China's semiconductor equipment imports reached $5.1bn in July, rebounding month over month but still down 2% year over year

Overview

The report uses monthly China customs import data to track semiconductor equipment demand and the China sales trends of global equipment suppliers. Total imports improved month over month in July and front-end equipment returned to growth, but year-to-date imports remained down year over year, with clear volume, price, and cyclical divergence across lithography, deposition, etch, and back-end equipment.

Core views

BofA believes China customs import data is an important indicator for observing the China sales trends of global semiconductor equipment suppliers. China accounted for 33.5% of the global wafer fabrication equipment (WFE) market in 2025, compared with 36.2% in 2024, so changes in Chinese demand have a significant impact on the global equipment industry. In July 2026, China's semiconductor equipment import value was $5.1bn, above the three-month average of $3.9bn from April to June 2026 and the twelve-month average of $4.4bn from July 2025 to June 2026; it fell 2% year over year and rose 9% month over month. On a three-month moving-average basis, import value fell 3% year over year and rose 11% month over month. The original report also states that the latter was below the historical average 3MMA month-over-month change of +1% for that month, but the two figures appear inconsistent when read literally. In 2Q26, import value fell 3% year over year and rose 13% quarter over quarter; full-year 2025 import value was $55.3bn, up 6% year over year. The July data brought the year-to-date 2026 decline to 8%, while the report notes that most semiconductor equipment suppliers had previously expected China sales to normalize in 2026. Front-end equipment was the main source of the July month-over-month improvement, with import value reaching $3.9bn, up 4% year over year and 15% month over month. Thermal processing equipment was $290mm, up 71% year over year and 54% month over month; process control equipment was $484mm, up 20% year over year and 9% month over month; other front-end equipment was $482mm, up 14% year over year and down 1% month over month; and lithography equipment was $870mm, up 7% year over year and 3% month over month. Weaker categories included ion implantation equipment at $109mm, down 44% year over year and 6% month over month; etch equipment at $810mm, down 6% year over year but up 60% month over month; and deposition equipment at $883mm, down 2% year over year and up 6% month over month. This indicates that the recovery in total front-end equipment imports in July did not reflect simultaneous improvement across all categories, but was jointly driven by thermal processing, process control, lithography, and the month-over-month rebound in etch. Year to date, front-end equipment import value was $19.5bn, down 7% year over year. Within this, etch was $3.7bn, down 17%; lithography was $3.9bn, down 14%; ion implantation was $785mm, down 13%; other front-end equipment was $2.7bn, down 6%; process control was $2.3bn, down 4%; and deposition was $5.0bn, down 1%. Thermal processing, by contrast, grew 23% to $1.2bn. Therefore, the return to positive year-over-year growth in front-end equipment for a single month has not yet reversed the year-to-date decline in most core categories, with thermal processing the main exception. Other equipment categories were generally weaker. July imports of assembly and packaging equipment were $310mm, down 15% year over year and 25% month over month, while year-to-date imports fell 15% to $2.2bn; within this category, wire bonding equipment grew 61% year over year and fell 29% month over month, while mounting and bonding equipment grew 20% year over year and fell 15% month over month. Wafer manufacturing equipment was $116mm, down 41% year over year and up 18% month over month, with year-to-date imports down 28% to $678mm. Flat-panel display manufacturing equipment was $105mm, down 44% year over year and 50% month over month, but year-to-date imports still grew 6% to $1.4bn. Spare parts were $556mm, down 11% year over year and up 16% month over month, with year-to-date imports down 6% to $3.1bn. Testing equipment was smaller in scale, at $66mm in July, up 45% year over year and 44% month over month, but year-to-date imports remained down 3% to $281mm. The import mix is also changing. The report notes that the share of back-end equipment has declined over the years, while lithography equipment has grown disproportionately relative to other categories since the second half of 2023. Year to date in 2026, Japan accounted for 25% of China's semiconductor equipment import value, while Japan and the Netherlands together accounted for 39%. In terms of supplier mapping, the disclosed China equipment sales of the five largest equipment companies—Applied Materials, Lam Research, Tokyo Electron, ASML, and KLA—were, on an annual aggregate basis, equivalent to approximately 75% of China's customs import value for front-end equipment over the same periods, while the quarterly ratio ranged from 58% to 85%; the ratio was 79% in 2Q26. Based on this, BofA believes monthly import data can serve as a practical proxy for the China sales trends of global equipment suppliers, although the quarterly relationship can fluctuate. Lithography equipment import value was $870mm in July, up 7% year over year and 3% month over month; import volume was flat year over year and up 29% month over month, while average selling price (ASP) rose 7% year over year and fell 20% month over month. July ASP was $13.8mm, slightly below the prior twelve-month average of $13.9mm. In 2Q26, lithography import value fell 13% year over year and 25% quarter over quarter, volume fell 27% year over year and rose 9% quarter over quarter, and ASP was $9.2mm, below the prior four-quarter average of $13.8mm. From 2021 to 2024, China's lithography equipment import value recorded a 32% compound annual growth rate, driven primarily by higher ASP. In 2025, import value was $10.6bn, down 1% year over year; full-year volume was 745 units, down 23%, while ASP was $14.2mm, 28% higher than in 2024. Through July 2026, lithography import value was down 14% year over year, indicating that the single-month growth in July remained within the context of a year-to-date decline. Dutch lithography equipment constitutes the majority of lithography imports. In July 2026, Dutch lithography systems accounted for 91% of total lithography import value but only 38% of import volume, and their ASP was 2.5 times that of all lithography systems. During the month, the import value of Dutch lithography systems rose 7% year over year and fell 1% month over month; volume rose 19% both year over year and month over month, while ASP fell 10% year over year and 17% month over month. Since December 2023, approximately 90% or more of China's monthly lithography system import value has consistently come from the Netherlands. Since data became available in January 2015, Dutch lithography customs import data has had a 95% correlation with ASML's disclosed China equipment sales; Dutch import value was equivalent to 86% and 96% of ASML's disclosed China equipment sales in 2023 and 2024, respectively. In 2025, Dutch lithography system import value was $9.7bn, up 4%; volume was 189 units, down 24%; and ASP was $51.3mm, 38% higher than in 2024, further indicating that import-value growth was driven primarily by product pricing or product mix rather than volume. Deposition equipment import value was $883mm in July, down 2% year over year and up 6% month over month; volume fell 12% year over year and 2% month over month, while ASP rose 12% year over year and 8% month over month, indicating that higher ASP offset part of the volume decline. In 2Q26, import value grew 9% year over year and 43% quarter over quarter, volume grew 12% year over year and 20% quarter over quarter, and ASP was $3.6mm, above the prior four-quarter average of $3.3mm. From 2021 to 2024, deposition import value recorded a 12% compound annual growth rate, and in 2025 it grew 8% to $8.3bn, driven jointly by volume and ASP. Deposition equipment has historically accounted for approximately 19% to 26% of WFE, while Applied Materials' global deposition equipment market share has remained in the leading range of 37% to 48%. Etch equipment import value was $810mm in July, down 6% year over year and up 60% month over month; volume fell 12% year over year and rose 15% month over month, while ASP rose 7% year over year and 39% month over month. The sharp month-over-month rebound was supported by increases in both volume and ASP, but year-over-year import value remained negative. In 2Q26, etch import value fell 28% year over year and 5% quarter over quarter, volume fell 2% year over year and rose 43% quarter over quarter, and ASP was $2.5mm, below the prior four-quarter average of $3.6mm; year-to-date import value fell 17%. Therefore, the report depicts a pattern in which a single-month sequential recovery coexists with year-to-date weakness, rather than a synchronized recovery across industry categories.

