Domestic price competition is eroding profitability even as Beijing hits localization targets.
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Applied Materials, Lam Research, and KLA booked a combined $19 billion in China revenue across their fiscal 2025 reporting periods, according to a recent Nikkei Asia analysis of corporate filings , even as direct U.S.-to-China tool shipments fell 34% to roughly $2 billion, the lowest figure since 2017.
The gap moved through Singapore and Malaysia , where all three firms have spent years building out manufacturing capacity. At the same time, every major Chinese wafer-fab-equipment vendor posted record 2025 revenues, but gross margins contracted across the board as domestic vendors competed on price for fab share previously held by foreign suppliers.
Naura Technology Group , China's broadest equipment supplier by product line, reported first-nine-months 2025 revenue of 27.14 billion yuan, up from 6.05 billion yuan ($887 million) for all of 2020, per Nikkei's analysis of company filings. Gross margin slipped 2.8 percentage points year over year to 41.4%, and net margin contracted by nearly four points.
You may like Chinese fabs import record volumes of US chipmaking equipment via Singapore and Malaysia YMTC's third Wuhan fab clears Beijing's 50% local tooling threshold as two more are planned The state of China's decade-long semiconductor push: still a decade behind, despite hundreds of billions spent and significant progress AMEC delivered full-year 2025 revenue of 12.4 billion yuan, up 36.6% from 2024, but gross margin fell 1.9 points to 39.2%. In Q3 alone, AMEC's margin dropped 5.8 points. Piotech, a thin-film deposition specialist, nearly doubled revenue to 4.2 billion yuan in the first nine months, but first-half net income fell 27% as the company absorbed high costs from new products still in customer validation, per its interim filing.
ACM Research, the U.S.-listed company that conducts most of its operations through its Shanghai subsidiary, posted 2025 revenue of $901 million, a 15% increase, but gross margin fell 5.7 points to 44.4%, and operating margin collapsed from 19.3% to 12.1%. Q4 gross margin of 41% landed below the company's own 42% to 48% long-term target band.
"While leading domestic equipment companies are still posting strong revenue growth, there are indications that their margin performance is deteriorating," Charles Shi, a veteran semiconductor analyst with Needham & Co., told Nikkei Asia . Shi attributed the squeeze to domestic vendors undercutting each other for business at Chinese fabs that were previously served by foreign suppliers.
As for the revenue figures from U.S. equipment makers, it’s clear that export controls haven’t completely severed commercial relationships with China.
Applied Materials booked $8.53 billion of China revenue in fiscal 2025, or 30% of total sales, down from 37% the prior year, according to the company's Q4 FY2025 earnings release. CFO Brice Hill told analysts on the Q4 call that the cumulative impact of U.S. export restrictions was equivalent to roughly 10% of the China market in fiscal 2024 and more than double that in fiscal 2025. Meanwhile, Lam Research reported $6.21 billion from China for 34% of total revenue, down from 42%, while KLA reported $4.01 billion, or 33%, down from 43%.
These revenue figures, however, are largely attributable to infrastructure. Lam Research’s Batu Kawan campus in Penang, for example, is its largest manufacturing site globally at 800,000, while Applied Materials opened a $450 million plant in Singapore in early 2024 and has committed to doubling its local manufacturing and R&D headcount under a plan it calls Singapore 2030.
KLA completed the first phase of a $200 million Singapore expansion in October 2024, with a second phase underway that will bring the site to 420,000 square feet and add roughly 400 jobs, expected to be completed this year. Chinese customs recorded $5.7 billion of Singapore-origin chipmaking equipment in 2025, up more than 17%, and $3.4 billion from Malaysia, more than double the 2024 figure, according to Nikkei's analysis.
U.S. lawmakers demand sales ban on chipmaking tools to China
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Reference reading
- https://www.tomshardware.com/tech-industry/SPONSORED_LINK_URL
- https://www.tomshardware.com/tech-industry/chinese-chip-tool-makers-posted-record-2025-revenues-while-margins-slipped#main
- https://www.tomshardware.com
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