US lawmakers could eye 10-year ban on CHIPS Act Grants buying Chinese chip tools, with waivers

While U.S. officials have reportedly signaled that long-anticipated semiconductor tariffs may not be imposed anytime soon, the country is maintaining strict controls on China’s chip industry. As part of these ongoing efforts, Reuters reports a bipartisan group of U.S. lawmakers on Thursday introduced a House bill that would bar CHIPS Act grant recipients from buying Chinese chipmaking equipment for the next decade.

The report suggests that the proposal covers a broad spectrum of semiconductor tools—from advanced lithography systems like those made by ASML to the machinery that saws and processes silicon wafers.

The measure was introduced in the House by Republican Jay Obernolte and Democrat Zoe Lofgren, while Senators Mark Kelly and Marsha Blackburn are preparing to bring a companion bill to the Senate in December, the report says.

Scope of impact
As Reuters highlights, major chipmakers such as Intel, Taiwan’s TSMC, and South Korea’s Samsung Electronics have drawn on CHIPS Act funds, although Washington later converted Intel’s grant into an equity stake.

However, Reuters points out that the restrictions apply only to equipment imported into the U.S. and would not extend to the overseas operations of CHIPS Act grant recipients. In addition, the bill also includes carve-outs that allow U.S. officials to issue waivers when certain tools aren’t available domestically or from allied suppliers.

If the newly proposed bill becomes law, it could be a boost for major U.S. toolmakers struggling under previous export curbs. Bloomberg reported last week that Applied Materials warned a broader U.S. crackdown could slash $600 million from its fiscal 2026 revenue.

During an earnings call cited by Investing.com, Applied Materials CEO Gary Dickerson noted that multiple trade rule changes in 2025 have shrunk the company’s addressable market in China, which made up 28% of total systems and services revenue for fiscal 2025—and 25% in the fourth quarter alone.

China’s chip-making tool emergence
Notably, as Reuters suggests, China has poured more than $40 billion into its own semiconductor sector, with a strong push into manufacturing equipment—a segment where Chinese suppliers have rapidly expanded their market share.

While China remains out of reach for the most advanced EUV machines needed for sub-5nm production, several domestic players are on the rise. According to the South China Morning Post, Naura Technology Group climbed the global rankings of semiconductor equipment suppliers in 2024, reportedly claiming sixth place worldwide by revenue last year, up from eighth in 2023.

The company specializes in high-end semiconductor process equipment and key components, including etchers, PVD and ALD systems, CVD tools, and more.

Other Chinese firms, such as SiCarrier and AMIES—a spinoff of Shanghai Micro Electronics Equipment (SMEE)—are advancing DUV systems aimed at achieving 5nm-class chip production, without relying on EUV technology.

Source: TrendForce, Taiwan.