In 2024, professionals specializing in CNC (computer numerical control) technology often face a feeling of frustration.
From manufacturing smartphones to building airplanes, modern industry depends heavily on high-precision CNC machine tools. These machines are used everywhere, from engineering machinery to mold development.
CNC machines have been around for more than half a century, but for much of that time, Chinese manufacturers have found independent development of CNC technology to be a daunting task.
The CNC system, often described as the “brain” of a CNC machine, is its most critical component, integrating both hardware and software.
At the heart of the CNC system is the CNC unit, a component that translates encoded instructions into motion and control signals. Nailing the intricacies of CNC unit technology is widely considered the key step toward overcoming the difficulties of independent development.
However, high-end versions of this crucial component have long been restricted by Japan, leaving Chinese companies with little choice but to purchase them from Germany or Switzerland. These purchases must be planned well in advance, often requiring applications a year ahead. What’s more, when high-end CNC machines arrive in China, they frequently come equipped with monitoring devices.
Chinese customers often can’t access the highest-end foreign products, and even though China has its own CNC systems, demanding users tend to avoid them. The reason? They simply don’t match up to foreign products in terms of precision and reliability.
Yet, that may soon be changing. Recently, a breakthrough occurred in the CNC system space. As reported by 36Kr, First Automation announced that it completed an angel extension round of financing at the beginning of the year, raising nearly RMB 100 million (USD 14.1 million). The round was led by Shida Investment, with GGV Capital and Glory Ventures joining in, alongside additional investments from Glory Ventures, an existing shareholder.
First Automation, founded in 2023, is led by a team with extensive experience at leading CNC companies. Its chairman, previously the R&D head at Mitsubishi’s high-end CNC systems unit, is the only Chinese executive known to have held such a senior role in the industry.
In Japanese and German high-end CNC manufacturers, Chinese engineers in core R&D are rare. But First Automation’s chairman is the exception, with nearly two decades of hands-on experience in core CNC technology development, overseeing a CNC business valued at RMB 5 billion (USD 704 million) annually.
This year, First Automation will begin production testing of its first-generation prototype. This milestone marks a turning point, as it would demonstrate that Chinese manufacturers too have the capability to compete in the high-end market, offering new possibilities for the industry.
Overseas technology blockades
In recent years, as critical fields such as consumer electronics, new energy vehicles (NEVs), defense, and aerospace have advanced, China’s demand for high-end CNC machines has surged, as the country enters a period of equipment replacement and upgrading.
High-end CNC machines are built from key components like structural parts, CNC systems, transmission systems, drive systems, and tools. The CNC system controls the precise details of metal cutting and shaping, and its quality directly impacts the machine’s stability and precision—it’s the most crucial part of the entire system. When a CNC machine is in operation, the CNC system automatically executes programmed instructions to finish the task.
In terms of cost, CNC systems account for roughly 40% of the total. The more advanced the machine, the higher the value of its CNC system.
According to the China Commercial Industry Research Institute, the market size of CNC systems in China reached RMB 27.381 billion (USD 3.9 billion) in 2023, growing at a compound annual growth rate (CAGR) of 6.18% over the last five years. The market is expected to reach RMB 29.073 billion (USD 4.1 billion) by 2024.
But in the high-end market, foreign brands still dominate. Siemens, Heidenhain, Fanuc, and Mitsubishi lead the sector, commanding 67% of CNC system sales in 2022, while Chinese brands such as GSK, Syntec, and Huazhong CNC hold just 33%.
China’s CNC industry didn’t start late. In fact, it was in 1952 when MIT developed the world’s first CNC machine, that China established its own CNC companies. By 1958, China had produced its first CNC machine.
Yet despite these early advancements, China’s CNC machines have long relied on foreign imports for core systems and components, creating a bottleneck in the industry.
As downstream industries demand greater supply chain security, product differentiation, and quality, CNC system manufacturers face increasing pressure to meet client needs. At the same time, the R&D process for Chinese companies remains shrouded in uncertainty.
A spokesperson for First Automation told 36Kr that over 95% of the mid- to high-end CNC system market is controlled by foreign companies, with Fanuc, Mitsubishi, and Siemens leading the pack. For most industrial applications, foreign brands still dominate the market, as domestic systems lag behind in stability. Even in defense and aerospace, German systems are the standard.
