Core Viewpoint - China is mandating that chipmakers use at least 50% domestically made equipment for new capacity, aiming to establish a self-sufficient semiconductor supply chain in response to U.S. technology export restrictions [1][3]. Group 1: Regulatory Changes - The new rule requires chipmakers to demonstrate through procurement tenders that at least half of their equipment will be sourced from Chinese manufacturers when seeking state approval for plant expansions [2]. - This mandate is a significant step in reducing reliance on foreign technology, particularly following the U.S. tightening of export restrictions in 2023, which banned sales of advanced AI chips and semiconductor equipment to China [3]. Group 2: Impact on Supply Chain - The 50% rule is influencing Chinese manufacturers to select domestic suppliers, even in areas where foreign equipment is still available from the U.S., Japan, South Korea, and Europe [4]. - Applications that do not meet the 50% threshold are generally rejected, although there is some flexibility based on supply constraints, particularly for advanced chip production lines where domestic equipment is not fully developed [5]. Group 3: National Strategy - President Xi Jinping is advocating for a "whole nation" approach to create a fully self-sufficient semiconductor supply chain, involving extensive collaboration among engineers and scientists across the country [6]. - Chinese scientists are reportedly working on prototypes for machines capable of producing cutting-edge chips, a development that the U.S. has sought to prevent [7]. Group 4: Industry Dynamics - The shift in preference among domestic fabs, such as Semiconductor Manufacturing International Corporation (SMIC), towards U.S. equipment has changed due to the 2023 U.S. export restrictions, forcing them to collaborate more with domestic suppliers [8].