Tools.

Tools

Western Toolmakers Still Earn About a Third of Their Revenue in China

China's share of Western toolmakers' revenue
CompanyChina sharePeriod
ASMLAbout 33%; about 20% expected for 20262025
Lam Research35% of $8.22 billionQuarter ended September 27, 2026
Tokyo Electron34.1%Year to March 2026
KLA30%, down from 43% in fiscal 2024Year to June 2026
Applied Materials28% of systems and servicesYear to October 2025

China bought $49.3 billion of the $135.1 billion of chipmaking equipment sold in 2025, 36% of the world market (SEMI). Its share of each toolmaker's revenue is falling as domestic tools take new lines and as foundry and memory spending outside China rises, but no Western maker has replaced China as a customer. The proposed MATCH Act (H.R. 8170), advanced by the House Foreign Affairs Committee in April 2026, would write tool controls into law and reach servicing of tools already in Chinese fabs. See the WFE Overview.

Controls

Controls Now Run in Both Directions

Controls in both directions
DateCountryMeasure
October 7, 2022USControls on advanced computing chips and on tools for advanced logic, DRAM and NAND
August 1, 2023ChinaLicensing for gallium and germanium exports
October 17, 2023USWider chip and tool controls
December 2, 2024USHBM controls, more tool types and about 140 entity listings
December 3, 2024ChinaBan on gallium, germanium and antimony exports to the US
April 2025US and ChinaUS license for NVIDIA H20; China licenses seven rare earths
October 9, 2025ChinaWider rare earth rule with a foreign-product content test
November 2025ChinaSuspends the US ban until November 27, 2026 and the October rare earth rule until November 10, 2026
January 13, 2026USH200 and MI325X licenses for China moved to case-by-case review
April 2026USMATCH Act advanced in House committee

Through 2024 the controls ran one way. Since then each side has held a lever over the other: the US over tools, HBM and accelerators, China over the refined metals and magnets those tools and chips use. Both of China's November 2025 suspensions run out in November 2026, and no renewal had been announced as of October 20.

Record

Page Record

Covers
China's domestic supply share by layer, the Western-aligned and Chinese chains and where they cross, China's share of Western toolmakers' revenue, the state of each layer in 2026, and US and Chinese controls since 2022
Sources
IDC via Reuters and TechNode (China AI accelerator shares, October 14, 2026); TrendForce citing the China Semiconductor Industry Association, Jiemian News and Anue (domestic equipment shares, January 12, 2026); SEMI (2025 equipment billings by region, April 2026); ASML, Lam Research (10-Q, quarter ended September 27, 2026), Tokyo Electron, KLA and Applied Materials reports; eeNews Europe (MATCH Act, April 27, 2026); SMIC second-quarter 2026 results via AnySilicon; TechInsights (SMIC N+3, December 2025); Korea JoongAng Daily (CXMT HBM3E, September 2026); Igor's Lab citing NVIDIA's 10-K (H200 licensing, 2026); Fastmarkets and Bloomberg Government (Chinese suspensions); industry research estimate (China EDA share)
Last verified
October 2026