US sanctions meant to curb China’s semiconductor ambitions are inadvertently pressuring major manufacturers to explore alternatives. In response to tightening trade controls, South Korean memory leaders Samsung Electronics and SK Hynix are quietly evaluating equipment from Chinese supplier Advanced Micro-Fabrication Equipment (AMEC). The move signals a strategic shift as firms prepare for potential disruptions to their manufacturing operations in China.
The evaluations focus on specialized etching tools across several major fabrication plants. Samsung is testing equipment at its sprawling NAND flash memory facility in Xian, while SK Hynix is conducting trials at its NAND plants in Dalian and its DRAM facility in Wuxi.
Both companies officially denied testing the Chinese hardware. Industry sources confirm the work, however, noting that these trials serve as a hedge against future policy changes. The US Commerce Department granted both firms “validated end-user” status in 2023. This status allowed them to import controlled US tools without seeking individual licenses. Washington revoked that authorization in 2025, granting only temporary annual licenses covering imports through 2026.
Fearful that future restrictions might block servicing, repairs, or replacement parts for installed Western tools from companies like Applied Materials, Lam Research, and KLA, the South Korean firms are keeping local Chinese vendors in reserve. The goal is to maintain operations if US policy shifts again.
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Unintended market growth for domestic suppliers
This cautious approach highlights an unintended consequence of the sanctions. Measures designed to limit Beijing’s progress are inadvertently opening doors for domestic Chinese toolmakers inside foreign-owned fabs. If AMEC secures formal approval from top-tier memory producers, it would mark a major commercial endorsement for China’s domestic chip-equipment sector.
Chinese equipment providers have rapidly closed the performance gap in key manufacturing areas like etching, deposition, cleaning, and planarization. They often offer systems at 20 to 30 percent less than traditional Western alternatives. Deutsche Bank analysts expect major Chinese suppliers such as Naura Technology, AMEC, Piotech, and ACM Research to post revenues of more than $1 billion each this year. They could potentially capture 25 to 30 percent of China’s projected $28 billion wafer-fabrication equipment market. Excluding lithography and metrology, Chinese suppliers could capture nearly 40 percent of the local market.
Despite the cost benefits and supply chain security, transitioning to Chinese hardware presents hurdles. Long qualification cycles, smaller maintenance networks, and intellectual property concerns make large-scale deployment difficult. For now, South Korean chipmakers view these Chinese tools as a prudent backup plan rather than an immediate replacement.
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