China’s Surge in Semiconductor Tool Spending
According to a recent report from Nikkei, China has claimed the number one spot as the single highest spender on chipmaking tools. Data from SEMI highlights that China spent a staggering $25 billion on key semiconductor tools in the first half of 2024. This expenditure surpasses that of the US, Taiwan, and South Korea combined. The Chinese semiconductor industry shows no signs of slowing down, with expectations to exceed $50 billion for the entire year 2024.
Focus on Mature Node Chipmaking Facilities
Despite these impressive numbers, it’s important to note that the equipment being purchased is not precisely leading-edge. Due to Western sanctions, Chinese companies have limited access to advanced EUV lithography tools essential for producing sub-7 nm chips. Consequently, most spending is directed towards mature node chipmaking facilities. Several of these ‘second tier’ companies operate nodes like 10/12/16 nm, and their numbers are substantial, with at least ten firms reported by Nikkei.
Impact on Global Chipmaking Tool Companies
China’s massive spending has positioned it as a crucial revenue source for many global chipmaking tool companies. For US toolmakers like Applied Materials, Lam Research, and KLA, Chinese purchases accounted for 32%, 39%, and 44% of their latest quarterly revenue, respectively. Tokyo Electron reported that orders from China amounted to 49.9% of its revenues in June, while ASML from the Netherlands also attributed 49%. This trend not only underscores China’s growing influence but also highlights the dependency of global semiconductor tool companies on the Chinese market.
Outlook for 2025
The outlook for 2025 shows no signs of deceleration, with expectations that China’s semiconductor industry will continue investing heavily to achieve complete self-sufficiency. The massive capital expenditures observed this year are anticipated to persist, further solidifying China’s position in the global semiconductor landscape.
