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China imports record-breaking chipmaking equipment quantities

China has seen a surge in its imports of semiconductor equipment, reaching record highs, as the country prepares for impending export curbs imposed by US allies. Chinese customs data reveals that chip production tool imports in June and July totaled almost $5 billion, representing a 70% increase from the same period last year. The majority of these imports came from the Netherlands and Japan, both of which have imposed export restrictions on chipmaking equipment as part of their efforts to curb China’s technological advancements. These restrictions will require Chinese chipmakers to apply for licenses from the Dutch and Japanese governments, causing concern among industry players. China’s increase in inventory of semiconductor equipment through advance stockpiling is seen as a response to these restrictions, ensuring the uninterrupted expansion of the country’s chip production.

Chinese companies, such as Semiconductor Manufacturing International and Yangtze Memory Technologies, heavily rely on equipment from the US, the Netherlands, and Japan for their chip manufacturing operations. The surge in imports mainly includes tools such as lithography and etching machines for chip production, excluding components and materials like wafers. Dutch chipmaking equipment imports to China doubled in June and July from the previous month due to increased delivery of lithography machines by ASML, a leading chipmaking equipment producer. Japan has also witnessed an increase in exports to China, with Chinese companies turning to Japanese suppliers for etching equipment and wafer-coating machines following the US tightening its export controls on chip equipment last year.

The surge in imports highlights China’s determination to expand the production of less advanced chips, despite facing challenges from tightened export controls. Chinese purchases of chip equipment from other countries, such as Singapore and Taiwan, have also contributed to the record imports. Experts believe that China’s concentrated investment in strategic fabrication plants aims to ensure local chip supply, while its sustained commitment to mature technologies serves as a buffer against geopolitical uncertainties. It is noted that China is focusing on producing chips for electric vehicles, green energy, and industrial applications, which predominantly require older chips not subject to export controls.

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