China Bought More Chipmaking Tools in the First Half of 2024 Than US, Taiwan, and South Korea Combined

[AleksandarK]

According to a recent report from Nikkei, China has claimed the number one spot as the single highest spender on chipmaking tools. As the data from SEMI highlights, China spent a whopping $25 billion on key semiconductor tools in the first half of 2024, more than the US, Taiwan, and South Korea combined. And the train of acceleration for the Chinese semiconductor industry doesn't seem to be slowing down, as the country is expected to spend more than $50 billion for the entire year 2024. However, this equipment is not precisely leading-edge, as Chinese companies are under Western sanctions and are unable to source advanced EUV lithography tools for making sub-7 nm chips.

Most of the spending is allocated to mature node chipmaking facilities. These so-called "second tier" companies are driving the massive expenditures, and they are plentiful. Nikkei reports that there are at least ten firms that operate with mature nodes like 10/12/16 nm nodes. Being the biggest spender, China is also one of the primary revenue sources for many companies. For the US chipmaking tool companies like Applied Materials, Lam Research, and KLA, Chinese purchases accounted for 32%, 39%, and 44% of their latest quarterly revenue, respectively. Tokyo Electron recorded orders to China accounting for 49.9% of its revenues in June, while the Netherlands giant ASML also attributed 49%. Perhaps even more interesting is the expected outlook for 2025, which shows no signs of slowing down. The Chinese semiconductor industry must establish complete self-sufficiency, and massive capital expenditures are expected to continue.



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[MacZ]

49% of ASML sales are from China in 2024.

China is the first producer of electronics worldwide : these sales figures are understandable.

 

[Prima.Vera]

They are buying a lot from Japan too, but the US is trying to convince Japan not to sell to China.
While China is threating with severe sanctions Japan if they stop doing this.
Those political games are getting out of hand.

China promises retaliation if Japan expands its chip export controls, and Toyota worries it'll get caught in the crossfire

Toyota privately told officials that Beijing could react to new controls by cutting Japan’s access to critical minerals for car production, sources say.

fortune.com

https://www.reuters.com/markets/asia/china-warns-japan-retaliation-over-potential-new-chip-curbs-bloomberg-reports-2024-09-02/

 

[john_]

Imagining financial reports taking a huge nosedive if China starts producing it's own tools. They seem to be buying plenty for production, spares and a few more to take them apart and study them.

 

[Daven]

Sounds as if China is going to completely abandon the use of western chip company products. I can see the whole country using their own homegrown OS, CPU and GPU among other parts of a computer.

 

[kondamin]

Sounds as if China is going to completely abandon the use of western chip company products. I can see the whole country using their own homegrown OS, CPU and GPU among other parts of a computer.

That is a good thing, the community of top minds is to small and being kept small because a few large players are dominating this very capital intensive market.

it's sad it's happening because of political reasons but it wouldn't have other wise.

 

[Fourstaff]

Imagining financial reports taking a huge nosedive if China starts producing it's own tools. They seem to be buying plenty for production, spares and a few more to take them apart and study them.

This is absolutely going to happen in the coming years/decades. China went from 2nd rate car manufacturing to tariff raising electric car production powerhouse. All it takes is a series of slips like Intel.

 

[529th]

That can be scary

 

[evernessince]

This is absolutely going to happen in the coming years/decades. China went from 2nd rate car manufacturing to tariff raising electric car production powerhouse. All it takes is a series of slips like Intel.

Intel is more than a few slips, it's a company that relied on anti-competitive practices to gain control of their market that allowed them to get lazy and arrogant over the decade they enjoyed a monopoly. You see this in other companies like Google, Microsoft, and Apple as well. When you rely on controlling a market instead of improving your product, at some point a competitor is going to come along with something better. It might not be from the US market because these companies have an iron grip there, but it will come. If there is ever a point where all the US tech giants are superseded by foreign companies, the US has no one to blame but themselves for the failure to keep their markets competitive and instead allowing it's big players to treat markets like their own fiefdoms.

 

[JohH]

Lenin said the capitalists will sell you the rope with which you hang them.

If the PRC is importing these machines while planning for 'self-sufficiency' what do these short-sighted companies expect will happen to their tools and machines? They will be reverse engineered and iterated upon with billions of subsidies which will rapidly outpace their own improvements.

 

[64K]

Lenin said the capitalists will sell you the rope with which you hang them.

If the PRC is importing these machines while planning for 'self-sufficiency' what do these short-sighted companies expect will happen to their tools and machines? They will be reverse engineered and iterated upon with billions of subsidies which will rapidly outpace their own improvements.

