Japan’s semiconductor equipment industry is learning what happens when your biggest customer gets cut off. Export restrictions targeting China’s access to advanced chipmaking technology have driven a 10% decline in China sales across Japan’s chip equipment sector, forcing manufacturers to rethink their revenue playbooks in real time.
The numbers are stark. Tokyo Electron, Japan’s largest semiconductor equipment maker, saw its China sales plummet from 279.4 billion yen to 175.5 billion yen in the third quarter of fiscal year 2026.
The export control squeeze
Japan imposed restrictions on 23 categories of semiconductor manufacturing equipment back in July 2023, aligning with parallel efforts by the US and the Netherlands to choke off China’s access to advanced chip production tools.
China’s share of Tokyo Electron’s total sales dropped to 31.8%, an 8.5 percentage point decline compared to the previous quarter. TEL had previously expected China to account for 41-42% of its sales. The company now projects that figure will stabilize around 30% in the second half of FY2026.
