Clicky

  • Login
  • Register
  • Submit Your Content
  • Contact Us
Friday, September 6, 2024
World Tribune
No Result
View All Result
  • Home
  • News
  • Business
  • Technology
  • Sports
  • Health
  • Food
Submit
  • Home
  • News
  • Business
  • Technology
  • Sports
  • Health
  • Food
No Result
View All Result
World Tribune
No Result
View All Result

China’s binge-buying of chipmaking equipment could yield another overcapacity problem

September 5, 2024
in News
Reading Time: 4 mins read
A A
China’s binge-buying of chipmaking equipment could yield another overcapacity problem
0
SHARES
ShareShareShareShareShare

Workers are processing chips at a workshop of an optoelectronic technology company in Huai’an, China, on May 11, 2024. 

Costfoto | Nurphoto | Getty Images

China is ramping up spending on chip manufacturing equipment, surpassing the combined expenditure of the U.S., South Korea, Taiwan and Japan in the first half of the year, according to an industry report Thursday.

The outsized investment is driven by Beijing’s endeavors for chip self-sufficiency as it hopes to hedge against further risks of Western restrictions that could thwart its access to the critical technology. 

In the first half of 2024, China splurged a whopping $24.73 billion on procuring chip manufacturing equipment, according to data from SEMI, a global semiconductor industry association. That’s more than the $23.68 billion spent by South Korea, Taiwan, North America and Japan combined, during the same period. The U.S. accounted for most of the spending in North America.

China’s binge-buying has accelerated since the U.S. introduced tighter export restrictions in October 2022. Annual spending surged from $28 billion in 2022 to $36.6 billion in 2023, according to SEMI, which projects the figure to exceed $35 billion this year.

The hoarding is likely to extend into the second half of this year, Clark Tseng, senior director at SEMI told CNBC, but he anticipates a slowdown next year to “digest the capacity.”

Economies of scale or excess capacity?

Such over-investment will ultimately lead to “inefficient or underutilized capacity in the future,” creating pricing pressure for industry peers outside of China, Tseng said.

China has more experience in producing older-generation chips, which are built on nodes that are at least 20 nanometers. These chips are widely used in consumer electronics, cars and home appliances.

To some extent, China is “well on its way” to being able to produce legacy chips, Alex Capri, a senior lecturer at the National University of Singapore and research fellow at Hinrich Foundation, told CNBC.

The world could soon face overcapacity in legacy chips, as already seen in other industries like electric vehicles and solar panels. Companies have found it hard to compete with Chinese firms flooding the market with cheaper products.

China’s binge-buying of chipmaking equipment could yield another overcapacity problem

But “China still has a long way to go” when it comes to more advanced and powerful chips, Capri said. Advanced chips have smaller transistors, allowing more of them to be packed onto a single semiconductor and yielding more powerful processing capabilities.

Capri noted U.S. export controls effectively cut China off from leading-edge manufacturing technology, known as extreme ultraviolet tools. The restrictions have created a bottleneck that could present a severe setback for China’s efforts to progress into more leading-edge chip making.

“They are trying to figure out how to build it, but it’s almost impossible,” Capri said.

Still, he noted the exception of Huawei’s Mate 60 Pro smartphone, which was launched last year carrying a 7-nanometer chip.

While it was a breakthrough for SMIC to manufacture the 7-nm chips without the EUV machines, he said “it was less efficient, much more expensive to do so [than with cutting-edge equipment].”

China is not going away

Capri said Chinese companies could be stockpiling chipmaking equipment in a “preemptive move” against potential risks that Washington could pile further export restrictions on the sector ahead of the U.S. presidential election.

The sweeping export curbs have not dethroned China as the largest revenue source for many of the world’s largest semiconductor equipment manufacturers.

Last year, the Netherlands and Japan imposed export restrictions on cutting-edge semiconductor equipment to China in a move that aligned with Washington’s interests to cut China off from the critical technology.

Dutch semiconductor equipment maker ASML has seen revenue share from its sales to Chinese clients more than double from 17% in the last quarter of 2022 to 49% in the second quarter this year.

