China’s $38B chip tool buy up exposes cracks in U.S. sanctions

China’s $38B chip tool buy up exposes cracks in U.S. sanctions

A bipartisan U.S. congressional probe has found that China purchased $38 billion worth of advanced chipmaking equipment from U.S. and allied suppliers last year — a 66% surge despite years of Western efforts to curb its semiconductor ambitions.

According to the House Select Committee on China, inconsistencies among U.S., Japanese, and Dutch export controls have allowed Chinese firms to legally acquire high-end manufacturing tools from non-American companies even as U.S. firms faced tighter restrictions.

The report, reviewed by Reuters, urges Washington and its allies to adopt broader, coordinated bans covering all Chinese chipmakers rather than targeting individual firms. Without alignment, lawmakers warn, Beijing’s semiconductor capabilities will continue to grow — with serious implications for global security and democratic values.

The committee’s data shows that Chinese companies’ purchases from the top five toolmakers — Applied Materials, Lam Research, KLA, ASML, and Tokyo Electron — accounted for nearly 39% of their total global sales in 2023.

The report highlights three firms of particular concern — SwaySure Technology, Shenzhen Pengxinxu Technology, and SiEn (Qingdao) Integrated Circuits — alleged to have ties to a covert supply network aiding Huawei Technologies. The U.S. Commerce Department has since barred exports to these entities.

Tokyo Electron’s U.S. president, Mark Dougherty, acknowledged the issue, saying sales to China are now falling under tighter rules and calling for stronger policy coordination. “It’s clear the desired outcome has not yet been achieved,” he said.

The findings underscore that while Washington’s tech curbs have slowed China’s progress at the cutting edge, loopholes among allies have blunted their overall impact — allowing Beijing to keep advancing its chipmaking power.

Key Takeaways:

• China legally bought $38B in chip tools from U.S. allies in 2023.

• Lawmakers say inconsistent export bans undermine U.S. tech policy.

• Report urges unified, wider restrictions on all Chinese chipmakers.

Source: Reuters