U.S. Rep. John Moolenaar (R-MI), chairman of the House Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party, is investigating the operations and sales by five of the industry leaders in semiconductor manufacturing equipment (SME) to the People’s Republic of China (PRC).
The growing prevalence of American, Japanese, and Dutch semiconductor manufacturing equipment in China could give the People’s Liberation Army an advantage in building advanced chips while also building up China’s domestic chip capacity, according to Nov. 7 letters Rep. Moolenaar and Committee Ranking Member Raja Krishnamoorthi (D-IL) sent to KLA Corp., Applied Materials, Lam Research, Tokyo Electron, and ASML.
“As one of the world’s leading semiconductor manufacturing equipment firms, your company has information that will help us better understand the flow of SME to the PRC and its contributions to the PRC’s rapid buildout of its semiconductor manufacturing industrial base,” the lawmakers wrote in each of the letters.
Reports show that the PRC now purchases more semiconductor manufacturing equipment than the United States, South Korea, and Taiwan combined, according to the letters, which say this will not only help the PRC supply chips to Russia’s war machine but also threaten its neighbors, including Taiwan, and allow the PRC to continue to progress in critical fields such as artificial intelligence.
They also pointed out that the United States is currently negotiating with Japan and the Netherlands to strengthen its export controls, with a particular focus on SME.
“It is our assessment that the current scale of Japanese, U.S., and Dutch SME technology exports to the PRC is significantly contributing to a growing global dependency on the PRC’s semiconductor manufacturing capacity and enabling its industry to manufacture both advanced and legacy semiconductors,” wrote the lawmakers. “This trend is a direct threat to the United States and its allies’ national and economic security.”
Rep. Moolenaar and his colleague asked the CEOs of each company to answer several questions, including their total dollar value for fiscal years 2022 through 2024; PRC revenue including sales of goods and services; PRC revenue obtained from a transaction subject to an export license from the U.S.; PRC revenue obtained from PRC entities that are currently on the BIS Entity List, Treasury NS-CMIC List, or DoD’s 1260H List, as well as any entity that is directly affiliated with such an entity; and PRC revenue obtained from a transaction in which one party to the transaction was a PRC government entity or affiliated entity as defined as 50.1 percent or more of ultimate government ownership.
If this dollar value is more than 1 percent of each company’s yearly gross revenue, the lawmakers asked the CEOs to list the top five PRC-distributors by revenue for the same fiscal years.
Among numerous other questions, Rep. Moolenaar and his colleague questioned if each company currently has plans for any new or expanded offshoring of production, and what related options are under consideration.
“We understand that some SME firms believe we should limit the expansion of, or even weaken these and existing and or future unilateral U.S. controls, due to perceived impacts on the competitiveness of this sector,” wrote the lawmakers. “However, enhanced export controls simply are not mutually exclusive with a robust and thriving SME industry.”