This near-monopoly means domestic customers often can’t get what they need.
Typically, CNC systems make up 20–40% of the value of a machine tool. The more expensive the machine, the greater the share of the CNC system in its total cost. For instance, a machine costing RMB 1 million (USD 140,800) will likely have a CNC system that represents a substantial portion of its value.
To remain competitive, CNC machines need to differentiate their systems and technologies. But this demand is currently hard to meet. Domestic customers can’t buy the highest-end foreign products, and though China has developed some comparable systems, they are still not on par with their foreign competitors. As a result, the most demanding customers still prefer foreign brands.
“Foreign brands provide basic technical support in China, but they keep their core R&D outside the country, and they don’t station key product managers here either,” the First Automation spokesperson said. “This makes it difficult for domestic machine tool companies—especially those looking to create differentiated brands and meet specific performance needs—to pursue customized development.”
This is why satisfying the custom needs of end customers has become a key driver behind First Automation’s decision to develop a self-controlled CNC system.
Independent R&D of hardware and software
At the moment, the reality remains that Chinese CNC manufacturers still face significant challenges, particularly in delivery, technology, and talent.
China’s CNC systems often lack versatility and stability, making them more suitable for low to mid-end machines. Mid- to high-end CNC systems are typically delivered on a case-by-case basis, but even then, they often fail to meet expectations. While domestic manufacturers have made progress in designing and producing mid- to high-end machines, they tend to remain dependent on imported CNC systems. Moreover, very few Chinese engineers have experience in core R&D for high-end CNC technology, leaving a critical talent gap.
“Our goal is to produce genuine mid- to high-end CNC systems, not just deliver systems on a project basis,” said the First Automation spokesperson.
“Many domestic companies are working on CNC systems, but there’s still a long way to go before we can achieve stable and reliable performance. Many domestic products look similar to foreign ones on paper, but in practice, they don’t perform the same,” the spokesperson said. This is why First Automation has chosen a more challenging path—developing both software and hardware from scratch, including the underlying algorithms and functional modules.
“Though we’re focused on independent development, we aren’t trying to make the chips ourselves,” the spokesperson added. “First Automation follows a framework that allows us to select domestic chips and real-time operating systems that are controllable. As of now, 85% of the hardware in our CNC system prototype is sourced domestically.”
While hardware forms the foundation of a CNC system, software is where the technological focus truly lies. Over 80% of First Automation’s R&D team is involved in software development. After a year of refinement, this team has become well-coordinated and is steadily producing various CNC functionalities.
First Automation’s primary product is its metal-cutting CNC system, one of the most challenging and demanding types of CNC systems. It is targeted at industries such as aerospace, engine manufacturing, and defense, where precision requirements are often measured in nanometers. Furthermore, these industries demand that precision be maintained even after extended operation.
Currently, First Automation’s CNC system has been designed with universal compatibility, allowing it to work with various foreign machine tools. Its latest motion control algorithm is said to be comparable to those of high-end international CNC systems like Fanuc and Mitsubishi, achieving nanometer-level interpolation. The system’s target mean time between failures (MTBF) is 25,000 hours.
First Automation expects to launch its first-generation engineering prototype by the end of this year. The initial product will focus on CNC turn-milling composite machine tools—among the most advanced and complex tools in terms of processing efficiency, precision, and complexity, placing the highest demands on CNC systems. In recent years, turn-milling composite machining has been increasingly integrated into machine tool applications, replacing traditional methods.
Compared to traditional turning and milling, which require separate operations, turn-milling composite machines can clamp the workpiece once and complete multiple processes, reducing errors caused by changing reference points. This also cuts down on labor and time costs during loading, unloading, and machine maintenance.
High-end turn-milling composite machines often feature advanced real-time detection, enabling precise, onsite monitoring and control of key manufacturing data. This significantly improves machining accuracy and allows complex operations to be completed quickly and cost-effectively, even when high precision is required for complex shapes.
Machine tools generally have a service life of about ten years, after which their stability and precision decline sharply. With the industry now undergoing a wave of updates, more manufacturers are entering the market. Whether First Automation, as a new player, can shake up the field remains to be seen.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Lin Qingqing for 36Kr.