China spends more on chip equipment than the US, Taiwan and Korea combined

China spent more than $25 billion on semiconductor manufacturing equipment in the first half of 2024 alone, more than the combined investment of the US, Taiwan and South Korea during the same period, according to international organization SEMI.

As expected, there is speculation that China has invested so much in the area in search of self-sufficiency. The country faces not only direct and constant sanctions from the US in the chip manufacturing segment, but also from Uncle Sam’s allies.

We recently had the example of the Netherlands, which established new restrictions on ASML, which had China as one of its biggest clients.

The Asian country’s chip manufacturing capacity is expected to more than double in the next five to seven years, especially in “mature” processes. That is, less advanced chips from 28nm and above, generally aimed at IoT devices and the automotive industry.

“We are seeing China continue to buy all the equipment they can for their new mature component manufacturing facilities,” a SEMI official said. The country’s investment trend is expected to continue at a rapid pace for the rest of the year.

China may retaliate with sanctions

Concerns about China are now no longer limited to the country’s chip production capacity, but also the possibilities of retaliation for the sanctions it has suffered.

In response to the latest Dutch restriction, national newspaper Global Times reported that ASML’s position in China was now “under threat.” According to The Register, the Dutch company made 49% of its sales to the Asian country in the first quarter of 2024.

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Japan has also faced threats of “severe economic retaliation” if it too bows to US pressure for more sanctions against its neighbour. China is a major supplier of rare earth metals for Japanese car production and could use that against the country.