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Chipmakers now face a hard requirement before adding new factory capacity, as they must show that at least 50% of their equipment is domestically made to secure state approval, according to a report from Reuters. Three people familiar with the process said authorities have allegedly delivered this message directly to companies seeking clearance. The rule is not written into public policy, but it is being enforced through procurement reviews tied to plant construction and expansion. China is using this gatekeeping method to force local sourcing at scale. Companies are required to submit tenders that clearly list equipment origins. If the domestic share falls below the threshold, approvals usually stop there. Officials may allow limited flexibility when supply gaps exist, especially for advanced production lines where local tools are still incomplete. One person said regulators actually want the ratio higher. “Authorities prefer if it is much higher than 50%,” the source reportedly said. “Eventually, they are aiming for the plants to use 100% domestic equipment.” Chinese authorities tighten chipmaker approvals in efforts to change supply chains inward The requirement gained speed after the United States tightened export rules in 2023. Those measures blocked sales of advanced AI chips and key semiconductor tools to China. While some foreign equipment from the U.S., Japan, South Korea, and Europe remains available, manufacturers are now choosing local suppliers even when alternatives exist. This is no longer about access. It is about compliance. Applications that fail the sourcing test are often rejected. For advanced lines, the rules ease slightly because domestic gear does not fully cover every step. Even then, firms must show clear intent to localize over time. The policy stands as one of the strongest moves yet to cut reliance on foreign technology. It also reshapes purchasing decisions across the entire chip sector. State-linked…

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Filed under: News - @ December 30, 2025 10:26 pm