The report, released Tuesday by the House Select Committee on the Chinese Communist Party, revealed that inconsistent export rules among the United States, Japan, and the Netherlands have allowed non-U.S. manufacturers to sell sensitive chipmaking equipment to Chinese firms that American companies were barred from supplying.
Committee members urged Washington and its allies to move from company-specific restrictions toward comprehensive bans on chipmaking tools destined for China’s semiconductor industry.
According to the investigation, the $38 billion in purchases represented a 66% jump from 2022, the year many export curbs were first introduced. The figure accounted for nearly 39% of total sales by five leading equipment makers — Applied Materials, Lam Research, KLA, ASML, and Tokyo Electron.
“These are the sales that made China increasingly competitive in the manufacture of a wide range of semiconductors, with profound implications for human rights and democratic values around the world,” the committee warned in its report.
Both Democratic and Republican administrations have sought to limit China’s access to advanced chip technology, citing its strategic importance in fields such as artificial intelligence, military modernization, and cyber capabilities. The rivalry between the two economic powers has also extended to efforts to dominate global AI infrastructure and data center exports.
Industry leaders say the pressure is being felt. Mark Dougherty, president of Tokyo Electron’s U.S. unit, said sales to China have already begun to decline this year amid tighter oversight and welcomed closer coordination between Washington and Tokyo.
“I think it’s clear, from a U.S. perspective, there’s an outcome that is still desired that has not yet been achieved,” Dougherty told Reuters.
While ASML and KLA declined to comment, Applied Materials and Lam Research did not respond to requests for comment. The committee noted that all five toolmakers had cooperated with the inquiry and were informed of its findings.
The report identified three Chinese firms — SwaySure Technology Co., Shenzhen Pengxinxu Technology Co., and SiEn (Qingdao) Integrated Circuits Co. — as security concerns. U.S. officials previously linked the companies to a covert supply network supporting Huawei Technologies, prompting export bans against them in December.
Beyond equipment sales, the committee also called for tighter controls on components that China could repurpose to build its own chipmaking machinery, warning that Beijing is aggressively seeking to reengineer the global semiconductor supply chain.
“China is attempting to rewrite the entire supply chain,” said Craig Singleton, a senior fellow at the Foundation for Defense of Democracies. “What used to be niche tool segments are now battlegrounds.”
The findings underscore growing unease in Washington that existing export controls are insufficient to slow China’s technological rise, fueling calls for a more unified and comprehensive strategy among Western allies.