China is solidifying its position as the global powerhouse in semiconductor production, with unprecedented investments in chip-making equipment. According to Tom’s Hardware, Chinese semiconductor firms poured a record-breaking $25 billion into this sector in the first half of 2024, eclipsing the combined investments of South Korea, Taiwan, and the United States.
This investment surge reflects China’s strategic push to localize its chip production and reduce reliance on foreign suppliers amid escalating trade tensions with Western nations. Industry experts predict that by the end of 2024, China’s total expenditure on semiconductor manufacturing equipment could soar to $50 billion.
To support this ambitious expansion, China plans to inaugurate over a dozen new semiconductor factories between 2024 and 2025. The investment frenzy is not limited to major players like SMIC and Hua Hong; smaller enterprises are also getting in on the action. Despite this robust investment, many of the new facilities will focus on producing chips with older technologies, as access to cutting-edge equipment remains a challenge for Chinese firms.
Interestingly, while global chip investments have been in decline due to the economic slowdown, China’s spending has surged. Countries such as Taiwan, South Korea, and North America have scaled back their investments in wafer production equipment. In contrast, Chinese companies are actively expanding their equipment orders, benefiting manufacturers like Applied Materials, Lam Research, and ASML. These companies have reported a significant increase in revenue from Chinese clients, with ASML’s share reaching 49% and Applied Materials at 32%.
Looking ahead, the semiconductor industry’s outlook remains optimistic, with growth driven by rising demand for memory chips and AI-related technologies. However, other sectors, including automotive and industrial electronics, are experiencing only modest growth as they navigate the current market landscape.
Analysts from Nikkei anticipate that China’s investment in new semiconductor facilities will continue to grow over the next two years. At the same time, global spending on chip manufacturing equipment is expected to rise across Southeast Asia, the Americas, Europe, and Japan as these regions aim to bolster their own production capabilities.