The new cold war, cloaked in silicon, is ratcheting up, with uncontested supremacy in the emerging AI-led, productivity-unlocking paradigm up for grabs. With the US and its allies determined to thwart Beijing's access to cutting-edge chips, China is finding progressively more creative ways to circumvent those restrictions, all the while trying to ramp-up its indigenous capacity.
In the first half of 2024, China significantly increased its investment in semiconductor manufacturing equipment, spending a record $25 billion according to the global chip industry association SEMI. This amount surpasses the combined expenditures of South Korea, Taiwan, and the…
— GammaLab (@gammalab_tweets) September 2, 2024
Now, Nikkei Asia is reporting that China splurged a whopping $25 billion on chipmaking equipment in the first half of 2024, constituting a new record. What's more, China's global shopping spree for specialized chipmaking equipment eclipsed the one recorded by the US, South Korea, and Taiwan in H1 2024, and that too on a cumulative basis!
At a more granular level, China accounted for a whopping 49.9 percent of Tokyo Electron's revenue in the June-ending quarter. Similarly, ASML, Applied Materials, Lam Research, and KLA respectively earned 49 percent, 32 percent, 39 percent, and 44 percent of their total revenue in the just-concluded quarter from Beijing's relentless shopping spree.
China appears to be stockpiling critical chipmaking equipment ahead of the US presidential election in November and the attendant threat of a significant escalation in silicon-related sanctions on Beijing.
In the same vein, China today threatened Japan with a severe economic retaliation should it further restrict the sale and servicing of chip-related equipment to Chinese firms, promising to starve Tokyo of critical raw materials and minerals that are required for the production of automobiles. Bear in mind that Beijing currently maintains a waning monopoly on the supply of rare earth metals.
Of course, as we reported earlier today, China's indigenous chips are, for now, managing to keep pace with the relatively high-end offerings from the likes of TSMC, with most of the performance gains for these domestically produced chips arising from a more efficient overall design. Nonetheless, we have yet to see any verified signs of China's ability to mass produce chips on sub-7nm nodes.
About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.
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