Trump’s Semiconductor Dilemma: Sanctions Fuel the Very Growth They Meant to Stop
Chinese vs. Non-Chinese WFE Growth: A 2024 Reality Check
The U.S. government’s export controls on semiconductor manufacturing equipment were intended to isolate China technologically.
Instead, they have catalyzed a market bifurcation that now works to China’s advantage. A detailed review of 2024 revenue data reveals just how stark the divergence has become between Chinese and non-Chinese equipment vendors.
According to Chart 1, Chinese wafer fab equipment (WFE) companies recorded an average year-over-year revenue increase of 36.7% in 2024. In contrast, non-Chinese vendors—including industry heavyweights from the United States, Europe, and Japan—grew at a subdued average of 11.9%. The highest-performing Chinese companies, such as Tuojing Tech, AMEC, and ACMR, grew by 51.7%, 44.7%, and 38.4%, respectively. Meanwhile, global leaders like Applied Materials (NASDAQ: AMAT) and KLA (NASDAQ: KLAC) posted minimal gains, and ASML (NASDAQ: ASML) saw a revenue decline of 0.7%.
Chart 1: 2024 YoY Revenue Change—Chinese vs. Non-Chinese WFE Companies
Source: The Information Network (www.theinformationnet.com)
This performance gap reflects not just market momentum, but a deeper structural shift. Export restrictions have redirected Chinese semiconductor investment toward mature-node fabs and tool categories that fall outside the scope of U.S. controls. This has created a surge in demand for domestic equipment—especially in process segments such as etch, clean, and deposition—where Chinese suppliers now compete effectively.
China’s Strategic Turn to 28nm and Above
This redirection of capital becomes even clearer when examining capacity trends. China’s expansion in 28nm manufacturing has not only allowed it to bypass sanctions but has also driven growth for both domestic foundries and equipment vendors. Rather than pressing further into leading-edge logic nodes constrained by EUV restrictions, China has focused on scaling mature-node infrastructure—technologies sufficient for analog ICs, image sensors, MCUs, and industrial chips.
As shown in Table 1, China’s share of global 12-inch mature-node wafer capacity has doubled from 20% in 2020 to a projected 40% in 2025. This is not a marginal trend. It represents a decisive shift in global production capacity, and it is no coincidence that this timeline overlaps with the intensification of U.S. export restrictions.
This mature-node buildout explains why companies like AMEC and ACMR are seeing explosive growth. Their tools are well-suited to 28nm-class processes, which now account for an increasing share of China’s wafer starts. It also explains why Chinese foundries are absorbing tools in high volumes—often using capital previously allocated to now-restricted advanced-node programs.
Reconciling Import Growth with Shifting Market Share
While China continues to rely heavily on imports, the composition of those imports is evolving. The country imported $28.27 billion in surface-mount equipment (SME) in 2022, followed by $36.60 billion in 2023 and $49.53 billion in 2024. Yet the foreign vendors capturing that revenue are increasingly competing with domestic firms for each incremental dollar.
According to Table 2, the top six foreign vendors—ASML, Applied Materials, Lam Research (NASDAQ: LRCS), KLA (NASDAQ: KLAC), Tokyo Electron (OTCMKTS: TOELY), and Screen Holdings (TYO: 7735)—collected $17.55 billion in revenue from China in 2022. That figure jumped to $26.76 billion in 2023 and reached $33.40 billion in 2024. While these are impressive growth figures in absolute terms, their share of China’s total SME purchases declined in 2024. After peaking at 73% in 2023, their combined share dropped to 67% last year.
This expanded view of Table 2 quantifies the heart of Trump’s semiconductor dilemma. In 2023, foreign vendors posted explosive 52.5% growth, capturing the front-loaded impact of pre-license tool orders. Yet domestic Chinese revenues declined by 8.2%that year—indicating a temporary crowd-out by imports. But in 2024, the situation reversed. Foreign vendor growth slowed to 24.8%, while Chinese domestic vendor revenue surged 63.9%—grabbing nearly half of the total incremental WFE growth in China. This confirms that China’s substitution strategy is no longer theoretical—it is now actively reshaping the market.
Mainland China Semiconductor Equipment Revenues by Quarter
Chart 2 provides a long-term visual trend of semiconductor equipment sales into mainland China by quarter, from Q1 2015 through Q4 2024. What it shows is a relentless upward slope in tool spending—punctuated by temporary dips around regulatory events and pandemic slowdowns, but consistently reverting to higher highs. The dotted trendline illustrates the long-term linear growth trajectory. The record-setting revenue streak in 2024 quarters confirms that China’s semiconductor tool investment is not only intact, but expanding sharply, despite intensifying sanctions.
Chart 2: Semiconductor Equipment Revenues—Mainland China by Quarter
Source: The Information Network (www.theinformationnet.com)