China produces only 1% of the critical tools used to manufacture litho chips, exposing it to tough US sanctions – investments in domestic tool manufacturers are likely to reverse the trend

China wants to dominate global chipmaking, but its ambitions are being dashed by the harsh reality of its low domestic production rates. According to a graph from a Nikkei report, China's domestic chipmaking tool makers produce 20% of the tools the country uses for chipmaking, but the production rate of the all-important lithography tools is currently only 1%. This means the East Asian country will need to invest much more in its domestic chipmaking tool companies before it can become self-sufficient in meeting its chipmaking needs.

“The people on the ground (semiconductor manufacturers and device makers) are at their wits' end, but they find it hard to admit it,” said Yuji Miura in the Nikkei report. Miura is a senior researcher at the Japan Research Institute.