They are probably caught up in make a buck right now any way they can and deal with the fallout later. Kick the can down the road philosophy.

Edit: Also from each company's perspective they probably think if they don't sell to the Chinese then their competition will anyway and they will lose sales and accomplish nothing for the future.

 

[FreedomEclipse]

I think there are two sides of the coin here. On one hand its about being self sufficient. On the other hand its about having something of value to sell to other countries who are on the US sanctions list and banned from buying such technologies.

If i recall correctly. There was a news post on TPU where a Chinese CPU was announced but the technology itself was about 10-20 years behind the US. Im sure China will find a way to get the information they need to replicate better technology. They somehow always do.

 

[Vayra86]

Intel is more than a few slips, it's a company that relied on anti-competitive practices to gain control of their market that allowed them to get lazy and arrogant over the decade they enjoyed a monopoly. You see this in other companies like Google, Microsoft, and Apple as well. When you rely on controlling a market instead of improving your product, at some point a competitor is going to come along with something better. It might not be from the US market because these companies have an iron grip there, but it will come. If there is ever a point where all the US tech giants are superseded by foreign companies, the US has no one to blame but themselves for the failure to keep their markets competitive and instead allowing it's big players to treat markets like their own fiefdoms.

So what about automotive, same thing? There's a whole lot of companies alongside, say VW and Audi over there. And I do think part of the issue applies to them, but does it really? Look at Toyota. They're struggling with this too and they have certainly not been complacent or lazy.

The real thing is just that China's gov money is flooding markets. It happened with solar, it happens with cars, and it happens with chips too, wherever they can. They would do that regardless of the movements of Intel or AMD, those are just used as a canvas to paint their own story, probably based on their technology too. Its never a good thing - we owe the dominance of Big Tech in part because of gov funding as well. And that dominance is really effectively a proxy form of gov dominance with severely lacking checks and balances. Its dangerous AF and it has already spiralled out of control if you ask me.

I'm kinda convinced it doesn't really matter how dominant or not domestic companies are in the face of a China that puts its mind to something. Stalling them is the best we can do short of building a great firewall around them which nobody wants or can possibly do.

 

[evernessince]

I'm kinda convinced it doesn't really matter how dominant or not domestic companies are in the face of a China that puts its mind to something. Stalling them is the best we can do short of building a great firewall around them which nobody wants or can possibly do.

Stalling them should not be the goal of any economic actions like sanctions, fair competition should. There's nothing wrong with Chinese competition per say, it's the subsidies and state help they are provided that's problematic.

There's a whole lot of companies alongside, say VW and Audi over there. And I do think part of the issue applies to them, but does it really? Look at Toyota. They're struggling with this too and they have certainly not been complacent or lazy.

In regards to electrification they certainly have been lazy. VW (who owns audi) was busy cheating on Diesel emission tests while the Chinese EV market was brewing a hotpot of companies fiercely competing domestically, which in turn created rapid advancement. US companies in particular have lobbied against electric vehicles for decades and their recent price increases are nothing but greed. My brother works at GM and pointed out that the union needed to increase the profit sharing cap to unlimited because the company has never been making more money.

Chinese EV companies do have an unfair advantage with state subsidies that needs to be balanced but there's also a massive boatload of greed and stupidity that's pervaded the car industry. If another player comes in and shakes things up that would be fantastic IMO, assuming it's done in a fair manner of course.

 

[Vayra86]

Chinese EV companies do have an unfair advantage with state subsidies that needs to be balanced but there's also a massive boatload of greed and stupidity that's pervaded the car industry. If another player comes in and shakes things up that would be fantastic IMO, assuming it's done in a fair manner of course.

One word: Tesla

And that on its own puts the entire idea that the end goal is fair competition, under a lot of pressure.
The market isn't fair. We're just protecting our interests, screw everyone else. And so does China. Its history in a nutshell, and sure, since WTO and lots of treaties things might have looked differently, but the same competitive rules exist: you either win, or you lose, a fair balance is at best temporary.

And it is that exact sentiment that has caused lots of Western companies to get lazy and complacent. Too big to fail comes to mind. Eventually, everything corrupts because people wiggle themselves into comfortable positions. Again: Tesla. What's Elon doing lately... It ain't all about bringing us to Mars anymore...

 

[Nhonho]

Western countries are making a big mistake again. The Chinese are probably reverse engineering some of these machines right now, and in a few years they will be manufacturing their own chipmaking machines.