US lawmakers question chip makers on China sales

Washington lawmakers are going after firms that make equipment for semiconductor manufacturing as the Joe Biden administration mulls more export controls to restrict China’s hi-tech advances.

On Thursday, the Democratic and Republican leaders of the House select committee on China sent letters to five American, Dutch and Japanese companies, requesting detailed information about the companies’ sales volume and customer base on the mainland and highlighting national-security concerns over China’s technological development.

Chinese purchases of chips manufacturing equipment will “not only help the PRC supply chips to Russia’s war machine but also threaten its neighbours, including Taiwan, as the PRC will feel less constrained by the threat of American sanctions”, said John Moolenaar, the Michigan Republican chairing the committee, and Raja Krishnamoorthi of Illinois, the Democratic ranking member.

“It will also allow the PRC to continue to progress in critical fields such as artificial intelligence, which are at the very heart of the strategic competition between the United States and the PRC,” they wrote.

Information from the companies would help the committee understand the flow of chipmaking equipment to China and its role in developing the country’s chip manufacturing base, the lawmakers said.

The targeted firms include three US-based companies – Applied Materials, Lam Research and KLA – as well as Netherlands-based ASML and Japanese firm Tokyo Electron. The companies did not immediately respond to requests for comment.

The five firms lead the global market for semiconductor manufacturing equipment, which involves some of the world’s most complex technological processes.

The companies were asked to respond to the letters by December 1.

Among other details, they were asked to provide their top 30 customers in China by revenue; total revenue obtained there, including from mainland entities on certain US trade restriction lists; and the number of employees engaged in trade compliance work in the country.

Over the past two years, the US has steadily tightened its hi-tech restrictions on China, including on chips and the technology needed to make them.

US-based companies, including the ones named in the letters this week, have already been subject to controls on exports of their chips and chipmaking machinery.

The Biden administration is considering another update to its rules, which may affect foreign companies that use a certain percentage of American inputs in their products.

The move has intensified a debate among company executives, lawmakers and executive-branch officials over the extent to which the US should restrain its own industry.

According to The New York Times, company executives at major chip firms have been saying that rules that are tougher on American firms than their Dutch or Japanese competitors will hamper US technology leadership.

Some Democratic lawmakers have echoed these concerns.

Krishnamoorthi and Moolenaar made a reference to the concerns in their letters sent this week. “Enhanced export controls simply are not mutually exclusive with a robust and thriving [semiconductor manufacturing equipment] industry,” they wrote. South China Morning Post