Investigation Uncovers U.S. Firms Advancing China’s Semiconductor and Military Aims
Following an extensive investigation, new evidence has emerged regarding U.S. and allied companies supporting China’s semiconductor and military developments. The investigation, led by the Select Committee on China, highlights the involvement of firms from the U.S., Netherlands, and Japan in providing semiconductor manufacturing equipment to Chinese entities, including those linked to military operations.
Key Findings from the Investigation
The inquiry was headed by Chairman John Moolenaar (R-MI) and Ranking Member Raja Krishnamoorthi (D-IL). The results unveil that major companies such as ASML (Netherlands), Tokyo Electron (Japan), Applied Materials, KLA, and Lam Research (U.S.) have substantially profited while aiding China’s military ambitions.
Financial Impact on Companies
The financial stakes are high for these companies. In 2024 alone:
- TOKYO ELECTRON (TEL): 44% of revenue from China
- LAM RESEARCH: 42%
- KLA: 41%
- ASML and APPLIED MATERIALS: 36%
Overall, the semiconductor manufacturing equipment (SME) sector’s sales to Chinese state-owned enterprises (SOEs) reached $9.5 billion in 2022. By 2024, this figure soared to $26.2 billion, constituting a significant portion of revenue derived from PRC operations.
National Security Concerns
The investigation raised pressing national security alarms. Key concerns include:
- Military implications: Development of chips for the People’s Liberation Army, particularly for advanced warfare applications.
- Trade dynamics: China aims to build self-sufficient chip manufacturing capabilities that could withstand export restrictions.
- Economic dominance: China could overtake the U.S. in chip manufacturing, leveraging this for strategic political purposes.
- Human rights issues: The Chinese Communist Party (CCP) utilizes AI and computing power for oppressive measures domestically and worldwide.
Recommendations for Action
To mitigate these risks, the investigation presents several recommendations:
- Align export controls among allied nations, particularly the Netherlands and Japan, with U.S. standards.
- Establish country-wide controls for the PRC to limit diversion of sensitive technologies.
- Expand the list of restricted entities and prevent allied manufacturers from engaging with additional Chinese military groups.
- Restrict the export of critical components necessary for semiconductor production.
- Develop a whistleblower export control program.
- Enhance resources and personnel for the Bureau of Industry and Security (BIS) and the State Department to improve enforcement.
Conclusion
The findings underscore the importance of safeguarding U.S. national security while maintaining leadership in semiconductor innovation. Moolenaar and Krishnamoorthi stress the urgent need for companies to reconsider their ties with the CCP, as these relationships pose serious threats to both corporate longevity and national interests.
