China's Chipmaking Equipment Purchases Slump Amid Overcapacity, US Sanctions

Key Points:

* China's chipmaking equipment purchases expected to decline 6% in 2023.
* Overcapacity and US sanctions hinder industry growth.
* China's market share in global purchases falls to 20%.
* Chinese companies expand into mature-node chips and equipment markets.
* Lithography systems remain a weakness for China's chipmaking industry.

Introduction:

Despite three years of robust growth, China's chipmaking equipment purchases are projected to drop this year due to oversupply and increased pressure from US sanctions.

Declining Spending:

According to TechInsights, China spent $41 billion on wafer fabrication equipment in 2024, accounting for 40% of global sales. However, spending is forecast to decrease by 6% to $38 billion in 2023, with market share falling to 20%.

Factors Driving the Decline:

* Export controls imposed by the US
* Global overcapacity in the chipmaking industry.

China's Drive for Self-Sufficiency:

Despite the decline in spending, China continues to invest in its domestic chipmaking capabilities.

* Chinese chipmakers have achieved progress in chip production and design.
* Local equipment makers, such as Naura Technology Group and AMEC, are expanding globally.

Weaknesses in Chipmaking Industry:

China's chipmaking industry faces challenges in certain areas:

* Lithography systems remain a critical weakness.
* Chinese companies still rely heavily on imported testing and assembly equipment.

Conclusion:

China's chipmaking equipment purchases are experiencing a slowdown due to overcapacity and US sanctions. While domestic efforts to enhance self-sufficiency are underway, China continues to face challenges in critical areas of the chipmaking industry.