Amidst global fluctuations in semiconductor markets, China's demand for wafer fab equipment (WFE) stands out, according to a recent note from Bernstein.
The firm's research note suggests China's relentless acquisition of WFE is reshaping the landscape of the semiconductor industry, prompting questions about the sustainability of its rapid expansion.
"While the rest of the industry suffers an unprecedented cyclical swing, the wafer fab equipment (WFE) market is hardly experiencing any given China is buying WFE at an unprecedented pace," notes Bernstein.
The report assesses the economic considerations driving China's WFE spree, attempting to quantify the investment needed to achieve the country's goal of semiconductor self-sufficiency.
It estimates that China would require approximately four years to meet its own needs in Mature Logic if its annual spending remains at last year's level of around US$21 billion.
However, the analysis also highlights potential challenges and uncertainties associated with China's semiconductor ambitions, particularly in Advanced Logic and Memory segments. While China is investing heavily in Mature Logic equipment, its efforts to produce Advanced Logic and Memory entail significant technical and economic risks.
As Bernstein's analysis states, China's unprecedented pace of WFE acquisition poses potentially significant implications for the semiconductor industry's future trajectory and underscores the need for careful monitoring by investors and industry observers.