China bought about $38 billion worth of sophisticated chimaking equipment from the U.S. and its allies last year due to gaps in efforts to curb manufacturing, a bipartisan report by U.S. lawmakers has found.
Inconsistencies In Rules Allow Sales
The Donald Trump-led U.S. government has tried to restrict China’s ability to make advanced microchips.
But, inconsistencies in rules issued by the U.S., Japan, and the Netherlands have led to non-U.S. equipment makers selling to some Chinese firms that U.S. companies could not, according to a report by the U.S. House of Representatives Select Committee on China.
Chinese firms last year bought $38 billion in equipment from five top semiconductor manufacturing equipment suppliers, without breaking the law, the report said. That is a 66% increase from 2022, when many of the export restrictions were introduced.
China also accounted for nearly 39% of the aggregate sales of Applied Materials (NASDAQ:AMAT), ASML (AMS: ASML), Lam Research (NASDAQ:LRCX), KLA (NASDAQ:KLA), and Tokyo Electron (TYO:8035), according to the report.
Most of the toolmakers’ China revenue in 2024 came from state-owned enterprises, and from 2022 to 2024, each toolmaker more than doubled the share of its worldwide revenue coming from Chinese state-owned companies.
See also: US Semiconductor Sector Faces Anti-Dumping Investigation By China Ahead Of Trade Discussions
US Calls For Broader Bans
U.S. lawmakers called for broader bans by the group of allies on chipmaking equipment sales to China, rather than narrower bans of specific Chinese chipmakers.
They urged allies to tighten enforcement, prevent equipment diversion, and boost support for U.S. and allied firms through stronger oversight, funding, and talent development.
The report comes amid U.S. efforts to cull China’s ability to produce cutting-edge chips that are key components in advanced technologies like artificial intelligence and modern military systems. At the same time, the two global superpowers are competing to export advanced technologies, including AI data centers, to countries around the world.
China’s semiconductor industry “must face meaningful restrictions across the entire chain of semiconductor production,” the report said.
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