China's spending on chipmaking equipment is expected to fall by 6% in 2025, marking its first decline since 2021, according to Canadian research firm TechInsights. The drop follows years of aggressive stockpiling as Chinese firms sought to bypass tightening US export controls. Last year, China accounted for 40% of global semiconductor equipment purchases, but its share is projected to shrink significantly.

Analysts attribute the decline to a combination of overcapacity and the impact of US sanctions, which aim to limit China's ability to develop advanced chips with potential military applications. Despite these restrictions, companies like SMIC and Huawei have continued to push forward, achieving technological breakthroughs by relying on more expensive and labour-intensive manufacturing processes.

China has made strides in producing mature-node chips and expanding its domestic semiconductor industry, with firms like Naura Technology Group gaining global market share. However, the country remains dependent on foreign suppliers for critical tools such as lithography machines, highlighting ongoing challenges in its push for self-sufficiency.