US Sanctions Disaster Begins To

Be Felt, China Stumbles

Jakarta, CNBC Indonesia –US sanctions targeting exports of chips and advanced chip-making equipment to China have begun to wreak havoc. TechInsigths analysts say China’s spending on chip equipment will decline this year after three years of growth.

The decline in chip equipment purchases is because China is grappling with excess capacity. China is also predicted to face greater obstacles from increasingly tightened US sanctions.

China has been the largest buyer of wafer fabrication equipment, at least for the past two years. Its total purchases are worth US$41 billion (Rp670 trillion) and account for 40% of global sales in 2024.

However, this year, China’s spending is expected to fall 6% to US$38 billion. Its share of global purchases will fall to 20%, the first decline since 2021.

“We could see some slowdown in Chinese spending due to export controls and overcapacity,” Boris Metodiev, senior semiconductor manufacturing analyst at TechInsights, was quoted as saying by Reuters on Thursday (2/13/2025).

China is the global growth driver for the global wafer fabrication equipment sector in 2023 and 2024, when the market is in decline due to slumping demand for consumer electronics.

Much of China’s buying is driven by stockpiling as the United States imposes a series of sanctions in an attempt to hamper Beijing’s ability to access and produce chips that could help advance artificial intelligence for military applications or threaten U.S. national security.

On the one hand, Chinese chip companies have continued to make progress despite Washington’s efforts to block access to chips.

Huawei, for example, managed to produce advanced chips last year at a higher cost. They have also expanded significantly into the mature-node chip segment, increasing production capacity and taking market share from Taiwanese rivals.

SOURCE : CNBC INDONESIA