China Spends Record $26B on Chip Equipment in 2024

China’s import of crucial machinery in semiconductor manufacturing has hit a record high as it looks to offset restrictions set by the US.?

Despite sanctions in the US and parts of Europe, China’s imports of machinery used for semiconductor manufacturing are skyrocketing. In 2024, Chinese companies, with government backing, have already imported equipment to the tune of $26 billion, which is higher than imports of the same machinery into China during the first seven months of previous years.?

Based on data released by the Chinese General Administration of Customs, Bloomberg noted most of the purchases came from leading global corporations including Applied Materials, ASML Holding, and Tokyo Electron. All of these companies make equipment used at different stages of chip fabrication.?

China’s growing imports from ASML have grown by 21% in Q2 2024 with a total value of $2 billion in July alone, shattering previous records on Dutch exports to China. ASML is a leading supplier of equipment used to make advanced chips with lithography — a technique that uses light to print transistors on a larger semiconductor (mostly silicon) wafer.

Sanctions on China’s technology began in 2019, with the Trump administration inhibiting American companies, and their partners across the world, from engaging with Huawei, ZTE, and other key players for alleged ties with the Chinese military. Starting 2022, the US government imposed further restriction preventing American companies from selling lithography machines —?primarily ones used for the most advanced extreme ultraviolet (EUV) lithography — to parties in China. The main objective was to prevent China from getting ahead of the US in the race to build advanced chips for AI and supercomputing, especially in ways these technologies could benefit the Chinese army.?

By November 2023, the Dutch administration introduced similar sanctions preventing ASML from exporting to China. Until 2023, ASML continued selling older equipment, the previous sanctions did not delist machines for the previous deep ultraviolet lithography (DUV). Even after the sanctions from last year, the Dutch company is not restricted from selling machines for older, more mature nodes to Chinese customers.?

Despite the governments’ measures, half of ASML’s sales in Q2 came from China. Similarly, the US-based Applied Materials reported almost one-third of its sales were to Chinese buyers.?

In the mainland, leading Chinese chip manufacturing companies, including Huawei and SMIC, have been finding ways around the restriction to manufacture chips at smaller nodes. The growth lies in the special subsidies by the Chinese government to aid in R&D for more advanced chip manufacturing processes.?