Report Reveals China Stockpiled $38 Billion in Chip-Making Tech, Highlighting Gaps in Export Controls

 A new investigation from a U.S. congressional committee has uncovered a significant surge in China's purchases of advanced semiconductor manufacturing equipment, raising questions about the effectiveness of international export restrictions.

According to the report, Chinese chipmakers bought a staggering $38 billion worth of tools from the world's top five equipment suppliers last year. This represents a 66% increase from 2022, the very year when many of the current export controls were first put in place.

The Core of the Issue: Inconsistent Rules

The bipartisan House Select Committee on China found that the core problem lies in inconsistent regulations between the United States and its key allies, Japan and the Netherlands. While U.S. companies are restricted from selling certain advanced tools to specific Chinese firms, non-American companies from allied nations have been able to continue some of these sales legally under their own countries' rules.

This has allowed China to continue acquiring sophisticated technology crucial for manufacturing advanced computing chips.

Key Findings and Industry Impact

The report highlighted that the $38 billion in sales to China accounted for nearly 39% of the total revenue for the five major toolmakers:

• Applied Materials (U.S.)

• Lam Research (U.S.)

• KLA (U.S.)

• ASML (Netherlands)

• Tokyo Electron (Japan)

These chips are vital for national security, powering everything from artificial intelligence to military modernization. The report argues that these sales have directly made China "increasingly competitive" in semiconductor manufacturing.

Calls for Tighter Controls and Future Outlook

In response to these findings, the committee is pushing for a more coordinated and broader approach among allies. Instead of narrowly targeting specific Chinese chipmakers, they recommend wider bans on the sale of chipmaking tools to China altogether. The report also suggests restricting the sale of components that China could use to build its own domestic chip-making equipment.

An industry executive from Tokyo Electron's U.S. unit noted that sales to China have begun to decline this year, partly due to newer regulations. He also expressed support for more coordination between the U.S. and Japanese governments, hinting that the desired outcome of curbing China's advanced chip capabilities has not yet been fully achieved.

The situation underscores the ongoing technological rivalry between the U.S. and China, where control over the global semiconductor supply chain has become a central battleground.