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China’s Chipmaking Equipment Purchases Expected to Decline in 2025

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China’s spending on chipmaking equipment is projected to decline this year after three consecutive years of growth, driven by overcapacity and U.S. sanctions, according to a report released by Canadian semiconductor research firm TechInsights on Wednesday.

China has led global purchases of wafer fabrication equipment for the past two years, buying $41 billion worth of tools in 2024 and accounting for 40% of global sales. However, spending is expected to fall to $38 billion in 2025, a 6% year-over-year decline, with China’s share of global purchases dropping to 20%, marking the first decrease since 2021, according to Boris Metodiev, a senior semiconductor manufacturing analyst at TechInsights.

“We can see some slowdown in Chinese spending due to export controls and overcapacity,” Metodiev stated during an online seminar.

China had been a key growth driver in the global wafer fabrication equipment sector in 2023 and 2024, even as demand for consumer electronics declined globally. Much of the country’s recent equipment purchases were spurred by stockpiling in response to U.S. sanctions aimed at limiting China’s access to advanced chip technology, particularly those with potential military applications.

Despite these sanctions, Chinese companies such as Semiconductor Manufacturing International Corporation (SMIC) and Huawei have made advancements. Last year, they produced an advanced chip using more labor-intensive and costly methods. Chinese firms have also expanded significantly in the mature-node chip segment, boosting production capacity and gaining market share from Taiwanese competitors.

However, SMIC warned on Wednesday of potential oversupply risks in the mature-node chip market.

Leading Chinese equipment manufacturers like Naura Technology Group and AMEC have also expanded globally, with Naura now ranking as the world’s seventh-largest equipment maker by sales. Despite these efforts to bolster self-sufficiency, China still faces significant challenges in producing lithography systems and testing and assembly tools.

Dutch company ASML, the largest manufacturer of lithography machines, continues to dominate this sector. In 2023, Chinese companies provided only 17% of the testing tools and 10% of the assembly equipment used within the country, Metodiev added.

Huawei Chairman Announces 2024 Revenue Exceeded $118 Billion

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Huawei’s chairman, Liang Hua, announced on Wednesday that the company surpassed 860 billion yuan ($118.27 billion) in annual revenue for 2024, marking a significant recovery after the impact of U.S. sanctions. The company experienced a remarkable 22% year-on-year growth compared to 2023, when it reported 704.2 billion yuan in revenue. This marks Huawei’s fastest growth in four years, as it continues to adapt and rebuild its operations.

Liang made these remarks at a forum in Guangzhou, confirmed by a Huawei spokesperson. He emphasized that Huawei’s 2024 results align with the company’s expectations, with ICT infrastructure remaining stable, the consumer business returning to growth, and the smart car solutions business rapidly developing. He added that the company’s annual sales revenue would exceed 860 billion yuan.

Huawei’s consumer business saw a strong rebound beginning in August 2023, when it launched new smartphones featuring locally-produced chipsets that successfully navigated U.S. sanctions. This resurgence has allowed Huawei to capture a 16% share of the Chinese smartphone market, overtaking Apple, according to Canalys data.

 

DeepSeek’s Global Success Sparkles with National Pride in China

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Chinese bloggers, state media, and citizens are celebrating the rapid success of DeepSeek, the homegrown AI startup, viewing its rise as a symbol of China’s resilience against Western efforts to constrain its tech industry. Last week, DeepSeek launched a free AI assistant that claims to use less data at a fraction of the cost of competing services. By Monday, it had surpassed U.S. rival ChatGPT in downloads on Apple’s App Store, prompting a significant selloff in tech shares globally.

DeepSeek’s ability to rival the capabilities of OpenAI while offering a more affordable alternative has raised concerns about the sustainability of profit margins and business models of U.S. AI giants such as Nvidia and Microsoft. In China, the startup’s success has been seen as a victory against U.S. efforts to block access to advanced semiconductors, which are critical for AI development.

“This symbolizes that U.S. containment, persecution, and sanctions in advanced technology against China have completely failed,” wrote military commentator Chen Xi on his WeChat account. This sentiment aligns with statements from former U.S. President Donald Trump, who suggested that DeepSeek’s achievements should spur American firms to innovate and that it was beneficial for Chinese companies to introduce cheaper, faster AI technology.

In Zhejiang, where DeepSeek is based, the provincial government’s media office published a widely shared essay celebrating the company’s success. The article, read more than 100,000 times, declared, “The moon overseas is not actually more round. Whatever others can do, we can also do—and even do it better.” The essay pushed back against both overly optimistic and overly pessimistic views of China’s technological progress.

This wave of pride surrounding DeepSeek mirrors the response to Huawei’s surprise launch of the Mate 60 Pro smartphone in 2023, which came despite U.S. sanctions. At that time, the state-backed Global Times praised Huawei’s ability to produce high-end smartphones, arguing that the U.S. crackdown had failed.

The reaction from the Chinese public has been equally supportive. Chen Jianuo, a 38-year-old Beijing resident, expressed pride over DeepSeek’s international success, reflecting on the positive global attention the company has garnered. “China has made great progress in AI development, and I hope our technological growth continues,” she shared.

Leo Li, a 24-year-old student, also voiced his pride, saying, “It’s exciting that a Chinese company is on par with Meta and OpenAI. As a Chinese citizen, it feels great to see our AI research becoming a global sensation.”