Nandini Roy Choudhury, writer
Brief news
- Japanese semiconductor equipment providers heavily rely on revenue from China, despite being involved in the US-China conflict.
- Tokyo Electron saw a significant increase in its proportion of China revenue, from 23% to 44% in the financial year ending March 2024.
- Screen Holdings also experienced a rise in revenue from China, increasing from 19% to 43% in the fiscal year ending March 2024.
Detailed news
China has been the primary source of revenue for Japanese semiconductor equipment providers, despite the fact that they have been entangled in the U.S.-China conflict.
Tokyo Electron, a Japanese semiconductor equipment behemoth with a market capitalization of nearly $72 billion, experienced a significant increase in its proportion of China revenue from 23% to 44% in the financial year ending March 2024, as indicated by the company’s earnings report.
In the first quarter of the 2025 financial year, that percentage increased to nearly 50%, a significant increase from the 39.3% observed during the same period in the previous year.
In contrast, Screen Holdings’ revenue from China increased from 19% in the fiscal year ending March 2023 to as much as 43% in the fiscal year ending March 2024. The share increased from 23% in the same period last year to 51% in the first quarter of the current financial year.
The company anticipates that the sales proportion of China will be 41% for the fiscal year ending in March 2025.
The U.S. ally’s difficulty in reconciling the White House’s demands with its domestic economic interests is evidenced by the substantial business of Japanese semiconductor companies in China.
According to a statement released by the Department of Commerce on Friday, the United States is implementing new export-control measures, which include those for chip-related commodities and quantum computing.
The manufacturing apparatus that Japanese companies are providing to China is anticipated to be used for legacy chips, which are utilized in vehicles rather than smartphones or for the training of advanced artificial intelligence models.
Bloomberg reported earlier this week that China had threatened to retaliate if Japan continued to expand its export controls on equipment sales to China.
At a regular press briefing on Monday, Mao Ning, the spokeswoman for the Chinese Foreign Ministry, refuted the report and stated that Beijing was “committed to maintaining the security and stability of the global industrial and supply chain.” She also stated that the country’s export control measures have been “just, reasonable, and non-discriminatory.”
According to a CNBC translation of the ministry’s statement in Mandarin, China’s Ministry of Commerce referred to Japan’s initial implementation of export controls to restrict the sale of semiconductor equipment to China in June of last year as a “serious violation of WTO’s mandated duties” and a “abuse of export control.”
The United States and its allies have been exerting increasing pressure on China to restrict its access to the most advanced processors.
China has been unsuccessful in obtaining chip-making equipment from the Dutch company ASML, which is the sole supplier of instruments capable of producing some of the most sophisticated circuits. The export of the apparatus to China has been prohibited by the government of the country.
However, analysts anticipate that China will soon be able to manufacture the majority of the processors required for the majority of applications.
According to a report released on Thursday by the industry organization SEMI, China has increased its purchases of chip-making equipment since the second quarter of 2023. The report indicates that China acquired approximately $25 billion worth of chip equipment in the first half of 2024, which is more than the combined total of the United States, South Korea, Taiwan, and Japan.
Source : CNBC News
