A Canadian consultancy company stated on Wednesday (February 11th) that due to China’s semiconductor industry facing overcapacity and greater restrictions from U.S. sanctions, China’s procurement of chip manufacturing equipment is expected to decrease this year.
According to Reuters, the Canadian semiconductor research company TechInsights reported that China has been the largest buyer of wafer fabrication equipment for at least the past two years. In 2024, China purchased equipment worth $41 billion, accounting for 40% of global sales.
However, this year, China’s related expenditure is expected to decrease to $38 billion, a drop of about 6% compared to last year, reducing its global procurement share to 20%, marking the first decline since 2021.
Boris Metodiev, a senior analyst in semiconductor manufacturing at TechInsights, said in an online seminar: “Due to export controls and overcapacity, we can see the slowing down of China’s spending.”
In the past two years, China has been a driving force in the global semiconductor manufacturing equipment industry as the entire market experienced a decline due to low demand for consumer electronics.
As the U.S. implemented a series of sanctions to prevent Beijing from acquiring and producing chips that could advance military AI capabilities or threaten U.S. national security, many of China’s purchases were for stockpiling.
Last year, China’s largest chip maker, SMIC, and the U.S.-sanctioned Huawei, produced more advanced chips in a more expensive and labor-intensive manner. They also aggressively expanded in the mature node chips field, significantly increasing production capacity and seizing market share from Taiwanese competitors.
However, SMIC stated on Wednesday that there is a risk of oversupply in mature node chips.
Metodiev noted that China’s leading equipment manufacturers, including Naura Technology Group and AMEC, have been expanding globally. In terms of sales, Naura Technology Group is currently the world’s seventh largest equipment manufacturer.
He mentioned that while China has been striving to improve the self-sufficiency of chip manufacturing equipment, its major weaknesses still lie in lithography equipment, as well as testing and packaging tools.
He stated that by 2023, Chinese companies only provided 17% of testing tools and 10% of packaging equipment domestically.