China’s Chipmaking Tool Imports Spike as Export Limitations Loom
China’s chipmaking tool imports spiked in June and July 2023, as the world’s second largest economy moved swiftly to procure equipment for its upcoming semiconductor fabs. The majority of these tools come from the Netherlands and Japan, which account for the majority of global wafer fab equipment supply. This move comes as both countries are about to introduce export limitations on chipmaking equipment, prompting China to act to avoid disruptions in wafer fab equipment supplies.
According to data released by SEMI, a global organisation that represents the supply side of the semiconductor industry, China imported approximately $5 billion (about RMB 30 billion) worth of chipmaking tools in June and July 2023. This is a 70% year-over-year (YoY) increase, and marks the highest chipmaking tool import value since the SEMI data series began in 2016.
The majority of these tools – lithography scanners, in particular – come from ASML, the Dutch wafer fab equipment supplier. The rest of the tools are etching and wafer-coating machines, and are predominantly Japanese, especially those from companies such as Canon, Mitsubishi, Toshiba, and Sharp.
China is aggressively procuring these tools because the Netherlands and Japan have both established export limitations on chipmaking equipment, aimed at slowing down the development of China’s semiconductor industry. China’s strategy is to procure tools for the manufacture of less sophisticated chips that are not covered by the new Western restrictions.
China’s chipmaking equipment manufacturers, such as SMIC and YMTC, are already customers of these tools, as are recently established fabs supported by local Chinese governments.
China was the second-largest wafer fab equipment importer in Q1 2023, with a total value of $5.86 billion. It is expected that Chinese companies will continue spending on equipment in 2023 and 2024, along with Taiwan and South Korea.
While Western countries are taking measures to slow down China’s chipmaking industry, China has taken a proactive approach to ensure a smooth expansion of its chip production. It will be interesting to see how many of the planned China-based fabs will be up and running by the end of 2023.
