Experts and lawmakers said chipmaking equipment is critical leverage that the US has over China.
The United States has extensive licensing requirements in place to limit Beijing from obtaining some of the most advanced chips in the world, but much of the equipment used to develop those advanced chips can still be legally purchased by Chinese companies because of loopholes, U.S. lawmakers heard on Nov. 20.
Experts testified to the House Foreign Affairs South and Central Asia Subcommittee that export controls on semiconductor manufacturing equipment are a critical leverage point that the United States holds over Beijing.
A congressional report released last month found that Chinese entities, mostly state-owned enterprises, legally purchased $38 billion of such equipment last year.
Rep. Bill Huizenga (R-Mich.), chair of the subcommittee, said the loopholes provide other countries “a free pass” to sell the equipment to China.
Making advanced semiconductors involves a complex manufacturing process that utilizes specialized equipment sourced from a select few companies around the world.
A critical gap in the export controls to China arises when different countries have different standards for how they restrict technology transfers to the communist country.
Chris McGuire, senior fellow for China and emerging technologies with the Council on Foreign Relations, said that allies’ export controls are “not as comprehensive” as those of the United States. Exceptions had been made for allies like Japan and the Netherlands to create their own rules.
As a result, semiconductor manufacturing equipment was “the number one or number two export” from the United States, the Netherlands, and Japan to China in 2024, McGuire said.
McGuire said this gap can effectively be closed by banning exports to China of semiconductor manufacturing equipment containing any U.S. technology, rather than the current, targeted approach.
