Who really controls chip supply? Equipment makers?

Semiconductor manufacturing equipment is the most constrained point of the chip supply chain. Without tools, fabs do not ramp, nodes do not shrink, and capacity plans remain PowerPoint slides.

Equipment determines when, and how fast, silicon supply can respond to demand shocks. Lead times for the most advanced tools stretch across many months, meaning any disruption propagates forward into wafer shortages, delayed node transitions, and higher chip prices.

This “tool gating” dynamic is strongest for leading-edge logic and memory manufacturing. Extreme ultraviolet (EUV) lithography is the clearest example. ASML’s near-monopoly makes EUV scanners a structural bottleneck, and the whole advanced-node roadmap depends on its delivery cadence.

Elena Barbarini, Director, Semiconductor Equipment & Packaging at Yole Group, and her team closely tracks technology roadmaps, investment trends, and competitive positioning across front-end, back-end equipment. .

Yole Group explores this supply chain through the lens of the industry’s different segments, from imaging and sensing to memory and beyond. 

Where equipment supply chain stands?
Equipment availability has normalized since the 2020–2022 crunch, but the market is not oversupplied. Demand is rebounding on the back of AI servers, HBM, and renewed foundry and IDM capital spending, keeping wafer fab equipment (WFE) spending high into 2025-2026.

At Yole Group, we project global equipment investment reached around $130 billion in 2025, with China still the largest spender despite US export controls.

Beneath the headline numbers, however, there are several key challenges in the supply chain.

First, tools are complex assemblies built around a small number of highly concentrated, high-precision subsystems. EUV optics, light sources, ultra-clean vacuum modules, RF power, precision mechatronics, and abatement systems each come from a narrow set of suppliers.

These equipment manufacturers are now superstars, and often, the pacers for equipment output. For EUV, ZEISS’s mirrors and ASML’s source ecosystem are uniquely complex, and scaling High-NA EUV adds even more distinctive optical, vibration, and contamination constraints.

Second, qualification cycles are long and unforgiving. Even when alternative suppliers exist, fabs will not switch unless performance, uptime, and defectivity are proven equivalent. Qualification typically takes 6-18 months, resulting in low short-term substitution and amplifying any supply disruption.

Third, geopolitics continues to redefine the market. US-aligned restrictions on exports of advanced lithography and some etch, deposition, and metrology tools have redirected order books and tool flows. In response, China is accelerating its domestic equipment development to fill the gaps, creating parallel supply chains and additional uncertainty for incumbents.

Fourth, global logistics and material trade flows remain fragile. Equipment manufacturing relies on specialized inputs including rare earths, high-purity ceramics, precision castings, and lasers, often integrated across multiple countries. While component lead times have broadly improved, volatility is returning in niche parts tied to AI and EV demand.

Finally, service and spares are becoming a constraint in their own right. As the installed base grows, so does the need for field support. Restrictions on spare parts, not just new tools, can throttle effective capacity in certain regions.

How will equipment supply chain evolve?
At Yole Group, we foresee three big shifts.

* Regionalization into “techno-spheres” will deepen, with US, EU, Japan and China-centric equipment and subsystem ecosystems expanding as governments subsidize fabs and control tool flows.

* We also see a co-development with subsystems suppliers, and it will intensify. OEMs will lock in long-term capacity with optics, vacuum, and power suppliers, sometimes via vertical integration or equity partnerships, to remove single points of failure.

* And, at the end, technology diversification will reshape where constraints appear. More advanced packaging and heterogeneous integration reduces some dependence on front-end scaling. But they also create new equipment demand at the back end, including hybrid bonding, panel-level processing and 3D metrology. Bottlenecks are unlikely to disappear; they will simply migrate.

From constraint to strategy: Why equipment intelligence matters more than ever?
Leadership varies by process step, but a small group dominates global WFE. Do not forget these names.

ASML is the uncontested leader in EUV and high-end deep ultraviolet (DUV) lithography, making it the industry’s most strategic chokepoint, reinforced by the High-NA EUV rollout in 2025–2026.

Applied Materials, Lam Research, and Tokyo Electron (TEL) are the “big three” for deposition and plasma etch, while KLA leads in inspection and metrology as defect budgets tighten.

Meanwhile, Chinese OEMs like Naura and AMEC are growing quickly within domestic fabs.

Semiconductor manufacturing equipment is no longer just a supply-chain input. It has become a strategic control point for the entire industry. As AI accelerates demand, nodes become harder to scale, and geopolitics reshapes access to technology, understanding where bottlenecks emerge and how they migrate, has become essential for decision-makers across the semiconductor value chain.

This is precisely where Yole Group is deeply engaged. Through continuous tracking of equipment markets, subsystem dependencies, technology roadmaps, and regional dynamics, our analysts support leading semiconductor companies with cutting-edge analyses, long-term visibility, and actionable insights.

From lithography and front-end process equipment to advanced packaging and heterogeneous integration, our work is designed to help industrial players anticipate constraints, de-risk investments, and align technology strategy with market realities.

As the industry enters a phase where capacity, tooling, and execution speed matter as much as innovation itself, we remain committed to being a trusted partner, decoding complexity and enabling informed strategic choices in an increasingly constrained world.

-- Elena Barbarini, Semiconductor Equipment & Packaging Director, Yole Group.