US lawmakers want transparency on semiconductor exports to China amid growing security concerns

House Select Committee on Strategic Competition between the United States and the Chinese Communist Party (CCP) Chairman John Moolenaar (R-MI) and Ranking Member Raja Krishnamurthy (D-IL) have sent letters to major semiconductor manufacturing equipment (SMEs). Companies in connection with their business transactions with the People’s Republic of China (PRC).

Companies that received inquiries include KLA, Applied Materials, Lam Research, Tokyo Electron and ASML.

In the letters, Moolenaar and Krishnamurthy expressed concern over SME’s increasing sales to China, which they say could give the People’s Liberation Army (PLA) a significant advantage in the development of advanced semiconductors.

Lawmakers highlight that China is now buying more semiconductor manufacturing equipment than the United States, South Korea and Taiwan combined, which could support not only China’s military activities but its efforts in key areas such as artificial intelligence. Can also advance ambitions. he/she warned that this could weaken America’s strategic competitiveness in relation to China.

The lawmakers also address concerns expressed by some SME companies about the impact of tighter US export controls on their competitiveness. They argue that increased export controls can exist with a strong and thriving SME industry.

Lawmakers are requesting detailed data from semiconductor equipment companies regarding their trade with China for FY2022, FY2023 and YTD FY2024. These include details about total revenues from PRC transactions, revenues from sales subject to US export licenses, and transactions with entities on the US sanctions list.

They also seek information about revenues from PRC government-affiliated entities, distributors outside China, and a company’s top PRC distributors if their revenues exceed 1 percent of total revenues. Other requests include data on US export license applications, the volume of SME equipment shipped to China, the top 30 PRC customers and information on staff involved in export compliance in China. Companies are also asked to report their global manufacturing footprint and any plans to expand or offshoring production.

Additionally, lawmakers asked for data on the annual volume of SME equipment shipped to China, including the most advanced technology nodes, as well as a list of the companies’ top customers in China by revenue.

They also inquired about the companies’ global manufacturing footprint, their plans for any new or expanded offshoring of production, and the number of employees dedicated to export control and trade compliance work in China.

These letters are part of a broader investigation into the role of semiconductor manufacturing equipment companies in China’s semiconductor sector and the potential national security implications.