China‘s chipmakers Spent $38 Billion on U.S., Allied Tech Despite Export Controls
WASHINGTON, D.C. - Chinese semiconductor manufacturers purchased approximately $38 billion worth of advanced chipmaking tools and technology from U.S. and allied nations in the past year, a figure that is raising concerns among U.S. lawmakers who believe export controls designed to slow China’s technological advancement are failing to achieve their intended effect. The purchases, revealed in newly released data, demonstrate China’s continued ability to acquire critical components needed to bolster its domestic chip industry, despite Washington’s efforts to restrict access.
The influx of technology underscores a growing debate over the effectiveness of current U.S. policy and highlights the complex challenges in curbing China’s access to cutting-edge semiconductors. Lawmakers on both sides of the aisle are now questioning whether stricter enforcement, expanded restrictions, or option strategies are needed to prevent China from achieving self-sufficiency in chip production - a goal with notable implications for U.S. national security and economic competitiveness. The continued purchases raise fears that China will circumvent restrictions, possibly accelerating its progress in areas like artificial intelligence, military technology, and advanced manufacturing.
According to data compiled by the Peterson Institute for International Economics and reported by Reuters, China’s imports of semiconductor manufacturing equipment from the U.S., Japan, South Korea, Taiwan, and the Netherlands totaled $38.13 billion between February 2023 and February 2024.This figure includes equipment used in the production of logic chips, memory chips, and other essential components.
“These numbers are deeply troubling,” said Senator Bob Casey, a Democrat on the Senate Foreign Relations Committee, in a statement. ”Despite our best efforts, China is still able to acquire the technology it needs to advance its semiconductor industry.We need to take a hard look at whether our current export controls are strong enough and whether they are being effectively enforced.”
The U.S.Commerce Department implemented sweeping export controls in October 2022,aimed at restricting China’s access to advanced chipmaking technology. These controls targeted companies like Semiconductor Manufacturing International Corporation (SMIC) and prohibited the sale of certain equipment and software without a license. However, loopholes and indirect sales through third countries have allowed China to continue acquiring critical components.
The Netherlands, a key supplier of lithography systems crucial for chip production, has also faced pressure to tighten its export controls. ASML, the Dutch company that dominates the market for these systems, has been granted licenses to sell some of its less advanced machines to Chinese customers.
Experts suggest several factors contribute to the continued flow of technology to China. These include the complexity of the global supply chain, the difficulty in identifying and intercepting indirect sales, and the economic incentives for companies to continue doing business with the Chinese market.
“It’s a cat-and-mouse game,” said Emily Benson, a research professor at the Peterson Institute for International Economics. “As the U.S. and its allies tighten restrictions, China will find new ways to circumvent them. We need to be constantly vigilant and adapt our policies accordingly.”
The Biden administration is currently considering further measures to strengthen export controls and address the loopholes that have allowed China to continue acquiring advanced chipmaking technology. These measures could include expanding the list of restricted items, increasing enforcement efforts, and working more closely with allies to coordinate export control policies. The outcome of these deliberations will likely shape the future of the U.S.-China technology competition and have significant implications for the global semiconductor industry.
