[News] China’s Chipmaking Equipment Spending Likely to Drop below USD 40 Billion in 2025 amid U.S. Tensions

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Amid concerns on the impact of the U.S. presidential election as well as the ongoing chip war between the world’s two superpowers, China’s chipmaking equipment market is expected to contract next year, according to a report by Nikkei. Citing remarks from SEMI, in 2025, the semiconductor equipment market in China is anticipated to drop below USD 40 billion and back to the level of 2023, after peaking in 2024.

According to SEMI, the decline can be attributed to the cooling demand after a period of accelerated purchasing spurred by U.S.-China tensions, the Nikkei report mentions. Spending on semiconductor manufacturing equipment in China is projected to exceed USD 40 billion this year for the first time, according to SEMI.

On the other hand, according to an executive of the Chinese branch of a global chip equipment supplier cited by the report, in 2025, the semiconductor equipment market in China is anticipated to decrease by 5-10% from the previous year, which is resulted from the decline of utilization rates for equipment at China’s semiconductor factories as well as the previous rush in purchases.

The projection aligns with Dutch chip equipment giant ASML’s financial forecast released earlier in October. It now forecasts 2025 net sales between 30 billion and 35 billion euros (USD 32.7 billion to USD 38.1 billion), in the lower end of its previous guidance range, according to a report by CNBC.

Though during the July-September quarter, China contribute to around 50% of ASML’s sales, Chief Financial Officer Roger Dassen noted that the company expects its China business to show a “more normalized percentage in our order book and also in our business,” indicating that China would come in at around 20% of its total revenue for next year, according to the CNBC report.

It is also worth noting that according to SEMI, the market contraction in China extends beyond next year. According to the Nikkei report, SEMI projects that China’s spending on chipmaking equipment will experience an average annual decline of 4% in compound growth from 2023 to 2027.

On the other hand, chipmaking equipment spending remains robust in regions other in China. Citing SEMI’s projection, Nikkei notes that spending in the Americas is projected to grow 22% annually between 2023 and 2027, with Europe and the Middle East increasing by 19%, and Japan by 18%.

Despite declining growth, China will remain the largest market for semiconductor manufacturing equipment, with estimated spending of USD 144.4 billion from 2024 to 2027, according to SEMI. This exceeds investments in South Korea (USD 108 billion), Taiwan (USD 103.2 billion), the Americas (USD 77.5 billion), and Japan (USD 45.1 billion).

To elaborate a bit, Nikkei suggests that China’s heightened outlay aligns with its goal of achieving greater self-sufficiency in chip production, as its self-sufficiency rate was only 23% in 2023.

Naura Technology Group, a state-owned company, is China’s largest supplier of semiconductor manufacturing equipment, followed by Advanced Micro-Fabrication Equipment (AMEC), according to Nikkei.

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(Photo credit: Naura Technology)