[News] China Contributes Over 40% of U.S. Chip Equipment Makers’ Revenue despite Export Controls

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Though the U.S. keeps tightening the export controls on the semiconductor sector, major chip equipment makers seem to become increasingly dependent on the Chinese market. According to a report by Nikkei, citing financial data such as Applied Materials and Lam Research, China’s share of sales have exceeded the threshold of 40%.

According to the latest forecast by SEMI, the global chip equipment sales are expected to grow by 3.4% to USD 109 billion in 2024, with China anticipated to reach a record-high USD 35 billion, accounting for over 30% of the global market.

The strong demand of China is also reflected in the sales of major U.S. chip equipment makers. Citing the latest financial data, Nikkei notes that from February to April, China accounted for 43% of the total sales of Applied Materials, a 22 percentage point increase YoY.

Similarly, from January to March, China accounted for 42% of the total sales of KLA Corporation, a 20 percentage point increase YoY.

The development appears to contradict Washington’s export control plans targeting China. In 2022, the US government restricted the export of advanced semiconductor production equipment to curb Beijing’s progress in this field. However, the manufacturing equipment for traditional chips above 28nm is not subject to these controls.

Citing sources familiar with the matter, Nikkei states that if it was not because of the regulation, the proportion of their business in China would be even higher, with sales growth in China occurring only in the non-advanced equipment sector.

The report also notes that though Washington’s policy of building a local ship supply chain does seem to benefit U.S. equipment manufacturers, they still find it difficult to reduce the reliance on China. In 2023, the U.S. accounted for 15% of Applied Materials’ total revenue, up 6 percentage points from 2021.

In order to confront the semiconductor sanctions from the U.S., China has been doubling down on the efforts by setting up its largest-ever semiconductor state investment fund. Earlier in May, it established the third phase of the National Integrated Circuit Industry Investment Fund, with investment totaling USD 47.5 billion.

The aim for China’s Big Fund is to leverage fiscal funds to attract private capital, focusing on key segments of the integrated circuit industry chain, including chip design, manufacturing, packaging and testing.

Read more

• [News] China Lists Semiconductor Self-Reliance Challenges, Excluding Lithography Equipment
• [News] China’s Big Fund Phase Three Commences, Injecting 344 Billion RMB into Semiconductor Industry

(Photo credit: Applied Materials)