China accounts for 40%+ of sales at Applied Materials and Lam Research, as they boost shipments of legacy chipmaking equipment not targeted by US export curbs
Kosuke Shimizu / Nikkei Asia :
Context & Ripple Effects
The companies’ China exposure follows three quarters in which China took more than half of Japanese chip-equipment exports, driven by demand for less advanced tools. The pattern matters because it shows how equipment demand can remain concentrated in China even where leading-edge restrictions apply.
It also extends the earlier example of Tokyo Electron offsetting controls through sales of less advanced equipment, making legacy-tool demand a meaningful commercial channel for major suppliers.
First-order effects
- Applied Materials and Lam Research gain a larger near-term sales contribution from China by shipping equipment outside the scope of current US curbs.
- Chinese chipmakers retain access to imported legacy production tools, supporting capacity additions using mature manufacturing processes.
Second-order effects
- Other equipment vendors have an incentive to prioritize product lines that remain eligible for China shipments, reinforcing competition in mature-node tools.
- High China revenue concentration makes suppliers more exposed to any future expansion of export restrictions, while Chinese customers remain dependent on foreign equipment in the interim.
Third-order effects
- If this pattern persists, export controls may shift equipment trade toward technically permitted legacy segments rather than simply reducing China’s overall equipment purchases.
- The longer-run tension is between continued access to foreign mature-node tools and China’s stated drive to reduce reliance on them; tighter rules or faster domestic substitution would reshape supplier exposure.
The trend: Semiconductor export controls are increasingly redirecting demand toward non-restricted equipment categories rather than cleanly separating China from global tool suppliers.