The global appetite for mobile phones, DVD players and flat screen TVs has boosted sales of microchip-making tools by 50% over the past year.
Chinese electronic manufacturers quadrupled their orders for chip equipment, and overall sales reached $3.9bn (£2.1bn) in the year to June.
The Semiconductor Equipment Association of Japan (SEAJ) said the huge demand for chips would continue to grow.
The sales data represents the highest percentage growth in 21 months.
Chinese plants
Factories are gearing up to meet the demand for digital products anticipated in 2007.
Toshiba and SanDisk have announced a joint investment of $5.1bn to build a new chip plant in Japan.
Chip equipment sales grew by 100% in the US and Canada - but this growth was dwarfed by the Chinese expansion in chip-making capacity.
Chinese companies bought 353% more chip-making tools in the period than in the previous year, purchasing equipment worth $443m for the country's booming electronics manufacturing sector.
Japanese and US industry bodies compile statistics on microchip-making tool sales.
SEAJ works with the California-based Semiconductor Equipment and Materials International group (SEMI) to monitor industry demand.
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