China outspends US, Taiwan, and South Korea in chipmaking push

  • Industry News
  • Sep 06,24
China's chipmaking capacity is projected to more than double over the next five to seven years, primarily focusing on mature production processes (28nm or above), used in sectors like automotive and household appliances.
China outspends US, Taiwan, and South Korea in chipmaking push

China spent more on chipmaking equipment in the first half of 2024 than the US, Taiwan, and South Korea combined, signaling its aggressive drive for self-reliance in semiconductor production. According to SEMI, an industry body, China invested $25 billion in silicon manufacturing equipment during the first six months of the year, a trend expected to continue through the rest of 2024.

These figures, revealed at the SEMICON trade event in Taiwan, also indicate that China will lead global investments in new chip fabrication facilities this year, according to another source. Despite China's dominance, SEMI forecasts substantial growth in chip production investments across regions such as Southeast Asia, the Americas, Europe, and Japan by 2027, spurred by efforts to onshore semiconductor manufacturing.

In the US, the CHIPS Act is providing incentives for local production, while the European Chips Act aims to bolster semiconductor manufacturing across the EU. For China, however, the push for semiconductor independence has been amplified by ongoing trade disputes with the US. Washington has imposed bans on exports of high-performance chips and restricted access to semiconductor design and manufacturing tools.

China's chipmaking capacity is projected to more than double over the next five to seven years, primarily focusing on mature production processes (28nm or above), used in sectors like automotive and household appliances. Clark Tseng, Senior Director, SEMI noted that China is securing as much chipmaking equipment as possible in anticipation of further export controls.

Concerns over restrictions have deepened following reports that the Dutch government may impose tighter rules on ASML, a leader in chip manufacturing equipment. These could include limiting ASML’s ability to service equipment in China. ASML, which saw 49% of its Q1 sales come from China, risks losing market share if the restrictions proceed, according to a third source.

China has also warned Japan of "severe economic retaliation" over potential semiconductor equipment restrictions. There are fears that Beijing could cut off Japan’s access to rare earth metals crucial for automotive production, a move that would escalate tensions further. Meanwhile, the European Commission has started discussions with chipmakers over concerns that China’s growing semiconductor output could lead to an oversupply of cheap chips, potentially disrupting global markets.

(Communications Today,  Nikkei Asia& Global Times)

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