South Korean memory chip giants Samsung Electronics and SK Hynix have begun evaluating semiconductor manufacturing equipment produced by China’s Advanced Micro-Fabrication Equipment (AMEC ) for potential deployment in their mainland fabrication facilities. According to a report by Reuters, the testing of AMEC’s etching tools commenced approximately two years ago as the companies sought to hedge against the mounting risk of tighter US export controls. While both Samsung and SK Hynix officially denied that they are testing AMEC equipment for use in China, sources familiar with the matter indicate that the evaluations are part of a strategic contingency plan to ensure the continuity of their massive Chinese operations.
The quiet testing of domestic Chinese equipment by two of the world’s leading memory manufacturers highlights a significant paradox in Washington’s technology containment strategy. Measures designed to restrict Beijing’s access to advanced Western chipmaking tools are inadvertently creating unprecedented opportunities for Chinese equipment suppliers to validate their technology within foreign-owned, world-class fabrication plants. If AMEC’s tools successfully pass the rigorous qualification processes required by Samsung and SK Hynix, it would provide the Shanghai-based company with a powerful commercial endorsement, accelerating its integration into the global semiconductor supply chain.
(Related: AMEC’s Profit Nearly Quadrupled in H1 as China’s Chip Tool Sector Booms)
Navigating the Validated End User Revocation
The urgency driving these equipment evaluations stems from the shifting regulatory landscape governing technology exports to China. In 2023, the US Commerce Department designated the Chinese factories operated by Samsung and SK Hynix as “validated end users” (VEU), a status that allowed them to import certain controlled American equipment without the need for individual licenses. However, Washington abruptly revoked this VEU authorization in 2025, replacing it with an annual licensing regime. While the companies were granted licenses to import equipment for 2026, the structural uncertainty surrounding future approvals has forced them to explore alternative supply chains.
Samsung currently operates a massive NAND flash memory plant in Xian, while SK Hynix manages NAND facilities in Dalian and a critical DRAM plant in Wuxi. Historically, these factories have relied heavily on sophisticated etching tools supplied by American industry leaders such as Applied Materials and Lam Research.
The South Korean chipmakers are increasingly concerned that future US restrictions could expand beyond the prohibition of new equipment sales to encompass the servicing, repair, or replacement of Western tools already installed on their production lines. By keeping Chinese suppliers like AMEC in reserve, Samsung and SK Hynix are developing a critical fallback option to maintain and upgrade their existing capacity if access to American technology is severed.
The Maturation of China’s Domestic Equipment Ecosystem
The potential adoption of AMEC’s etching tools by top-tier foreign foundries underscores the rapid maturation of China’s domestic semiconductor equipment ecosystem. While Chinese manufacturers still lag behind their overseas rivals in the most advanced lithography and inspection systems, they have significantly narrowed the technological gap in critical processes such as etching, deposition, and cleaning. Furthermore, this domestic equipment is highly competitive on price; according to Dan Hutcheson, vice chair of research firm TechInsights, Chinese tools can cost 20 to 30 percent less than comparable equipment from established foreign suppliers.
AMEC’s technology is already deeply integrated into the operations of leading domestic chipmakers, including the state-backed NAND producer Yangtze Memory Technologies Co (YMTC). This existing deployment provides Samsung and SK Hynix with confidence that AMEC’s systems are sufficiently mature for rigorous testing in high-volume manufacturing environments. The financial momentum behind these domestic suppliers is substantial.
Deutsche Bank estimates that leading Chinese equipment makers, including AMEC, Naura Technology, Piotech, and ACM Research, will each generate more than $1 billion in revenue in 2026. Together, these companies are projected to capture 25 to 30 percent of China’s $28 billion wafer-fabrication equipment market this year, a figure that could approach 40 percent when excluding lithography and metrology.
(Related: HP, Asus and Acer Are Quietly Using Chinese Memory Chips)
Long-Term Challenges for Western Equipment Giants
The rise of highly capable Chinese equipment suppliers poses a significant long-term challenge to the dominance of Western and Japanese firms that have historically controlled the wafer-fabrication market. Companies like Applied Materials, Lam Research, and KLA rely heavily on the Chinese market for revenue; Applied Materials alone reported $8.53 billion in China revenue in fiscal 2025, representing 30 percent of its total sales. If foreign foundries operating in China begin substituting American tools with domestic alternatives, the financial impact on Western suppliers could be severe.
However, any widespread breakthrough for Chinese equipment makers within foreign-owned fabs will still face substantial hurdles. The qualification process for new semiconductor manufacturing tools is notoriously lengthy and complex. Furthermore, South Korean chipmakers must carefully weigh the security and intellectual property risks associated with installing Chinese equipment on their proprietary production lines, alongside the inevitable political pressure from Washington.
Nevertheless, the fact that Samsung and SK Hynix are actively evaluating AMEC’s technology demonstrates that US export controls are fundamentally reshaping the global semiconductor supply chain, forcing even the most advanced manufacturers to seriously consider Chinese alternatives.