Analysis framework

The report first uses monthly China customs import value to measure overall equipment demand and examines trends through year-over-year, month-over-month, quarterly, year-to-date, and three-month moving-average comparisons; it then breaks the data down by front-end, back-end, and specific equipment categories. For core categories such as lithography, deposition, and etch, the report further decomposes import value into import volume and ASP to distinguish changes in volume from changes in pricing or product mix. Finally, the report compares customs import value with the disclosed China sales of the five largest equipment suppliers on annual and quarterly bases and tests the applicability of this proxy indicator using the historical correlation between Dutch lithography imports and ASML's China sales.

Methodology notes

• Industry/Sector Analysis FrameworkVolume-price decomposition

  Decomposition of import value, import volume, and average selling price

  The report decomposes equipment import value into changes in volume and ASP to determine whether growth or decline comes from procurement volume, equipment prices, or product mix. For example, deposition equipment import volume declined in July, but higher ASP cushioned the decline in import value.

• Cycle and Business Conditions Framework

  Three-month moving average (3MMA)

  The 3MMA uses the average of the most recent three months of data to reduce single-month volatility. The report compares year-over-year and month-over-month changes in both monthly values and the 3MMA to assess whether equipment import trends are persistent.

• Industry/Sector Analysis Framework

  Using customs import data as a proxy for suppliers' China sales trends

  The report matches China's front-end equipment import value with the disclosed China sales of five major suppliers. Because the annual coverage ratio is approximately 75% and the quarterly coverage ratio ranges from 58% to 85%, BofA uses monthly customs data as a tracking indicator for suppliers' China sales.

