Japan's Five Chip Equipment Makers Post First China Sales Drop

Japan's five largest chipmaking equipment suppliers just logged a milestone they would prefer not to mark. Nikkei Asia reported that Tokyo Electron, Advantest, Screen Holdings, Disco, and Kokusai Electric recorded combined China sales of 1.47 trillion yen (about $9.19 billion) for the fiscal year ended March 31 -- down 12 percent from fiscal 2024 and the first-ever combined decline for this group.

Nikkei attributes the drop to Beijing's efforts to promote its homegrown semiconductor equipment industry. Naura Technology Group is reportedly gaining share in dry etching and physical vapor deposition, two equipment categories where Japanese firms have long been dominant. Chinese domestic competitors are not just filling gaps left by export controls; they appear to be converting that foothold into durable market share.

The distinction between export-control-driven displacement and demand that has genuinely migrated to domestic alternatives is what the reporting does not resolve. Japan imposed restrictions on 23 categories of semiconductor manufacturing equipment in July 2023, aligning with parallel moves by the US and the Netherlands. How much of the 12 percent revenue decline traces to that policy versus deliberate fab-level substitution would change the outlook considerably -- a revenue loss from export controls is partly recoverable if the rules shift; a loss to competitive domestic alternatives is structurally harder to reverse. The reporting also does not break down individual company performance, so whether the pain is concentrated or broadly shared across all five suppliers remains unclear.

What is unambiguous is that China was the primary growth driver for this segment for years, and that growth has now gone negative. The 'first-ever' framing in the headline carries real weight for that reason, not as boilerplate.