By Che Pan and Brenda Goh
Beijing/Shanghai (Reuters) – China’s purchase of chip manufacturing equipment will drop this year as the industry struggles to overcapacity and faces greater restrictions from U.S. sanctions, a consulting firm said Wednesday.
TechInsights, a Canadian semiconductor research firm, said China has been the largest buyer of wafer manufacturing equipment for at least the last two years, buying $41 billion worth of tools and accounting for 40% of global sales in 2024.
But this year, spending in China is expected to drop to $38 billion, down 6% year-on-year, with global purchases set to drop to 20% on the first decline since 2021, Boris Metodiev TechInsights Tell the webinar.
“We can see a slowdown in China’s spending due to export control and overcapacity,” he said.
China was the global growth driver for the global wafer manufacturing equipment industry in 2023 and 2024, when the vast market declined due to demand for consumer electronics.
Many of China’s purchases are driven by inventory as the U.S. imposes a series of sanctions to enable Stymie Beijing to acquire and produce chips that could help promote artificial intelligence for military applications or otherwise threaten U.S. national security.
Despite Washington’s efforts, Chinese chip companies continue to make progress, while China’s largest chipmaker Smic and the United States approved Huawei to produce premium chips last year by using more expensive and laborious efforts.
They have also expanded heavily to the mature node chip segment, dramatically increasing production capacity and gaining market share from Taiwan’s competitors.
Smic marks on Wednesday that it sees oversupply risk of mature node chips.
Metodiev said China’s leading equipment manufacturers, including Naura Technology Group and AMEC, have been expanding their footprint worldwide, and Naura is now the seventh-largest equipment manufacturer to sell worldwide.
Metodiev said that while China has been working to become more self-sufficient, its biggest weakness remains lithography systems, as well as testing and assembly tools.
ASML in the Netherlands is the world’s largest manufacturer of lithography machines. Metodiev added that Chinese companies only provide 17% of testing tools and 10% of assembly equipment in 2023.
(Reported by Che Pan and Brenda Goh; Edited by Jamie Freed)