Both Tokyo Electron and Screen Holdings derived more than 40% of their total revenue from China in the June quarter and expect sales to continue expanding.

In the second quarter, equipment sales to China stood at $12.21 billion, compared with $4.52 billion to South Korea, $3.9 billion to Taiwan and $1.61 billion to Japan, according to SEMI.

Credit: Source link

READ ALSO

OPEC+ members delay plans to hike production by two months after oil price slump

Stocks had a record-breaking rally. What’s next?

ShareTweetSendSharePin
Previous Post

Roku’s new feature will turn your TV into a fancy art delivery system

Next Post

Chinese companies huge advantage vs. South Korea, Japan peers

Related Posts

OPEC+ members delay plans to hike production by two months after oil price slump
News

OPEC+ members delay plans to hike production by two months after oil price slump

September 5, 2024
Stocks had a record-breaking rally. What’s next?
News

Stocks had a record-breaking rally. What’s next?

September 5, 2024
Former EU Brexit negotiator Michel Barnier named new French prime minister
News

Former EU Brexit negotiator Michel Barnier named new French prime minister

September 5, 2024
Saudi Arabia’s fiscal breakeven oil price is rising fast
News

Saudi Arabia’s fiscal breakeven oil price is rising fast

September 5, 2024
These are the top 10 MBA programs in the world in 2024
News

These are the top 10 MBA programs in the world in 2024

September 5, 2024
Chinese companies huge advantage vs. South Korea, Japan peers
News

Chinese companies huge advantage vs. South Korea, Japan peers

September 5, 2024
Next Post
Chinese companies huge advantage vs. South Korea, Japan peers

Chinese companies huge advantage vs. South Korea, Japan peers

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

What's New Here!

Top economist Mohamed El-Erian says traders are too aggressive on Fed rate cut expectations

Top economist Mohamed El-Erian says traders are too aggressive on Fed rate cut expectations

August 23, 2024
Phil Simms has problem with Tom Brady’s young QB ‘tragedy’ comments

Phil Simms has problem with Tom Brady’s young QB ‘tragedy’ comments

August 24, 2024
Exclusive: Crypto veteran Meltem Demirors raising two venture funds totaling  million

Exclusive: Crypto veteran Meltem Demirors raising two venture funds totaling $75 million

August 7, 2024
Older adults are very concerned about health care and insurance affordability ahead of 2024 election

Older adults are very concerned about health care and insurance affordability ahead of 2024 election

August 14, 2024
Get one year of 1Password for 25 percent off

Get one year of 1Password for 25 percent off

August 23, 2024
The Google Pixel 9, the Pixel 9 Pro Fold and everything else announced at the Made by Google Pixel launch event

The Google Pixel 9, the Pixel 9 Pro Fold and everything else announced at the Made by Google Pixel launch event

August 13, 2024
Paraguay swimmer Luana Alonso who was kicked out of Olympic Village over ‘inappropriate’ behavior wanted to compete for Team USA

Paraguay swimmer Luana Alonso who was kicked out of Olympic Village over ‘inappropriate’ behavior wanted to compete for Team USA

August 7, 2024

About

World Tribune is an online news portal that shares the latest news on world, business, health, tech, sports, and related topics.

Follow us

Recent Posts

  • How to watch, stream NFL’s first game of 2024 live online free without cable: Fox, CBS, NBC, ESPN
  • Everything to know about the NFL kickoff rule change for 2024
  • One of the best games Sony has ever made
  • OPEC+ members delay plans to hike production by two months after oil price slump

Newslatter

Loading
  • Submit Your Content
  • Contact Us
  • Privacy Policy
  • Terms of Use
  • DMCA

© 2024 World Tribune - All Rights Reserved!

No Result
View All Result
  • Home
  • News
  • Business
  • Technology
  • Sports
  • Health
  • Food

© 2024 World Tribune - All Rights Reserved!

Welcome Back!

Login to your account below

Forgotten Password? Sign Up

Create New Account!

Fill the forms below to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In