China Dodges U.S. Export Curbs, Continue Chip Equipment Purchases, Congressional Report Reveals

In a bold move to circumvent recent export restrictions imposed by the Joe Biden administration, Chinese companies have persistently acquired cutting-edge chipmaking equipment from the United States, despite stringent measures aimed at impeding China’s semiconductor industry advancements. The revelation was disclosed in the House of Representative’s bipartisan select committee on China’s extensive 741-page annual report released on Tuesday.
BE SemiconductorThe report targets the efficacy of the October 2022 export curbs, specifically designed to prevent Chinese chipmakers from accessing U.S. chipmaking tools destined for manufacturing advanced chips below the 14 nanometer node.

“Importers frequently exploit loopholes by claiming equipment usage for older production lines, making it challenging to validate that these tools aren’t fueling the production of more sophisticated chips,” highlighted the comprehensive report by the Commerce Department.

Loopholes and Stockpiling: China’s Strategic Moves

Amid the U.S. efforts to restrict chipmaking tool exports, China’s strategic maneuvers have raised concerns. The report underscores how China, leveraging the 2022 regulations’ temporal gap with similar measures by allies like Japan and the Netherlands in July and September 2023 respectively, capitalized on the opportunity to amass vital equipment, Reuters news report said.

During the initial eight months of 2023, China remarkably escalated its acquisitions, importing semiconductor manufacturing machines worth $3.2 billion (RMB 23.5 billion) from the Netherlands alone, indicating a staggering 96.1 percent surge compared to the $1.7 billion (RMB 12 billion) recorded during the same period in 2022. Overall semiconductor equipment imports by China across all countries amassed $13.8 billion (RMB 100 billion) during the mentioned eight months of 2023, as outlined in the report.

Calls for Stringent Assessment and Oversight

While the report refrains from suggesting specific remedies, it strongly advocates for stringent oversight and evaluation of the effectiveness of export controls on chipmaking equipment. The proposal includes an annual evaluation by the General Accountability Office within six months, followed by public disclosure, to gauge the efficiency of these controls in thwarting China’s access to advanced chip production tools.

The persistent acquisitions by Chinese entities underscore the pressing need for comprehensive measures and international collaboration to secure and regulate the export of critical chipmaking equipment, crucial in maintaining technological competitiveness and safeguarding strategic interests.