A powerful committee of United States lawmakers has issued a stark warning, stating that American and other international companies are inadvertently strengthening China's advanced semiconductor industry, posing significant long-term national security risks to the US and its allies.
Committee Report Highlights Critical Vulnerabilities
The House Select Committee on the Chinese Communist Party, led by Chairman Mike Gallagher and Ranking Member Raja Krishnamoorthi, released a detailed interim report on February 22, 2024. The investigation focused on the role of foreign integrated circuit (IC) design software, chipmaking equipment, and specialized inputs provided by global firms to Chinese entities.
The report concludes that despite existing US export controls, China's chipmaking firms, including the sanctioned Semiconductor Manufacturing International Corporation (SMIC), continue to access vital foreign technology. This access is enabling China to make incremental progress in producing advanced chips, which are crucial for modern military systems, artificial intelligence, and critical infrastructure.
How Global Supply Chains Are Being Exploited
The lawmakers identified several key channels through which China's chip industry is being sustained. A primary concern is the widespread use of American electronic design automation (EDA) software by Chinese companies. While US regulations restrict the sale of the most advanced tools, Chinese firms reportedly still use older, but still critical, versions of this software to design chips.
Furthermore, the report highlights the role of third-country suppliers and a lack of cohesive international enforcement. Companies based in allied nations sometimes provide equipment or materials that fall outside strict US jurisdiction, creating loopholes. The committee also pointed to the "gray market" for chipmaking equipment, where older-generation tools are refurbished and sold to Chinese buyers without adequate oversight.
"The findings show that the PRC’s (People's Republic of China) military-civil fusion strategy is actively leveraging US and allied technology to advance its semiconductor capabilities," the report states, emphasizing the direct link between commercial progress and military modernization.
Urgent Calls for Stricter Controls and Allied Coordination
In response to these findings, the bipartisan committee has put forward a series of urgent recommendations for the US government. The central demand is for the Bureau of Industry and Security (BIS) under the Department of Commerce to significantly tighten export control regulations.
The proposed measures include:
- Expanding the list of restricted semiconductor manufacturing equipment to cover more legacy tools.
- Imposing stricter licensing requirements on the sale of older-generation EDA software to any Chinese entity.
- Applying foreign direct product rules more aggressively to prevent third-country circumvention.
- Enhancing enforcement and crackdowns on gray market activities.
Critically, the report stresses that US actions alone are insufficient. It calls for the Biden administration to intensify diplomatic efforts to bring key allies in Europe and Asia, particularly the Netherlands, Japan, South Korea, and Germany, into a fully coordinated export control regime. The goal is to create a unified front to deny China the technology it seeks.
The interim report serves as a clarion call, arguing that every piece of advanced equipment or software that flows into China shortens the timeline for its technological self-sufficiency. The lawmakers warn that without immediate and decisive action, the United States risks losing its strategic advantage in a foundational technology that will define the 21st-century geopolitical and economic landscape. The committee plans further investigations into other sectors deemed critical to national security.
