Semiconductor chip machine sales have fallen to the lowest level in two years as the U.S. makes new restrictions on overseas trading.
- Chinese customers bought $2.3 billion worth of chip-making equipment in November, a drop of 40% from the year before, marking the lowest level since May 2020, according to the country’s customs data.
- Shipments from Japan fell 40% to $687 million in November, while shipments from South Korea fell 50% from September to $227 million in November.
- The sharp decline in shipments to China in November proves that America’s restrictions are working as the country tries to prevent the technology from helping the Chinese military.
Why it’s news
In October, the U.S. began making restrictions to stop the imports of semiconductor chip technology to China to keep the technology from helping China’s military and becoming a security risk to the U.S.
Not only did the restrictions stop the export of chips, but it also stopped any other country that used U.S. technology to produce the chips from sending them to China.
In November, chip imports to China decreased significantly, proving that the U.S.’s restrictions are working and taking a toll on the country. Imports for November hit the lowest level since May 2020.
Before America implemented the restrictions, China was the leading force in semiconductor chip making, and the companies are expecting a significant hit in revenue after these restrictions have been put in place. Lam Research said in October that it expects to take a revenue hit of between $2 billion and $2.5 billion next year due to the new rules, Applied Materials expects a $2.5 billion loss, while KLA expects a $100 million loss, according to Wall Street Journal writer Liza Lin.