Japanese chip equipment firms count on China sales amid U.S. moves to block high-end exports to Beijing

Japanese semiconductor equipment providers have been counting on China as their largest source of revenue, even as they have got caught in the U.S.-China crossfire.

Japanese semiconductor equipment powerhouse Tokyo Electronwith a market cap of nearly $72 billion, saw its share of China revenue jump to 44% in financial year ended March 2024 compared with 23% a year earlier, according to the company's earnings report. It increased to nearly 50% in the first quarter of financial year 2025 compared with 39.3% in the same period last year.

Screen Holdings, meanwhile, generated as much as 43% of its total sales from China in the financial year ended March 2024, up from 19% in financial year 2023.

That share rose to 51% in the first quarter of the current financial year from 23% in the same period last year. The company expects China's sales to be 41% for the full fiscal year ending in March 2025.

The large business of Japanese chip companies in China underscores the challenge that the U.S. ally faces in balancing White House's demands with its domestic economic interests.

The manufacturing equipment that Japanese companies are supplying to China is expected to be for legacy chips, used in cars rather than smartphones or for training advanced artificial intelligence models.

Bloomberg reported earlier this week that China had threatened to retaliate if Japan further expanded its export controls on equipment sales to China.

Beijing refuted that report and said it was "committed to keeping the global industrial and supply chain secure and stable," Mao Ning, China's Foreign Ministry spokeswoman said at a regular press briefing Monday, adding that its export control measures have been "just, reasonable and non-discriminatory."

When Japan