As of March 31 of this fiscal year, the combined sales of Japan's top five chip manufacturing equipment manufacturers in China decreased by 10%.
This is the first time this data has seen a decline since history began. According to the Japanese media "Nikkei Asian Review," on June 21, China manufacturers are taking market share from Japanese and Western companies, driven by efforts to promote domestic industry development.
According to reports from five Japanese companies—Tokyo Electron, EDV Test, Skullin Group, Disco, and International Electric—in the last fiscal year, their total sales in the Chinese market amounted to 1.47 trillion yen (approximately 58.8 billion RMB), a decrease of 12% compared to the previous fiscal year.
For equipment manufacturers involved in the previous process (where circuits are formed on silicon wafers), the decline is particularly significant. The combined sales of Tokyo Electron, Skullin Group, and International Electric to China decreased by nearly 20% compared to the previous year.
In addition, in the first quarter of this year, Tokyo Electronics's sales in China accounted for 27% of its total sales, a decrease of 7 percentage points compared to the same period last year. This proportion has significantly dropped from 50% in the second quarter of 2024.
March 26, 2026, Shanghai, 2026 China International Semiconductor Exhibition. The picture shows the booth of “Electric Technology Materials”, with visitors paying attention to the 12-inch silicon carbide wafers. Oriental IC
However, compared to the stagnant sales of equipment in the previous process, the sales of equipment in the subsequent process by Japanese manufacturers are continuing to grow. In the last fiscal year, the sales of major testing equipment manufacturers Edvan Testing increased by approximately 20% in the Chinese market, and Disco’s sales also increased by nearly 10%.
According to Nikkei Asia, semiconductor equipment is a field where Japanese companies maintain their competitiveness. However, as Chinese companies rise in the chip manufacturing sector, they are starting to capture market share in the manufacturing equipment domain.
Apart from Japanese companies, major European and American companies such as ASML, Applied Materials, and KLA Corporation also face difficulties in the Chinese market. As the world's largest equipment manufacturer, ASML's sales to China in the first quarter of this year dropped to 19%, a decrease of 8 percentage points compared to the previous year.
However, according to data from the international industry organization SEMI, China's equipment market accounts for 37% of the global market. This market is expected to remain stable in 2025, with a value of $49.3 billion.
Analysis indicates that foreign companies’ sales have decreased, but the market size in China has remained stable, due to the rapid growth of local Chinese manufacturers.
According to reports, Chinese chip manufacturers have expanded their semiconductor wafer factories by purchasing manufacturing equipment from Japan, the United States, and Europe. However, in recent years, the U.S. government has continuously tightened export restrictions on China to hinder the development of China’s semiconductor industry. In this context, China has made efforts to establish its own domestic semiconductor supply chain, and Chinese companies are developing rapidly.
Regarding the restrictions imposed by the US side, Mao Ning, a spokesperson for the Chinese Ministry of Foreign Affairs, previously stated that it has been proven that the so-called 'small courtyard with high walls' cannot stop China's pace of innovation and development, nor is it conducive to the healthy development of the entire industry, including US enterprises.
According to data from Japanese research company MIR, last year, the localization rate of Chinese chip manufacturing equipment in the pre-process stage reached 21% in terms of value, a significant increase from 10% in 2021. The proportion of post-process stages (including packaging) increased from 19% to 36%.
Among chip manufacturers, Chinese companies are strengthening their presence in the fields of logic semiconductors for automotive control and power semiconductors for voltage regulation. They have already started exporting to regions such as Southeast Asia. Many of these companies are expanding their production capacity by introducing manufacturing equipment manufactured in China.
Regarding this, Koichi Kawai, the president of Tokyo Electronics, responded that the company's 'advantages in terms of safety performance, environmental performance, and production capacity remain unchanged', and will continue to lead the industry's development. While facing challenges, Skullin Group has seen the huge business opportunities in the Chinese market, as Chinese companies have already started producing high-performance semiconductors on a large scale.
"Chinese domestic equipment manufacturers are rapidly expanding," said Jun Okamoto, a member of the PwC consulting team. "Foreign companies' market share will continue to decline in China."
