US lawmakers are advancing bipartisan legislation to prohibit companies receiving federal semiconductor subsidies from purchasing chipmaking equipment manufactured in China for the next decade. The proposal aims to harden supply chain security and ensure that American tax dollars do not indirectly strengthen Beijing's technology sector.
Bipartisan security measures
The Chip Equipment Quality, Usefulness, and Integrity Protection Act, known as the Chip EQUIP Act, was introduced in the House by Representatives Zoe Lofgren and Jay Obernolte. Senators Mark Kelly and Marsha Blackburn plan to introduce a companion bill in December.
The legislation would prevent CHIPS Act grant recipients from acquiring tools produced by China or other "entities of concern." This designation encompasses Iran, Russia, and North Korea. The restrictions cover a broad spectrum of semiconductor manufacturing hardware. This includes complex lithography tools and machines used for wafer processing. The bill reportedly includes a waiver process for scenarios where specific tools cannot be sourced from the US or allied nations.
Lawmakers frame the initiative as a necessary step for national security. Representative Lofgren stated the measure ensures federal funds do not subsidize China's equipment industry while the US attempts to expand domestic production. Senator Kelly added that utilizing Chinese tools at American facilities could provide competitors with opportunities to disrupt production or gain a technological edge.
Impact on global manufacturers
The 2022 CHIPS Act allocates US$39 billion to bolster US semiconductor manufacturing. Major beneficiaries of this funding include Intel, TSMC, and Samsung Electronics.
The proposed restrictions would apply strictly to equipment imported into the US. They would not dictate procurement strategies for facilities that these companies operate overseas. This distinction is critical for global chipmakers maintaining high-volume operations in Asia and Europe.
The legislative push arrives as American toolmakers face financial pressure from shifting trade rules. Applied Materials recently warned that a broader US crackdown could reduce its fiscal 2026 revenue by US$600 million. The company noted that multiple regulatory changes in 2025 have already shrunk its addressable market in China. That market accounted for 28% of its total systems and services revenue in the prior fiscal year.
US equipment suppliers are also contending with Chinese customers pivoting toward domestic alternatives in response to previous export controls.
China's domestic growth
Beijing is aggressively funding its own semiconductor infrastructure. Lawmakers noted that China has directed more than US$40 billion into its equipment sector, a level of state support that challenges the competitiveness of US firms.
Chinese suppliers are gaining market share. Beijing-based Naura Technology Group climbed to sixth place among global semiconductor equipment suppliers in 2024. It moved up from eighth place the previous year. Naura was the only Chinese company to rank in the global top ten and is projected to post approximately 40% sales growth for the year. ASML remains the world's largest equipment supplier, followed by US giants Applied Materials and Lam Research.
Other Chinese entities are also advancing. Firms such as SiCarrier and AMIES are developing deep ultraviolet lithography systems to support more advanced chip manufacturing.
The Senate is expected to consider the Chip EQUIP Act in December. Proponents argue the measure is essential to protect the integrity of the US industrial base as domestic capacity expands.
Article edited by Jack Wu
