On July 26, 2026, the China Electronic Materials Industry Association officially released the "White Paper on China's Semiconductor Material Localization (2026)." Data shows that in the first half of 2026, the overall self-sufficiency rate of key materials such as domestic photoresist, large silicon wafers, and electronic specialty gases exceeded 50% for the first time, reaching 51.3%, up 12 percentage points from the same period in 2025. This landmark figure indicates that China has initially established self-reliance in the material segment—a lifeline of the semiconductor supply chain.

Tech Breakthrough: From 'Bottleneck' to 'Usable'

The localization of semiconductor materials has long been one of the weakest links in China's supply chain. According to the white paper, as of end-2024, domestic photoresist held less than 5% of the global market share, and the self-sufficiency rate of 12-inch silicon wafers was only about 25%. However, after two years of concentrated efforts, in 2026, domestic ArF immersion photoresist entered the 28nm mass production line verification at SMIC, while KrF photoresist achieved full coverage for processes above 14nm. In the silicon wafer field, the combined monthly capacity of 12-inch wafers co-developed by NSIG and Zhonghuan Semiconductor exceeded 1 million pieces, with yields reaching international mainstream levels.

Photoresist: Breaking Japanese Monopoly

Domestic photoresist leaders such as Tongcheng New Materials, Nanda Optoelectronic, and Yake Technology ramped up capacity in 2025-2026. Notably, the ArF photoresist series independently developed by Nanda Optoelectronic passed certification from YMTC and Hua Hong Semiconductor, securing bulk orders. Industry analysts point out that although high-end EUV photoresist remains controlled by Japanese oligarchs JSR, TOK, and Shin-Etsu Chemical, the substitution rate of domestic photoresist in mature process nodes is climbing rapidly.

Large Silicon Wafers: Rapid Capacity Ramp-Up

As the most basic substrate for chip manufacturing, the localization of large silicon wafers is particularly critical. In May 2026, NSIG announced the official production of its second-phase 12-inch silicon wafer project, adding 400,000 wafers per month. Combined with capacity from Zhonghuan Semiconductor and Yanyuan Semiconductor, the total domestic monthly capacity of 12-inch wafers approaches 4 million pieces, boosting the self-sufficiency rate from 25% in 2024 to 58%. Key indicators such as resistivity, oxygen content, and surface defects of domestic wafers are approaching international first-tier levels like those of Shin-Etsu Chemical and SUMCO.

Policy Driver: 'New Nationwide System' Accelerates

The leap in material localization is inseparable from policy support. According to the "National IC New Material Industry Development Plan (2025-2030)" issued in 2025, the central government established a special fund, offering up to RMB 100 million in rewards for each material project entering mass production verification. In addition, Phase III of the National IC Industry Investment Fund (Big Fund) has clearly allocated over 30% of its funds to semiconductor materials and equipment. Cities like Beijing, Shanghai, Shenzhen, and Hefei have also introduced supporting policies. For example, Shanghai Zhangjiang built the country's first 'Photoresist Pilot Base,' providing R&D and testing platforms for SMEs.

Tariffs & Countermeasures: Forcing Self-Substitution

In September 2025, the US Commerce Department added 14 Chinese material companies to the Entity List, restricting US exports of equipment and chemicals to China. This accelerated the material verification process for downstream foundries (e.g., SMIC, Hua Hong). In response, China announced in early 2026 a 25% tariff on certain semiconductor materials (e.g., high-purity krypton fluoride, photoresist monomers) originating from Japan and the US, further widening the price advantage of domestic materials. A senior executive at a domestic material company said: 'Previously, fabs worried about low yields of domestic materials. Now, cost advantages and technological progress make them willing to actively adopt them.'

Global Supply Chain Landscape: From 'Globalization' to 'Dual Track'

China's material self-sufficiency exceeding 50% is reshaping the global semiconductor supply chain. On one hand, Japanese and South Korean material giants (e.g., Tokyo Ohka, Dongjin Semichem) are adjusting their China strategies, with some setting up joint ventures in China to circumvent tariff barriers. On the other hand, the US-led 'Chip 4 Alliance' pushes allies to tighten tech restrictions on China, but decoupling in materials is more difficult—given the vast variety of materials and long certification cycles, it is hard to fully replace China as a supply source in the short term.

A June 2026 report by SEMI noted that China's annual material market demand is about $20 billion, accounting for roughly 25% of the global share. If domestic self-sufficiency reaches 70%, it would directly impact the value distribution of Japanese and South Korean companies. However, breakthroughs in high-end materials (e.g., EUV photoresist, silicon-based wafers) will still take time, making the next 3-5 years a critical catch-up period.

Future Outlook: From 'Substitution' to 'Leadership'

Despite the phased success of domestic materials, the industry must remain clear-eyed: the current self-sufficiency improvement is mainly concentrated in mature process nodes above 28nm. For advanced process nodes below 7nm requiring high-purity photoresist, specialty gases, and precursors, the localization rate remains below 15%. The white paper suggests focusing on three directions in the next phase: establishing a collaborative R&D mechanism for materials and equipment; accelerating the construction of a material reliability database to shorten verification cycles; and securing key mineral resources (e.g., rare earths, hydrogen fluoride) through 'Belt and Road' cooperation.

At a media briefing, the Secretary-General of the China Electronic Materials Industry Association stated: '50% is just a new starting point. Our goal is to achieve full localization of materials for mature process nodes by 2030, and a self-sufficiency rate of over 40% for advanced process materials. This requires continuous relay from the upstream and downstream industry chain, as well as more active capital market support.'

As geopolitical gaming deepens, the localization of semiconductor materials is no longer merely a business issue but a cornerstone of national security strategy. This breakthrough in 2026 marks a key step in China's chip supply chain moving from 'having' to 'excelling.'