Protecting the Foundation: Strengthening Export Controls on Semiconductor Manufacturing Equipment

Mr. McGuire’s testimony to the House Foreign Affairs Committee argues that export controls related to semiconductor manufacturing equipment (SME) and advanced semiconductors are one of the most powerful tools available to U.S. policymakers in the technological competition with China and are critical to U.S. efforts to maintain leadership in artificial intelligence (AI) and other emerging technologies.

His testimony makes this argument through five key points:

1. SME export controls are the single most decisive leverage point the United States has in the technology competition with China. Advanced chips are critical to leadership in AI and other emerging technologies, and to military modernization. Because advanced chips cannot be manufactured without U.S. and allied SME, and SME is uniquely hard for China to indigenize, strong SME controls are the foundation of America’s ability to shape the global technology landscape and preserve its military advantages.
2. Current controls are working—but not well enough. U.S. SME restrictions have slowed China’s progress in advanced chipmaking, yet remaining gaps, loopholes, and inconsistent implementation still allow Beijing to build, maintain, and expand strategically significant semiconductor capacity.
3. Allied controls must be leveled-up to match U.S. controls. Key partner countries, particularly the Netherlands and Japan, have not fully matched U.S. controls on advanced Chinese fabs. This allows advanced Chinese fabs continued access to essential allied tools, components, and servicing, which uplifts Chinese chipmaking capabilities, helps China maintain existing advanced allied tools, and shifts market share away from American firms.
4. Expanded country-wide restrictions on SME—in addition to comprehensive restrictions on all advanced Chinese fabs and toolmakers—are necessary to close all loopholes. Only broad, country-wide restrictions on all SME capable of advanced production can reliably prevent Beijing from advancing its chipmaking capabilities or dominating mature-node manufacturing. The United States must also update the Entity List to include all entities affiliated with China’s national champions in chipmaking and SME, but entity-based measures alone cannot keep pace with China’s rapid buildout and complex corporate structures.
5. U.S. extraterritorial controls have proven effective and should be expanded to close gaps between U.S. and allied controls. Key allies are currently exempt from these extraterritorial controls; suspending these exemptions until allies adopt fully matching restrictions would seal some of the most significant gaps in the SME control regime.