• Industry/Sector Analysis FrameworkIndustry Concentration Analysis

  Comparison of source-country and supplier market shares

  The report analyzes the concentration of import sources and the equipment supply landscape using the import shares of Japan and the Netherlands and Applied Materials' share of the deposition equipment market.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Five largest global semiconductor equipment suppliers (Applied Materials, Lam Research, Tokyo Electron, ASML, KLA)

  The report uses China's customs import value for front-end equipment as a proxy for tracking these suppliers' China sales trends.

  Strengths

  The five companies' disclosed China equipment sales are equivalent to approximately 75% of China's front-end equipment import value on an annual basis, with the ratio at 79% in 2Q26.

  Weaknesses

  The corresponding ratio fluctuates between 58% and 85% quarterly, and imports are not perfectly synchronized with company revenue recognition.

  Comparison

  The report compares the five companies' aggregate sales with China's total front-end equipment import value.

• ASML

  The report views Dutch lithography system import value as an important indicator for tracking ASML's China equipment sales.

  Strengths

  Since January 2015, Dutch lithography import data has had a 95% correlation with ASML's disclosed China equipment sales.

  Weaknesses

  The report notes that the quarterly trends of the two data series fluctuate.

  Comparison

  Dutch import value was equivalent to 86% and 96% of ASML's disclosed China equipment sales in 2023 and 2024, respectively.

• Applied Materials

  Its business is related to the deposition equipment demand tracked in the report.

  Strengths

  The report shows that Applied Materials' global deposition equipment market share has remained in the leading range of 37% to 48% for many years.

  Comparison

  It remains the leader in the global deposition equipment competitive landscape presented in the report.

Key data

• Semiconductor equipment import value in July 2026$5.1bnDown 2% year over year and up 9% month over month; above the prior three-month average of $3.9bn and the prior twelve-month average of $4.4bn
• Change in July import-value 3MMAYear over year -3%, month over month +11%The report uses a three-month moving average to smooth single-month volatility
• Overall year-to-date change in 2026-8% yoyThe report states that most equipment suppliers expect China sales to normalize in 2026
• China's share of global WFE33.5%Share in 2025; 36.2% in 2024
• Front-end equipment import value in July$3.9bnUp 4% year over year and 15% month over month
• Year-to-date front-end equipment import value$19.5bnDown 7% year over year
• Lithography equipment import value in July$870mmUp 7% year over year and 3% month over month; volume flat year over year and up 29% month over month
• Deposition equipment import value in July$883mmDown 2% year over year and up 6% month over month; ASP up 12% year over year
• Etch equipment import value in July$810mmDown 6% year over year and up 60% month over month; ASP up 39% month over month
• Thermal processing equipment import value in July$290mmUp 71% year over year and 54% month over month, the strongest year-over-year performance among the major categories
• Ratio of five major suppliers' sales to import value79%The ratio of the five major suppliers' disclosed China sales to front-end equipment import value in 2Q26; the long-term annual ratio is approximately 75%
• Correlation between Dutch lithography imports and ASML's China sales95%Based on customs import data and company disclosures since January 2015
• Year-to-date 2026 shares of major source countriesJapan 25%; Japan and the Netherlands combined 39%Shares of China's total semiconductor equipment import value

Impact & implications

The report believes that the month-over-month rebound in July indicates that China's semiconductor equipment procurement activity improved from previous months, but overall year-to-date imports and most front-end categories remained down year over year, consistent with the normalization trend in China sales described by suppliers. The import mix continues to shift toward front-end equipment and lithography, while volume and ASP trends vary considerably across categories; therefore, total import value alone is insufficient to determine changes in the sales of all equipment suppliers. The high coverage of customs data relative to the disclosed sales of the five major suppliers makes it suitable for monthly trend tracking, but fluctuations in the quarterly ratio mean the two are not perfectly synchronized.

What to watch

• Continue tracking China's monthly semiconductor equipment import value and 3MMA to determine whether sales normalization in 2026 and the July month-over-month improvement can continue.
• Monitor changes in the import volume and ASP of lithography, deposition, etch, thermal processing, and process control equipment to distinguish the effects of demand volume and product mix.
• Monitor the corresponding ratio between the China sales subsequently disclosed by the five major equipment suppliers and customs import value for front-end equipment.
• Monitor how Dutch lithography system import value, volume, and ASP correspond with ASML's China equipment sales trends.
• Monitor whether the year-over-year declines in assembly and packaging, wafer manufacturing, and flat-panel display equipment narrow.