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China to Lead in Chipmaking Investment in 2025, SEMI Reports

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China is set to continue its dominance in global chipmaking investments in 2025, despite a notable year-over-year decline, according to a report from industry group SEMI. The country is expected to outpace all other regions in spending on new computer chipmaking equipment, followed by Taiwan and Korea.

Global Investment Growth

SEMI’s forecast for global fabrication plant investments shows a 2% increase in 2025, reaching $110 billion. This marks the sixth consecutive year of growth, driven largely by the demand for tools needed to produce chips for artificial intelligence (AI). SEMI predicts that the AI boom will have an even stronger impact on the industry in 2026, with an expected investment growth of 18%.

China’s Strategic Push and Decline in Investment

China has been the largest consumer of chips for years, and its chipmaking sector saw a massive push starting in mid-2023. With government support, China has accelerated efforts to reduce its dependence on imported chips, particularly in response to U.S. restrictions. Despite this surge, SEMI forecasts that China’s chipmaking spending will drop by 24% in 2025, falling to $38 billion from $50 billion in 2024. However, this still keeps China ahead of other major chip-producing countries like Korea, where SK Hynix and Samsung are expanding memory chip production, with investments projected at $21.5 billion.

Spending in Other Key Regions

Taiwan, home to TSMC, a major foundry for AI chips, is projected to spend $21 billion on chipmaking equipment in 2025. In comparison, spending in Korea will be significant, but not as high as China’s, with $21.5 billion expected. The Americas and Japan are each expected to invest $14 billion, while Europe’s investment is projected at $9 billion.

Key Players in the Equipment Market

The top players in the chip equipment market include ASML, Applied Materials, KLA, LAM Research, and Tokyo Electron. ASML, the largest chip equipment manufacturer, anticipates sales of €32-38 billion in 2025, maintaining a dominant market share in the lithography sector. Chinese equipment makers, such as Naura, AMEC, and SiCarrier (affiliated with Huawei), are also gaining traction in the market.

Exxon to Invest $100 Million in Facility for Producing Cleaning Alcohol for Semiconductor Industry

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Exxon Mobil has announced plans to invest $100 million to upgrade its chemical plant in Baton Rouge, Louisiana, to produce high-purity isopropyl alcohol (IPA) used in the semiconductor industry. The upgrade, which is scheduled to be completed by 2027, will cater to the growing demand for highly pure IPA, a crucial substance in cleaning and processing microchips, particularly as the tech industry booms.

Strategic Move Amid Chip Industry Growth

The demand for this specialized alcohol is surging, driven by the rise of advanced artificial intelligence and the subsequent growth of the chip industry. Companies are ramping up the construction of data centers and developing in-house chips to train AI systems, further increasing the need for high-purity cleaning agents.

Exxon’s chemical plant upgrade will enable the company to produce IPA at scale, supporting the construction of semiconductor fabrication plants (fabs) across the U.S. “It will create production at scale and allow us to support the fabs that are under construction in the U.S.,” said Frederik Donkers, Exxon’s vice president of intermediates.

Focus on U.S. Market

The production of highly pure IPA will primarily serve U.S.-based customers, as the longer shipping distances associated with international exports could compromise the purity of the product. Although Exxon did not disclose any new customer agreements for the IPA supply, the move addresses a gap in the domestic supply chain, as U.S. companies have historically relied on imports from Taiwan and Japan for this high-quality cleaning alcohol.

European Lawmakers Urge Quick Action on Chips Act 2.0 to Boost AI and Semiconductor Investment

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European lawmakers have called on the European Commission to expedite the development of a new support program for the region’s semiconductor industry, particularly focusing on investment in AI chips and addressing technological gaps. A letter, authored by representatives from three major factions in the European Parliament and signed by 54 lawmakers, emphasized the urgency of bolstering Europe’s semiconductor sector.

The letter highlighted recent geopolitical developments that have underscored the need for Europe to secure continued access to advanced technologies. Lawmakers expressed concern that the progress under the original 2023 Chips Act has been too slow, urging the European Commission to act more swiftly.

The lawmakers’ plea follows a similar call from leading European chip industry firms, which have also voiced concerns over the pace of progress. While the European Commission has signaled plans to launch five new investment packages this year to support European industries, including AI, the letter criticized the absence of semiconductor-focused measures in these packages. Semiconductors, the lawmakers stressed, are central to the EU’s industrial ambitions, and the current lack of targeted support for the sector could hinder Europe’s technological and economic future.

The initial EU Chips Act prompted a wave of investment but fell short of attracting advanced chipmakers, with Intel notably halting plans for a large new factory in Germany. The lawmakers urged the Commission to address these gaps and act quickly, especially given the current geopolitical realities surrounding competition between the United States and China.

The letter also emphasized the need for Europe to protect its key players from the implications of extraterritorial laws and the escalating global competition in the semiconductor industry.