Tokyo Electron, one of Asia’s largest makers of semiconductor equipment, is finding the effect of American and Japanese controls, which bar the sales of cutting-edge chips and chipmaking equipment to China, to be smaller than expected, thanks to surging Chinese demand for less advanced machinery. The company generated 43% of its sales from China last quarter, up from 24% a year ago, head of investor relations Junko Takagi told the Financial Times.

Kokusai Electric Corp., another Japanese equipment maker, is also expanding its presence in China to match an expected increase in demand. China could soon make up just under 50% of the company’s revenue, up from over 40% and above the historical level of 30%, CEO Fumiyuki Kanai forecast in an interview with Bloomberg. Kanai expects investments across memory, logic, and power chips at 28-nanometers and larger.

“Countless small-scale fabrication plants are springing up like mushrooms in China,” Kanai said.

While Japan’s chip manufacturing is decades behind its competitors like Taiwan and South Korea, the country is still a major producer of the machinery used to make the chips themselves. This equipment enables companies like Taiwan Semiconductor Manufacturing Company or Samsung to make the tiny semiconductors that power our electronic devices.

Earlier this year, Japan and the Netherlands, another major producer of chipmaking equipment, agreed to join the U.S. in limiting sales of cutting-edge chipmaking equipment to China.

China has been investing in so-called legacy chips as the U.S. puts the screws on more advanced semiconductors. Many devices use mature chips larger than 28 nanometers, while high-end consumer electronics and data centers rely on the cutting-edge chips made by companies like TSMC, Intel and Samsung. The market for 28-nanometer chips will be worth $28 billion by 2030, estimates consulting firm International Business Strategies.

Chinese companies may also be using older chipmaking equipment to secretly make more advanced semiconductors. Huawei blindsided Washington in August by unveiling its new 5G phone, the Mate 60 Pro, that featured an advanced Chinese-made processor. Experts believe that Huawei and its supplier, Semiconductor Manufacturing International Corporation (SMIC), may have been able to use older-generation equipment to make the advanced chip, though are unsure whether the Chinese firms can make them at scale and at reasonable cost.

Huawei’s achievement is now pushing U.S. lawmakers to call for even stricter export controls. Representative Mike Gallagher (R-Wis.), co-chair of the House Select Committee on China, suggested in September that the U.S. block all technology exports to Huawei and SMIC. Other politicians and think tanks have proposed extending chip controls to older chips and equipment as well. (The Biden administration expanded its chip controls to cover more advanced semiconductors used for AI development in October)

Still, in mid-October, the Biden administration allowed TSMC, Samsung and Korean firm SK Hynix to keep supplying legacy equipment to their Chinese chip plants indefinitely. At the time, analysts told Fortune that Washington may want to keep some foreign presence in China’s chip industry; if foreign companies left, demand would shift to local Chinese companies, leading to “less control and visibility” for the U.S.