Japan's top five chip equipment makers posted their first-ever fall in combined China sales, down 10% for the year ended March 31, as China boosts local players
TOKYO — Japan's top five manufacturers of chipmaking equipment posted a 10% decline in combined sales to China for the year ended March 31 …
Context & Ripple Effects
China had been an unusually important outlet for Japanese chip-equipment suppliers: Japanese trade data showed China taking more than half of such exports for three consecutive quarters through early 2024, and China imported a record amount of chipmaking equipment in 2024.
The latest decline follows evidence that China’s domestic equipment base is broadening. Three Chinese suppliers reached the global top 20 in 2025, versus one in 2022, creating a clearer local alternative to imported tools.
First-order effects
- Japan’s five leading chip-equipment makers collectively recorded a 10% year-on-year reduction in China sales for the year ended March 31, their first combined decline in that market.
- Chinese equipment makers gain a more favorable domestic purchasing backdrop as local customers increase adoption of homegrown suppliers.
Second-order effects
- A market that had absorbed a large share of Japanese equipment exports becomes less dependable for Japanese vendors, increasing pressure to diversify demand and defend installed-customer relationships in China.
- The rise of Chinese suppliers can intensify competition first in less advanced equipment categories—the segment previously associated with strong Chinese demand for Japanese gear—and may narrow foreign suppliers’ pricing and share advantages.
Third-order effects
- If Chinese customers continue substituting locally made equipment, China’s semiconductor supply chain could become less dependent on imported production tools even where foreign vendors remain important.
- The shift points toward a more regionally segmented equipment market: foreign leaders retain global scale, while Chinese suppliers build scale and product capability through domestic demand.
The trend: China’s semiconductor push is moving from heavy imports of manufacturing equipment toward progressively deeper localization of the equipment supply chain.