China's Chip Self-Sufficiency Push Hits Japanese Equipment Sales
Japan’s largest semiconductor equipment makers are seeing their sales to China weaken for the first time, as Beijing intensifies efforts to bolster its domestic chip industry. Five major Japanese manufacturers recorded a combined 10% drop in sales to China for the fiscal year ending 31 March 2026, according to Nikkei Asia. The decline is linked to China’s push to strengthen its homegrown industry.
Observers in China argue that Japan’s increasingly strict chip export restrictions are proving counterproductive. Meanwhile, Beijing’s semiconductor self-sufficiency strategy is helping local companies seize market share previously held by foreign suppliers.
The five companies—Tokyo Electron, Advantest, Screen Holdings, Disco, and Kokusai Electric—posted total sales in China of 1.47 trillion yen (approximately US$9.19 billion), down 12% from the previous fiscal year. At Tokyo Electron, China’s contribution to total revenue fell to 27% in the January-March 2026 quarter, a seven-percentage-point drop year-on-year and a sharp decline from the 50% share recorded in the April-June 2024 quarter.
According to Global Times, the steepest declines were seen in companies producing front-end process equipment for circuit fabrication on silicon wafers. Tokyo Electron, Screen Holdings, and Kokusai Electric collectively experienced a nearly 20% drop in China sales compared to the previous year.
Senior Chinese technology analyst Ma Jihua noted that the semiconductor supply chains of China and Japan have historically been highly integrated, with extensive cooperation spanning upstream and downstream sectors. He said the relationship was fundamentally mutually beneficial. However, after Japan aligned with US-led restrictions on China’s semiconductor sector, Chinese companies were forced to accelerate innovation and localise technology.
Ma assessed that years of investment and technological breakthroughs have strengthened China’s capabilities in semiconductor equipment and materials. This has reduced reliance on Japanese suppliers and serves as evidence that the restrictive policies are ultimately harming Japan’s own industry.
Japan announced export controls on 23 types of semiconductor manufacturing equipment in 2023, in step with US efforts to limit China’s ability to produce advanced chips. On 26 April 2024, Japan unveiled plans to impose export controls on a range of sensitive products, including semiconductor-related items, and opened a public consultation on the policy. On 3 April 2025, the Japanese government officially enforced export controls on more than a dozen products linked to the semiconductor industry. China’s government has repeatedly voiced objections to Japan’s export control policies. Responding to the April 2025 decision, a spokesperson for China’s Ministry of Commerce stated that the semiconductor industry is a highly globalised sector.