China will be the world’s biggest buyer of chipmaking equipment this year despite slashing its overall investment in the technology, industry group SEMI said in a report.
Beijing will spend an estimated $38 billion on chip tools — the highest in the world, but down 24% from the $50 billion it spent on the equipment last year.
China’s projected spends will account for approximately a third of the $110 billion total global investment into chip tools, the SEMI report said.
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Since last year, analysts have been warning of an oncoming slowdown in Chinese spending on chip equipment. Last month, Canadian semiconductor research company TechInsights said the slowdown would be caused by “export controls and overcapacity.”
China was the growth driver globally for the global wafer fabrication equipment sector in 2023 and 2024, when the broader market experienced a downturn due to slumping consumer electronics demand.
Many of China’s purchases were driven by stockpiling as the US levied a series of sanctions in a bid to stymie Beijing’s ability to access and produce chips that could help advance artificial intelligence for military applications or otherwise threaten US national security.
The slowdown in China’s overall equipment spending also comes at a time when it is aggressively working towards building a self-sufficient chip supply chain, with billions of dollars worth of state backing.
Chinese chip firms have made several progresses — in spite of Washington’s clampdown — with China’s largest chipmaker SMIC and US sanctioned Huawei producing an advanced chip last year by using more expensive and laborious efforts.
Beijing’s biggest weaknesses, meanwhile, remain lithography systems, as well as testing and assembly tools.
But early this month, market research firm TrendForce reported that SMIC and Huawei had also developed the country’s first-ever homegrown extreme ultraviolet (EUV) lithography machine.
EUV machines are considered the most advanced chipmaking tools currently, with Europe’s ASML being their dominant supplier. ASML, however, has never sold its EUV machines in China due to export controls.
SMIC and Huawei’s EUV machines are set for trial production in the third quarter of 2025. The companies aim to begin their mass production next year.
Other leading Chinese equipment makers including Naura Technology and AMEC have also been expanding their footprint globally. Naura is now the world’s seventh-largest equipment maker in terms of sales.
Other Asian countries among top buyers
The SEMI reports also noted that South Korea is expected to remain the second-highest spender on chip tools through 2026.
Korean investment is forecasted to grow by 29% to $21.5 billion in 2025 and by 26% to $27 billion in 2026.
The key driver to Korea’s chip tools spending will be the growing penetration of artificial intelligence, that has driven a spike in memory adoption. The country’s biggest chipmakers SK Hynix and Samsung Electronics are planning to invest more in equipment for capacity expansion and technology upgrades, SEMI noted.
Spending in Taiwan, where leading foundry TSMC manufactures AI chips for Nvidia and others, is projected at $21 billion.
Among other regions, the Americas and Japan are each expected to spend $14 billion in 2025, while Europe will spend $9 billion, SEMI said.
- Reuters, with additional editing and inputs from Vishakha Saxena
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