Japan chip equipment makers report first-ever 10% drop in China sales

Japan’s Chip Equipment Makers Report First-Ever 10% Drop in China Sales

Japan’s leading semiconductor equipment manufacturers have reported an unprecedented decline in sales to China, marking a turning point for an industry that until recently counted the Chinese market as its fastest-growing revenue source.

According to Nikkei Asia, Japan’s top chipmaking equipment suppliers — including Tokyo Electron, Screen Holdings, and Disco — saw combined China sales fall 10% year on year, the sharpest contraction on record for the sector. The decline is attributed to Beijing’s accelerating push for semiconductor self-reliance, with Chinese firms such as SMIC and YMTC reducing their dependence on Japanese equipment as they develop domestic alternatives.facebook

Export Curbs Reshaping the Market

The downturn reflects the cumulative impact of Japan’s export restrictions, first imposed in July 2023, which target 23 categories of advanced semiconductor manufacturing equipment in alignment with similar U.S. and Dutch controls. Washington has continued pressing Tokyo to extend curbs on equipment used for sub-14-nanometer chip production.valuethemarkets

Tokyo Electron, Japan’s largest semiconductor equipment maker, has seen its China sales share plummet from peaks above 40% to around 31.8%, an 8.5 percentage point quarterly decline. The company now projects China will account for roughly 30% of sales going forward. Other firms including Advantest and Nikon have historically relied on China for 24–30% of revenue and face similar pressures.kucoin

Offsetting Losses with AI and Regional Diversification

Japanese equipment makers are pivoting to offset their China shortfall. Tokyo Electron expects demand for AI-related chipmaking tools to reach nearly 40% of total revenue, helping compensate for the lost Chinese business. The companies are also benefiting from orders tied to Samsung and SK Hynix high-bandwidth memory expansion in South Korea, as well as TSMC’s 2-nanometer investment in Taiwan.trendforce

Japan’s share of the global semiconductor equipment market has already fallen to 21.7%, trailing both the United States and Europe — a stark decline from the country’s dominant position in the 1990s. Analysts warn that while export controls aim to slow China’s chip ambitions, they risk permanently displacing Japanese suppliers from one of the world’s largest equipment markets as Chinese manufacturers build out their own capabilities.vespernews