China’s Chipmaking Equipment Purchases to Decrease in 2025…

China is expected to see a 6% decline in chipmaking equipment purchases to $38 billion in 2025, down from $41 billion in 2024. This drop marks the first decline since 2021, influenced by overcapacity and U.S. export controls. Although significant progress has been made by firms like SMIC, challenges persist in key equipment areas such as lithography systems.

China’s semiconductor industry is poised for a decline in chipmaking equipment purchases in 2025, according to a recent report by TechInsights. After three years of growth, spending is expected to decrease from $41 billion in 2024 to $38 billion this year, marking a 6% drop. This decrease will reduce China’s share of global purchases from 40% to 20%, attributed to overcapacity and increasing U.S. sanctions affecting the sector.

Despite being the largest buyer of wafer fabrication equipment, China’s growth was partly fueled by stockpiling amidst a series of U.S. sanctions aimed at restricting access to advanced semiconductor technology. The Chinese market had previously invigorated the global equipment sector, even as consumer electronics demand weakened globally. Significant strides have been made by prominent Chinese companies such as Semiconductor Manufacturing International Corporation (SMIC) and Huawei, which have managed to produce advanced chips despite U.S. sanctions.

Chinese firms like Naura Technology Group and AMEC are enhancing their presence in the global market, with Naura ranking as the seventh-largest equipment producer worldwide. While progress has been achieved in self-sufficiency, challenges remain, particularly concerning lithography systems and testing tools. Notably, ASML from the Netherlands continues to lead the lithography equipment market, with Chinese manufacturers providing only a fraction of the necessary testing and assembly equipment in 2023.

As the Chinese semiconductor industry grapples with oversupply, particularly in the mature-node chip segment, analysts like Boris Metodiev underscore that while China continues to advance its capabilities, significant reliance on foreign technology remains. The evolving landscape of the semiconductor market highlights a complex interaction between national security interests and global trade dynamics, leading to a pivotal moment for China’s ambitions in chipmaking.

China’s semiconductor sector faces a notable decline in chipmaking equipment purchases for 2025, as spending diminishes due to overcapacity and U.S. sanctions. Despite being a primary market driver in previous years, the shift signals potential challenges ahead for the industry. Chinese firms continue to advance their technologies; however, critical dependencies remain on foreign equipment, which underscores the delicate balance between self-sufficiency and global supply chains.

Original Source: money.usnews.com