Amidst escalating trade tensions with the West, China has emerged as the leading buyer of chipmaking equipment in 2024. This surge in investment comes as the United States has sought to restrict China’s access to advanced semiconductor technologies and equipment, a move that is part of a broader trade conflict. US President Joe Biden has aimed to bolster domestic chip production and manufacturing in other sectors, such as electric vehicles, amid concerns about Chinese dumping and theft of American intellectual property.
Despite these tensions, China has doubled down on its chipmaking ambitions. A report from the Semiconductor Equipment and Materials International (SEMI) reveals that China purchased more chip-making equipment during the first seven months of 2024 than South Korea, Taiwan, and the United States combined. This strategy aims to localize semiconductor supplies and mitigate the risk of further export restrictions from the West.
China’s commitment extends beyond simply being the largest market for semiconductors. The country is now also the leading investor in the field, according to the SEMI report. In the first half of 2024, China invested approximately $25 billion in chipmaking, with total spending expected to reach $50 billion by year’s end.
This investment spree is not limited to major chipmakers like the Semiconductor Manufacturing International Corp (SMIC). Investments are growing across the board, including among mid-sized and smaller chip companies. Clark Tseng, SEMI’s Senior Director of Market Intelligence, noted that at least 10 tier-two chipmakers are aggressively acquiring new tools, contributing significantly to the overall surge in Chinese spending.
China’s chipmaking industry has witnessed a 20% growth this year, fueled by resurgent demand for memory chips and a surge in demand for artificial intelligence (AI)-related chips. This momentum is expected to continue, with Tseng predicting another 20% growth in 2025.
What makes this investment surge even more remarkable is that it occurs amidst a global economic slowdown, with investments falling in South Korea, Taiwan, and North America. China’s unwavering commitment to chipmaking, despite international pressures and a slowing global economy, underscores its determination to become a dominant force in the global semiconductor landscape.
