Chipmaking Gear Companies Get More Sales From China Than Ever
(Bloomberg) -- The leading producers of chipmaking equipment are seeing a spike in the percentage of revenue they get from China, as the country stockpiles equipment in an effort to counter US trade curbs on advanced semiconductors.
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The world’s biggest suppliers of essential chip fabrication machinery drew more than 40% of their revenue from Chinese customers in the most recent quarter — and nearly half in the case of Lam Research Corp. Japan’s Tokyo Electron Ltd. hit a record in the share of its shipments to China, while sales to the country made up a high proportion of ASML Holding NV’s revenue despite a ban from shipping its most advanced and lucrative systems there.
A recent tightening of US export restrictions on advanced chip tech has not yet translated into diminished sales to China for gear makers — in fact, it may have accelerated orders. Santa Clara, California-based Applied Materials Inc. on Thursday reported outsized China sales in the quarter ended October and said they will remain elevated in the current period because of some large shipments to a computer memory customer. China’s share will shrink closer to its more typical 30% over time, the company said.
Tokyo Electron earlier said a pause in investment among global chipmakers contributed to China’s rising proportion of sales.
“China’s massive front-loading of existing orders to beat any further export restrictions will likely run out of steam,” said Amir Anvarzadeh of Asymmetric Advisors. “Sooner or later, the market will start discounting these future growth rates in China as they are obviously unsustainable for the medium term. They will get exhausted or blocked by stricter export rules.”
On Thursday, a report of a US criminal investigation into Applied Materials violating export restrictions to China overshadowed the company’s earnings report. Its shares fell as much as 7% in extended trading and also dragged down fellow chipmaking tool makers KLA Corp. and Lam.
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