(Reuters) – U.S. Lawmakers are intensifying pressure on the Biden administration to further restrict the sale of advanced chipmaking technology to China, following reports that Chinese firms purchased $38 billion worth of such equipment last year despite existing export controls. The push for tighter restrictions comes amid growing concerns that loopholes in current regulations are undermining efforts to slow China’s progress in advanced semiconductor manufacturing, a sector viewed as critical to national security.
The bipartisan investigation, conducted by the U.S. House of Representatives Select Committee on China, revealed that Chinese companies acquired the substantial amount of equipment from five leading suppliers – Applied Materials, Lam Research, KLA, ASML, and Tokyo Electron – without technically violating existing U.S. Export controls. This finding highlights the complexities of regulating a globalized supply chain and the ability of Chinese firms to procure necessary technology through non-U.S. Companies and subsidiaries.
According to the report, inconsistencies in the rules issued by the United States, Japan, and the Netherlands have created opportunities for non-U.S. Toolmakers to sell to Chinese firms that would be prohibited from purchasing directly from their American counterparts. Lawmakers are now urging the State and Commerce Departments to address these discrepancies and implement broader restrictions on chipmaking tool sales to China, rather than focusing on targeted bans of specific companies. This call for a more comprehensive approach reflects a growing frustration with the perceived ineffectiveness of the current strategy.
The report detailed a 66 percent increase in purchases from , the year many of the initial tool export restrictions were introduced. The $38 billion figure represents nearly 39 percent of the combined sales of the five aforementioned equipment suppliers. This demonstrates the significant reliance of Chinese chipmakers on foreign technology, even as they strive to develop indigenous capabilities.
The situation is further complicated by China’s recent mandate, issued on , requiring chipmakers to source at least 50 percent of the equipment they use domestically. While intended to bolster China’s self-sufficiency in semiconductor production, this policy could also incentivize the development of alternative, potentially less regulated, supply chains. This move is seen as a direct response to U.S. Export restrictions and a signal of China’s determination to overcome technological barriers.
The concerns extend beyond the United States. The Netherlands-based ASML, a key supplier of lithography systems essential for advanced chip manufacturing, has cautioned that it may not achieve its growth targets due to the uncertainty surrounding U.S. Tariffs and export controls. ASML’s predicament underscores the potential economic consequences of escalating trade tensions and the disruption of global semiconductor supply chains.
The U.S. Government has long maintained that restricting China’s access to advanced chip technology is vital to prevent the development of capabilities that could be used for military purposes or to enhance its surveillance capabilities. However, critics argue that overly broad restrictions could stifle innovation and harm U.S. Companies’ competitiveness. The current debate centers on finding a balance between national security concerns and the need to maintain a level playing field for American businesses.
The implications of this situation are far-reaching. China’s continued access to advanced chipmaking technology could accelerate its progress in artificial intelligence, high-performance computing, and other strategic sectors. This, in turn, could challenge U.S. Technological leadership and reshape the global balance of power. The ongoing efforts to restrict chip sales to China are therefore not merely a trade dispute, but a key component of a broader geopolitical competition.
The effectiveness of any future restrictions will depend on the willingness of key allies – particularly Japan and the Netherlands – to coordinate their policies with the United States. A fragmented approach could simply drive Chinese firms to seek alternative sources of technology, undermining the intended impact of the controls. The call for broader bans by the U.S. Lawmakers reflects a recognition of this challenge and a desire for a more unified international response.
The situation is dynamic and evolving. Further policy changes and technological developments are expected in the coming months, as both the United States and China continue to navigate the complex landscape of semiconductor technology and geopolitical competition. The outcome of this struggle will have significant implications for the future of the global technology industry and the international order.
