It is well known that the rapid development of the Chinese semiconductor market and attempts by local chip manufacturers to resist sanctions are stimulating sales of foreign equipment in the country. Japan is one of the beneficiaries of this trend, but companies supplying equipment to China are trying to protect themselves from excessive concentration of sales in the Chinese market.
Image Source: SMIC
According to the Nikkei Asian Review, by the end of this year, revenue from sales of Japanese chip production equipment on the global market as a whole will grow by 15%, maintaining double-digit growth rates in the future. At the end of the second quarter, major Japanese suppliers mostly raised their annual revenue forecasts as sales statistics turned out to be higher than their expectations.
The head of Tokyo Electron, Toshiki Kawai, explained that chip manufacturers continue to actively invest in the production of components for artificial intelligence systems, and at the same time the PC and smartphone markets are recovering. In the electric vehicle electronics segment, demand has temporarily stalled, but will inevitably resume growth in the long term.
In the second quarter, the Japanese manufacturer received 51% of its revenue from equipment sales in China, according to Screen Holdings. As company representatives emphasize, customer purchases on the Chinese market exceed actual needs, since demand is stimulated by sanctions against China in this area. When demand in the Chinese market stabilizes, sales will be stimulated by projects implemented in the United States, Europe and Japan. According to representatives of Kokusai Electric, demand for equipment not subject to US sanctions from Chinese chip manufacturers will be stable.
Some Chinese companies, after falling under US export restrictions, created related structures through which they continue to purchase equipment, and therefore the volume of orders from China after the tightening of sanctions did not decrease much. The outcome of the US presidential election will have little effect on the structure of demand, but the general vector of deterioration in relations between the US and China will force many manufacturers to move their enterprises to Vietnam, Malaysia and India. In the latter country, not only Tata Group, but also foreign players, including the American Micron Technology, are ready to build chip production plants.
According to Japanese manufacturers, if the transfer of technology from Taiwan to India goes smoothly enough, then the latter will be able to quickly become a serious player in the semiconductor market. The main factor limiting growth for India will be the shortage of skilled workers, not engineering infrastructure.
In addition, the search for new ways to package chips is also driving demand for Japanese equipment. Local manufacturers, however, see Chinese competitors as a threat because they believe they can close the decade-long gap with Japanese companies in six or seven years. Currently, the difference in technological development between Japanese and Chinese companies is measured at 15 years, according to Kazunori Tsukada, executive vice president of Kokusai Electric.