WASHINGTON, Oct 8 (Reuters) — In a forceful move that could reshape global tech supply chains, U.S. lawmakers are calling for sweeping bans on sales of chipmaking equipment to China, citing national security and strategic rivalry. The pressure is mounting after a congressional investigation revealed Chinese firms bought $38 billion worth of advanced semiconductor tools last year — a spike of 66 percent from 2022.
The investigation, led by a U.S. House Select Committee on China, argues existing export controls are too narrow and inconsistent. While U.S., Japanese and Dutch rules prevent some gear from reaching Chinese firms, non-U.S. suppliers are still allowed to sell certain tools. That loophole, lawmakers argue, undermines U.S. efforts to maintain technological dominance.
“These are the sales that made China increasingly competitive in the manufacture of a wide range of semiconductors,” the committee’s report says. “They have profound implications for human rights and democratic values.”
Mark Dougherty, head of Tokyo Electron’s U.S. unit, told Reuters that sales to China have already begun to decline, in part because of the new regulatory atmosphere. “From a U.S. perspective, there’s an outcome that is still desired that has not yet been achieved,” he said. Reuters
The committee singled out three Chinese firms—SwaySure Technology, Shenzhen Pengxinxu Technology, and SiEn Integrated Circuits—for their growing reliance on foreign toolmakers. Some are alleged to have ties to networks assisting Huawei, prompting the U.S. Commerce Department to block exports to those entities in December.
If these broader bans succeed, they could dramatically constrict China’s ability to produce its own advanced chips. That in turn might stall ambitions in areas like AI, telecommunications, and defense, where semiconductor capabilities are central. But the move also raises the specter of retaliation from Beijing, which would almost certainly view such actions as economic aggression.
For Chinese firms, the restrictions would complicate procurement of essential tools used in wafer fabrication, lithography, etching, and inspection. Firms already operating at the cutting edge could face serious delays or losses in competitiveness.
U.S. firms and global chip equipment manufacturers could also feel fallout. Some have argued that restrictions on exports to China rip through supply chains and hamper their own business growth. The report recommends blocking key components too—those China could reverse-engineer into its own toolmaking systems.
The challenge now rests with the U.S. executive branch and its allies. For effective enforcement, U.S., Dutch and Japanese governments will have to align on regulation, oversight, and sanctions. Congressional leaders hope the pressure will force cooperation and eliminate loopholes that allow circumvention.
The struggle over semiconductors is not just technical; it speaks to the strategic balance of power in technology. China has long seen mastery of core chip technologies as essential to sovereignty in defense, AI applications, and advanced manufacturing. The U.S., increasingly wary of strategic dependency, sees controlling these pipelines as vital to national security.
As the debate intensifies, smaller chip equipment suppliers face uncertainty. Will they be forced to choose sides? Will they be shut out of massive markets? The ripple effects could reach startups, alliances, and national policies in Asia, Europe and beyond.
This is a turning point in the tech arms race. The outcome could decide not just who sells chips, but who controls the world’s digital backbone.
Source: Reuters
