Foreign media reported that a latest investigative report by the U.S. Congress revealed that although the U.S. government continues to tighten semiconductor export restrictions to China, China has successfully exploited regulatory inconsistencies between major U.S. allies, including Japan and the Netherlands, to obtain approximately US$38 billion in cutting-edge semiconductor manufacturing equipment in 2024.
According to ZDnet Korea citing this report, the U.S. House of Representatives China Special Committee, established to deal with strategic competition between the U.S. and China, released an investigation report on the 8th local time in the U.S. stating that inconsistencies in controls between the United States, Japan, and the Netherlands have fueled the rise of Chinese semiconductors. Because the control standards of allied countries are different from those of the United States, China is able to obtain large quantities of cutting-edge equipment through roundabout purchases.
In fact, in order to prevent China from obtaining advanced semiconductors and related equipment, the US government has continuously strengthened export control measures in recent years. Especially in October 2022, the United States issued a strengthened export control plan that significantly restricted the export of U.S.-made semiconductor manufacturing equipment to China. However, reports show that the effectiveness of these controls was undermined by the involvement of allies. The report pointed out that the supply of products originally restricted due to US export controls was replaced by companies from Japan and the Netherlands.
The report also specifically named key suppliers including ASML of the Netherlands and Tokyo Electron of Japan. These Japanese and Dutch companies provided products originally restricted by U.S. export controls, which actually weakened the effect of U.S. export controls. In particular, major semiconductor equipment companies, including ASML, Tokyo Weinli Technology, Applied Materials, KLA, Lam Research, etc., will continue to conduct transactions with Chinese state-owned and military-related companies in 2024. The cumulative sales of these transactions reached approximately US$38 billion.
The committee warned that China exploited loopholes in export controls to acquire large quantities of cutting-edge equipment. These sales strengthen China's semiconductor manufacturing capabilities, thereby affecting global supply chains and democratic values. It is worth noting that although the report expressed concerns about the behavior of these major semiconductor equipment companies, the report also clearly pointed out that the behavior of these companies is not illegal under the current legal framework.
Reports indicate that Republican Congressman John Moolenaar, chairman of the committee that released the report, issued a stern warning, saying that the key equipment produced and supplied by these companies is supporting China's goals. And if this situation is ignored, the United States may fall behind in the competition for technological hegemony. In addition, in order to effectively plug these loopholes, the report puts forward specific suggestions for future responses. The report proposes that the scope of the export ban should be expanded to the component stage. The purpose of this is to prevent China from developing or assembling semiconductor equipment within its borders.
In summary, the report emphasizes that in the face of the rise of China's semiconductor industry, Western alliances must achieve greater consistency in export control strategies, otherwise unilateral or asynchronous restrictive measures may continue to be circumvented.