China’s Chipmaking Equipment Purchases to Decline in 2025, Consultancy Warns
China is expected to reduce its chipmaking equipment purchases in 2025, following three years of growth, due to overcapacity and U.S. sanctions. Spending is projected to drop to $38 billion, down 6% from last year, marking the first decline since 2021. Major firms continue to make advancements despite significant challenges, particularly in the lithography systems and testing equipment sectors.
China’s chipmaking equipment purchases are anticipated to experience a decline in 2025, following three consecutive years of growth, primarily due to overcapacity and increased restrictions from U.S. sanctions. According to TechInsights, a Canadian semiconductor research firm, China has remained the leading buyer of wafer fabrication equipment, having invested $41 billion in tools in 2024, which constituted 40% of global sales. However, this spending is projected to decrease to $38 billion in 2025, representing a 6% year-on-year drop.
Boris Metodiev, a senior semiconductor manufacturing analyst at TechInsights, discussed the expected slowdown, attributing it to factors such as export controls and overcapacity in the market. Despite being a growth engine for the wafer fabrication equipment sector in the past couple of years, China’s demand has been affected by a wider downturn in the market resulting from reduced consumer electronics demand. Additionally, the urgency caused by U.S. sanctions has led Chinese companies to stockpile necessary technology.
While companies like SMIC and Huawei have made strides in chip production, even utilizing advanced techniques despite sanctions, there are still significant challenges. The mature-node chip segment has seen increased production capacity in China, but the issue of oversupply has also been acknowledged, with fears voiced by SMIC regarding this risk.
Chinese equipment manufacturers such as Naura Technology Group and AMEC have expanded their market presence globally, with Naura now ranking as the seventh-largest equipment producer based on sales. Nonetheless, critical weaknesses persist in lithography systems and testing and assembly tools, where Chinese firms currently provide only a minor share of the necessary technology. The leading provider of lithography systems globally is ASML, based in the Netherlands.
In summary, China’s chipmaking equipment purchases are set to decline due to overcapacity and U.S. sanctions, marking a significant drop after years of growth. The country dominated the wafer fabrication market recently but now faces critical challenges in specific technology areas. Despite progress by major Chinese firms, the ongoing risks of oversupply and reliance on foreign technologies raise concerns about the industry’s future trajectory.
Original Source: money.usnews.com
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