China's chipmaking equipment purchases are projected to decrease this year after three years of growth due to overcapacity and increased restrictions from U.S. sanctions, according to a consultancy report on Wednesday.
China, which has been the leading purchaser of wafer fabrication equipment for the last two years, acquiring $41 billion worth and representing 40% of global sales in 2024, is expected to decrease spending to $38 billion this year, a 6% drop from last year. The country's global market share is foreseen to decline to 20%, marking the first decrease since 2021, as noted by Boris Metodiev, a senior analyst from Canadian semiconductor research company TechInsights, during an online seminar.
The slowdown in Chinese spending is attributed to export controls and overcapacity, Metodiev mentioned. China played a pivotal role in driving growth globally in the wafer fabrication equipment sector in 2023 and 2024 amid a downturn in the overall market due to weakened consumer electronics demand.
Despite U.S. export controls aimed at impeding China's chip advancements, Chinese chip firms like SMIC and Huawei, which faced U.S. sanctions, have made progress through innovative approaches. These firms have notably expanded into mature-node chip production, significantly increasing their capacity and gaining market share. Chinese leading equipment manufacturers, including Naura Technology Group and AMEC, have also broadened their global presence, with Naura currently ranking as the world's seventh-largest equipment maker in terms of sales.
While China is striving for self-sufficiency in chipmaking equipment, its primary challenges lie in procuring lithography systems, as well as testing and assembly tools, according to Metodiev. Notably, ASML from the Netherlands dominates the lithography machine market. In 2023, Chinese companies supplied only 17% of testing tools and 10% of assembly equipment used in the country, Metodiev added.