China Purchased $38B From The US In Semiconductor Chips

Taiwan’s global dominance of semiconductor chip manufacturing has been at the forefront of the US-China technology war. The focus has been on Taiwan, leaving other avenues of Chinese influence ignored. China used loopholes in US law to purchase over $38 billion in chip-making technology in the last year alone, marking a 66% rise in imports since 2022, when legislation was passed to restrict Chinese access to US chip technology.

Military modernization has become the focal point of concern. These advanced chips have been utilized to develop highly detailed surveillance systems, hypersonic weapons, and cutting-edge AI technology. US intelligence believes national security is at risk and there must be an effort to  “impede the PRC’s ability to procure and produce the technologies necessary for its military modernization” to “protect our world-leading technologies and know-how so they aren’t used to undermine our national security.”

The US House of Representatives Select Committee on China is calling for a broad ban on importing US chip technology to China, following the release of a report detailing how Chinese firms have bypassed loopholes in US law to purchase this technology legally.

“These are the sales that made China increasingly competitive in the manufacture of a wide range of semiconductors, with profound implications for human rights and democratic values around the world,” the report said. China accounted for 39% of aggregate sales to Applied Materials, Lam Research, KLA, ASML, and Tokyo Electron. Legislation has curbed but not deterred sales to China.

A spokesman for Tokyo Electron stated that sales to China have declined since 2022, when the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) implemented a law entitled “Export Controls on Advanced Computing and Semiconductor Manufacturing Items to the People’s Republic of China.” The legislation expanded on Export Administration Regulations (EAR) to include foreign-produced advanced computing items and semiconductor chips.

US businesses seeking to conduct business with Chinese semiconductor companies must obtain a license that is notoriously difficult to acquire. The latest report revealing the $38 billion in sales has raised bipartisan concern, and increased restrictions are expected.

This brings the attention back to Taiwan. China may not purchase advanced technology from the US, and if Taiwan were to move 50% of production to US soil, China would certainly lose its competitive edge. Furthermore, China is also not willing to share technology with the US–why would enemy nations share the most crucial components needed to engage in next-generation warfare? China reclaiming Taiwan would eliminate America’s access to semiconductors. Both China and the US can tariff each other to death, but neither can afford to lose the jewel of Taiwan.