• US lawmakers report $38 billion in chipmaking tools sold to China, indicating policy failure.
• Inconsistencies in export rules among allies allowed these sales.
• Proposals for broader bans on sales to China, rather than targeting specific companies.
• The sales boost China's semiconductor competitiveness, raising national security concerns.
• Industry leaders note declining sales since new regulations were introduced this year.

According to a bipartisan investigation by the US House of Representatives Select Committee on China, gaps in export restrictions have allowed Chinese firms to acquire nearly $40 billion worth of advanced semiconductor manufacturing tools. This sale represents a 66% increase from the previous year and accounts for nearly 39% of the combined revenues of leading suppliers such as Applied Materials, Lam Research, KLA, ASML, and Tokyo Electron, highlighting significant challenges in limiting Beijing's chipmaking capabilities, according to Indiatimes and Reuters.

Both Democratic and Republican administrations have aimed to restrict China's access to advanced chip technology, viewing it as critical to national security, particularly in the realms of artificial intelligence and military modernization. However, inconsistencies in export rules among the US, Japan, and the Netherlands have allowed non-US manufacturers to sell equipment to firms in China, which US companies are barred from supplying, as noted by the Select Committee. The report called for broader, coordinated restrictions on chipmaking tool sales instead of narrower bans targeting specific Chinese companies, according to TRT Global and Reuters.

The investigation revealed that the significant sales to Chinese companies have made China increasingly competitive in semiconductor manufacturing, with implications for human rights and global democratic values. Three Chinese firms have been highlighted as points of concern due to their alleged ties to campaigns supporting Huawei Technologies, leading to restrictions on exports to these companies. Industry executives, such as Mark Dougherty, president of Tokyo Electron's US unit, indicated that sales to China have also begun to decline this year, reflecting newfound regulatory pressures, as stated by Indiatimes and TRT Global.

The congressional committee's report pointed to the necessity of tighter coordination among allies and broader restrictions, including prohibiting components that China might utilize to develop its own chipmaking capabilities. This situation underscores ongoing tensions in technology competition between the US and China, with calls for comprehensive policy adjustments to prevent further advancements by Chinese semiconductor firms, according to Reuters and TRT Global.