According to reports, the combined sales of Japan’s top five chip manufacturing equipment manufacturers to China fell by 10% in the fiscal year ended March 31.
Japanese media “Nikkei Asia” stated that this is the first time in history that this data has declined.
As China strives to promote the development of local industries, Chinese manufacturers have been taking market share from Japanese and European and American competing companies in recent years.
According to reports from five Japanese companies, Tokyo Electronics, Advantest, Schooling Group, Disco and International Electric, their total sales in the Chinese market in the last fiscal year were 1.47 trillion yen (approximately 58.8 billion yuan), a 12% decrease from the previous fiscal year.
The decline was particularly sharp for manufacturers of equipment for front-end processes, which form circuits on silicon wafers.
The combined sales of Tokyo Electronics, Sculin Group and International Electric to China fell by nearly 20% compared with the previous year.
In addition, in the first quarter of this year, Tokyo Electronics’ sales in China accounted for 27% of total sales, a decrease of 7 percentage points from the same period last year.
This ratio has dropped significantly from 50% in the second quarter of 2024.
However, compared with the stagnant sales of front-end process equipment, Japanese manufacturers’ sales of back-end process equipment are continuing to grow.
In the last fiscal year, major testing equipment manufacturer Advantest’s sales in the Chinese market increased by about 20%, and Disco’s sales also increased by nearly 10%.
“Nikkei Asia” mentioned that semiconductor equipment is an area where Japanese companies remain competitive.
But as Chinese companies have emerged in chip manufacturing, they have begun to grab market share in manufacturing equipment.
In addition to Japanese companies, major European and American companies such as ASML, Applied Materials and Kelei are also struggling in the Chinese market.
As the world’s largest equipment manufacturer, ASML’s sales to China fell to 19% in the first quarter of this year, a year-on-year decrease of 8 percentage points.
However, according to data from the international industry organization SEMI, China’s equipment market accounts for 37% of the global market and will remain stable at US$49.3 billion in 2025.
According to analysts, sales of foreign companies have declined, but the size of the Chinese market has remained flat because of the rapid growth of local Chinese manufacturers.
According to reports, Chinese chipmakers have expanded their semiconductor fabs by purchasing manufacturing equipment from Japan, the United States and Europe.
However, in recent years, the U.S. government has continuously tightened export restrictions to China in order to hinder China’s semiconductor development.
Under this circumstance, China has worked hard to establish a local semiconductor supply chain, and Chinese companies have developed rapidly.
Regarding the U.S.’s restrictive behavior, Chinese Foreign Ministry spokesperson Mao Ning previously said that facts have proven that “small courtyards and high walls” cannot stop the pace of China’s innovation and development, and are not conducive to the healthy development of the entire industry, including U.S. companies.
According to data from Japanese research company MIR, the localization rate (by value) of China’s chip manufacturing equipment in front-end processes reached 21% last year, a significant increase from 10% in 2021.
The proportion of back-end processes (including packaging) increased from 19% to 36%.
Among chip manufacturers, Chinese manufacturers are strengthening their presence in the fields of logic semiconductors for automotive control and power semiconductors for voltage stabilization, and have begun exporting to Southeast Asia and other regions.
Many such companies are expanding their production capacity by introducing manufacturing equipment made in China.
In response, Tokyo Electronics President Toshiki Kawai said that the company’s “advantages remain unchanged” in terms of safety performance, environmental performance and production capacity, and it will continue to lead the development of the industry in the future.
While facing challenges, Sculin Group sees huge business opportunities in the Chinese market, as Chinese companies have begun mass production of high-performance semiconductors.
“China’s local equipment manufacturers are growing rapidly,” said Jun Okamoto, a member of KPMG’s accounting consulting team. In the Chinese market, “the market share of foreign companies will continue to decline.”
