U.S. lawmakers are pushing for expanded restrictions on the sale of chipmaking equipment to China after a bipartisan investigation found that Chinese semiconductor firms bought $38 billion worth of advanced machinery in the past year.
Inconsistencies in rules issued by the U.S., Japan, and the Netherlands have led to non-U.S. chip equipment manufacturers selling to some Chinese firms that American companies could not, according to a report published on Tuesday by the U.S. House of Representatives Select Committee on China.
The $38 billion was purchased from five top semiconductor manufacturing equipment suppliers without breaking the law, a 66% increase from 2022, when many of the tool export restrictions were introduced.
The report further found that these purchases represented nearly 39% of the total combined sales of major chip equipment makers Applied Materials (NASDAQ:AMAT), Lam Research (NASDAQ:LRCX), KLA (NASDAQ:KLAC), ASML (NASDAQ:ASML), and Tokyo Electron (OTCPK:TOELY).
“These are the sales that gave China’s semiconductor fabs, including Huawei’s network and SMIC, the production capacity and technological sophistication they now possess,” the report said.
“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.”
This investigation, however, did not seek, address, or focus on any “potential illegal activity, including any assessment of Toolmakers’ compliance or non-compliance with export control laws,” the report said.
The findings emerge as China puts pressure on local tech companies to boost the country’s domestic semiconductor industry and intensify efforts in the AI race against the U.S.
China-based Huawei reportedly plans to nearly double the production of its artificial intelligence chip, the 910C, in 2026 as it attempts to fill in the gaps left following Nvidia’s (NASDAQ:NVDA) dwindling shipments to the country.