China’s YMTC Targets Up to 70% Domestic Equipment for New Wuhan Chip Factory
The proposed Wuhan facility would produce advanced NAND flash memory for data centers and artificial intelligence applications, while some high-end equipment would still come from overseas suppliers.
Yangtze Memory Technologies Co. (YMTC), China's largest flash-memory chipmaker, plans to source as much as 70% of the equipment for a proposed fourth manufacturing facility from domestic suppliers, in a move that could strengthen China's semiconductor equipment industry and reduce reliance on foreign technology.
The company is targeting a domestic equipment share of at least 60%, with an ambition to reach 70%, according to a Reuters report citing two people familiar with the matter. The sources spoke on condition of anonymity because they were not authorized to discuss the plans publicly.
The proposed factory will be built in Wuhan, where YMTC is headquartered. Construction is expected to begin next year, although the company has so far held preliminary discussions with equipment suppliers and has not placed formal orders.
The plant is expected to manufacture advanced NAND flash memory chips with more than 300 layers of memory cells stacked vertically. The technology is designed to increase storage density, allowing more information to be stored within chips of a similar physical size.
The planned facility is expected to focus mainly on memory products for data centers and artificial intelligence applications. Demand for high-capacity storage has been increasing as cloud computing providers, technology companies and AI developers expand their infrastructure and process larger volumes of data.
NAND flash memory is a type of non-volatile storage that retains information even when a device is switched off. It is widely used in smartphones, computers, solid-state drives and data-center storage systems. Improvements in the number of stacked memory layers can help manufacturers increase capacity and improve the economics of chip production.
A higher domestic equipment share would represent further progress in China's effort to develop a more self-reliant semiconductor supply chain. YMTC's third factory, which is expected to begin operating later this year, already sources just over half of its equipment from Chinese suppliers, Reuters reported.
The increased use of domestic tools could benefit Chinese semiconductor equipment manufacturers such as Naura Technology Group and Advanced Micro-Fabrication Equipment. The additional orders are expected to involve production processes including wafer cleaning, polishing and etching, where Chinese suppliers have made progress in supplying equipment to YMTC's existing production lines.
However, the shift toward domestic suppliers does not mean the company has eliminated its dependence on overseas technology. Reuters reported that YMTC still relies on foreign suppliers for some advanced manufacturing equipment, including lithography and inspection tools. These processes remain among the more technically demanding areas of semiconductor production.
The company's localization efforts have accelerated amid U.S. export restrictions. The U.S. Commerce Department added YMTC to its Entity List in December 2022, introducing licensing requirements for American suppliers seeking to provide certain technologies to the company.
The restrictions have complicated access to some semiconductor equipment and have also affected the ability of other international chipmakers to upgrade their manufacturing operations in China. South Korean companies Samsung Electronics and SK Hynix have faced limits on bringing certain U.S.-made equipment into their Chinese facilities.
YMTC has nevertheless strengthened its position in the domestic NAND market. According to market research firm Omdia, cited by Reuters, the company's share of China's NAND market rose to 38.5% in the second quarter of 2026, up from 28% in 2025, allowing it to overtake Samsung as the leading NAND supplier in China.
The fourth factory is part of a broader expansion strategy. Reuters previously reported that YMTC was planning additional factories in Wuhan. When fully operational, the company's third, fourth and fifth facilities are each expected to process approximately 100,000 silicon wafers per month. Together, they could more than double its manufacturing capacity.
The plans remain subject to execution, equipment availability and financing. The domestic sourcing target is an ambition rather than a completed procurement decision, and the eventual share will depend on whether local suppliers can meet the required standards for reliability, precision and production yield.
For China's semiconductor industry, the project could provide a significant test of whether domestic equipment manufacturers can support increasingly advanced memory production at commercial scale.