According to a recent U.S. Congress report, export controls have only partially limited the flow of tools used in chipmaking to China; in 2024, sales for these devices were around $38 billion. Vendors complied with the legislation because the majority of sales were older tools that were either excluded from U.S. regulations or sold to customers who weren’t on any lists. In the current tech war between the United States and China over semiconductors, lawmakers argue that this shows gaps that are serious for the U.S. and its allies.
“The People’s Republic of China (PRC) is already fervently seeking to build a world-leading semiconductor manufacturing industry from raw materials through semiconductor manufacturing equipment to finished product,” the House Select Committee on the Chinese Communist Party (CCP) warned. For them, Washington and its allies should make that objective “as difficult and costly as possible.”
Although corporations not currently on U.S. lists continue to purchase capable equipment, the research says that targeted blocks, like those aimed at Semiconductor Manufacturing International Co. (SMIC), can be effective. Important toolmakers have factories in the Netherlands and Japan, so even close friends don’t always apply restrictions in the same way.
According to the committee: “While the Netherlands has denied extreme ultraviolet (EUV) lithography to the PRC market, the toolmakers have continued to provide vast quantities of highly capable SME that is not labeled as ‘advanced,’ as particularly illustrated by ASML’s sales of deep ultraviolet (DUV) and other lithography systems.”
The investigation’s findings
The committee argues that although U.S. policy frequently prevents the most advanced technology, it still allows shipments of “older” equipment that continue to help China in increasing its chip manufacturing. This includes DUV lithography, which was able to produce chips close to the 7nm range until recently. DUV tools are still in high demand since EUV is forbidden.
Also, while allies agree on ideals, actual implementation changes by nation. Lawmakers believe that this inequity reduces the impact of current export restrictions. The committee suggests a stricter, more comprehensive strategy for selling equipment to Chinese consumers, not just designated organizations like SMIC. Additionally, it draws attention to the Foreign Direct Product Rule (FDPR), a very important legal tool. Foreign-made goods that are the “direct product” of American software or technology may be subject to US regulations under the FDPR.
For instance, TSMC avoids supplying chips to Chinese firm Huawei in purpose because to the FDPR, TSMC’s equipment is based on US intellectual property and doing so could potentially expose the business to severe fines.
The importance of allies
The Netherlands and Japan supply a huge part of the world’s chip equipment. Since ASML is a significant provider of DUV and only manufacturer of EUV scanners, its policy decisions have an important impact. The Netherlands is been given credit by the committee for keeping EUV in check, but it notes that ongoing DUV shipments continue to allow Chinese factories to grow.
The main disagreement is that “non-advanced” robots can still be very productive. Researchers say that Washington needs to think about extending FDPR to foreign goods based on American technology when allies don’t follow the same course. Not blaming businesses for misconduct is the goal; the majority of sales stated met all existing regulations.
The committee’s conclusion though is still quite harsh: “It is far past time that the toolmakers start treating the CCP and its national champions as threats to their corporate longevity, rather than as valued customers.”
In the coming years, who can develop devices and how quickly can they do it will depend on whether Washington and its allies adopt a more strict alignment or stick with what they already have today.