By Che Pan and Brenda Goh
BEIJING/SHANGHAI (Reuters) – China’s purchases of chipmaking gear are set to say no this 12 months after three years of development, because the trade grapples with overcapacity and faces better constraints from U.S. sanctions, a consultancy stated on Wednesday.
China has been the largest purchaser of wafer fabrication gear for no less than the previous two years, buying $41 billion value of instruments and accounting for 40% of worldwide gross sales in 2024, Canadian semiconductor analysis firm TechInsights stated.
However this 12 months, China’s spending is predicted to drop to $38 billion, down 6% year-on-year, and its share of worldwide purchases will fall to twenty% within the first decline since 2021, Boris Metodiev, a senior semiconductor manufacturing analyst at TechInsights, instructed a web-based seminar.
“We will see some slowdown in Chinese language spending attributable to export controls and overcapacity,” he stated.
China was the expansion driver globally for the worldwide wafer fabrication gear sector in 2023 and 2024, when the broader market skilled a downturn attributable to slumping shopper electronics demand.
Lots of China’s purchases had been pushed by stockpiling because the U.S. levied a sequence of sanctions in a bid to stymie Beijing’s capacity to entry and produce chips that would assist advance synthetic intelligence for army purposes or in any other case threaten U.S. nationwide safety.
Chinese language chip companies have continued to make progress regardless of Washington’s efforts, with China’s largest chipmaker SMIC and U.S. sanctioned Huawei producing a complicated chip final 12 months through the use of dearer and laborious efforts.
They’ve additionally expanded closely into the mature-node chip phase, dramatically rising manufacturing capability and taking market share from Taiwanese rivals.
SMIC flagged on Wednesday that it noticed oversupply threat in mature node chips.
Chinese language main gear makers together with Naura Know-how Group and AMEC have been increasing their footprint globally, with Naura now the world’s seventh-largest gear maker by way of gross sales, Metodiev stated.
Whereas China has been working to change into extra self-sufficient in chipmaking gear, its greatest weaknesses stay lithography programs, in addition to testing and meeting instruments, Metodiev stated.
The Netherlands’ ASML is the world’s largest producer of lithography machines. Chinese language corporations offered solely 17% of testing instruments and 10% of meeting gear used within the nation in 2023, Metodiev added.
(Reporting by Che Pan and Brenda Goh; Modifying by Jamie Freed)
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