SEMI data: Japan is expected to spend $7B on chipmaking equipment in 2024, up 82% on 2023, the largest in the world; China's spending is forecast to rise 2% YoY
Context & Ripple Effects
SEMI's regional spending scoreboard is being rewritten in real time. A week earlier, the industry group had flagged South Korea lifting advanced equipment spend 41.5% to $21B; now Japan is called the largest spender anywhere for 2024 at $7B, an 82% jump, while China — which as recently as 2020 was the biggest single market at $18.72B — is forecast to grow just 2%.
The swing matters because it marks the moment the post-2020 equipment boom rotates away from China toward allied buildouts, a rotation SEMI itself later confirmed with projections of $100B+ Chinese spending across 2025–2027 and US fab investment outpacing China, Taiwan, and South Korea from 2027.
First-order effects
- Equipment vendors gain their fastest-growing large customer in Japan, whose 82% expansion makes it 2024's largest market even at a smaller absolute base than South Korea's $21B.
- Toolmakers' China order books effectively flatline at 2% growth, forcing sales mix to shift toward Japanese, Korean, and later American fabs.
Second-order effects
- With new imported capacity constrained, China leans on workarounds already visible in the coverage: retrofitting older ASML DUV lithography tools to produce advanced chips, and a reported requirement that chipmakers use at least 50% domestically made equipment when adding capacity — a direct demand subsidy for local toolmakers.
- Government-backed capital fills the gap Beijing's stalled equipment imports leave: state media reported three venture funds of over $7.1B each backing early-stage hard-tech startups, extending the push upstream into the supplier base.
Third-order effects
- If the pattern holds, chipmaking equipment becomes a policy-allocated rather than purely demand-driven market: each region subsidizes its own capacity, SEMI's rolling forecasts become the scoreboard, and leadership rotates — Japan in 2024, heavy Chinese spending through 2027, then the Americas ahead from 2027 on AI-driven demand.
- Export controls intended to limit China's access to advanced tools get tested by exactly these adaptations — retrofits and domestic substitution — meaning effectiveness shifts from blocking purchases to slowing indigenization.
The trend: Chipmaking equipment spending is fragmenting into competing, state-backed national buildouts, with SEMI's forecasts tracking a leadership baton passing from China to Japan and Korea in 2024 and toward the US thereafter.