TL;DR
China’s Ministry of Commerce warned that US chip export legislation would “seriously disrupt” global semiconductor supply chains in response to the House Foreign Affairs Committee’s April 22nd 20+ export control bill, the largest in congressional history. Center is the MATCH Act, which requires the Netherlands and Japan to adapt DUV lithography export restrictions to US regulations within 150 days or unilaterally impose them, cutting off ASML’s remaining Chinese sales and banning servicing of existing machines. China has already implemented comprehensive supply chain security regulations and rare earth restrictions, while strengthening domestic capacity through US CHIPS Act investments and the $25 billion Terafab project.
China’s Ministry of Commerce warned on Friday that the US legislation advancing through Congress would “seriously disrupt the international economic and trade order and seriously destabilize the global semiconductor industry and supply chain.” The legislation in question is the MATCH Act, the Multilateral Harmonization of Technology Controls in Equipment, which passed the House Foreign Affairs Committee on April 22 as part of what the House described as the largest increase in semiconductor export controls in the history of Congress. The bill would require the Netherlands and Japan to bring their chip equipment export restrictions into line with American rules within 150 days or face unilateral US enforcement, including an expanded Foreign Direct Products Rule that would give Washington jurisdiction over equipment containing any American technology, regardless of where it was manufactured. If enacted, the MATCH Act would cut off China’s access to the DUV immersion lithography machines that ASML still sells there and ban servicing of machines already installed, a move that would affect every advanced and near-advanced fab in the country.
Marking
The House Foreign Affairs Committee, chaired by Rep. Brian Mast, advanced more than 20 export control bills on April 22. The MATCH Act, introduced by Representative Michael Baumgartner on April 2, has bipartisan support in both chambers. Senators Jim Risch, Pete Ricketts, Andy Kim and Chuck Schumer introduced the Senate companion on April 8. The bill names SMIC, Huawei, Hua Hong, CXMT and YMTC, including all subsidiaries and affiliates, as “closed entities” and prohibits any export of DUV’s immersion equipment. It would also bar allied firms from providing engineering services to maintain or upgrade existing machinery in Chinese factories, which would degrade existing capacity over time as machinery requires regular maintenance to maintain productivity.
The committee also pushed the Chip Security Act, which would require advanced chips to include pre-export verification mechanisms so exporters can flag the government if the chip reaches an unauthorized destination. The Semiconductor Industry Association opposes the provision, warning of “untested and potentially unfeasible chip mechanisms” that could undermine global confidence in American semiconductors. The ECRA Penalty Enhancement Act would quadruple the civil penalties for export violations, raising the ceiling from $300,000 to $1.2 million per violation. ECRA’s Extension of Limitations Act would double the window for criminal prosecution from five years to ten years. The law, which would prevent the theft of American artificial intelligence models, would authorize sanctions against Chinese AI firms accused of misusing US-developed models. He smuggled $2.5 billion worth of Nvidia servers into ChinaAs the co-founder of Super Micro Computer allegedly did through a diversion scheme through Southeast Asia, it demonstrates both the scale of demand for limited chips and the limits of enforcement based on declared end-use and corporate compliance groups.
Escalation
The MATCH Act would be the most significant increase in U.S. semiconductor export controls since the initial restrictions imposed in October 2022. These regulations prohibited the export of advanced computing chips and chip manufacturing equipment to China. They were updated in October 2023 to close loopholes, expanded to include high-bandwidth memory and peripherals in December 2024, and added in January 2026 when the Trump administration imposed a 25% Section 232 tariff on advanced semiconductor imports and changed Nvidia’s H2000 and AMD5002 preview policy. separate assessment. Blackwell class chips remain under the assumption of denial. The January 2026 changes were partly a response to pressure from Nvidia, whose CEO Jensen Huang dined with Trump at Mar-a-Lago and argued that overly restrictive controls would push Chinese AI labs toward domestic alternatives. DeepSeek optimizes AI models for Huawei chips instead of Nvidia hardware In Huang’s words, “terrible result” for the United States, as it would remove the software dependency on Nvidia’s CUDA ecosystem, which currently gives American chips a lock-in advantage.
The MATCH Act moves in the opposite direction from the January break. As the executive branch loosens restrictions on finished chips, Congress tightens restrictions on the equipment used to make them. The logic is that controlling equipment is more effective than controlling chips, because a lithography machine is a $200 million tool that requires years of maintenance by the manufacturer, while a chip is a commodity that can be rerouted through intermediaries. ASML, the sole manufacturer of both EUV and the most advanced DUV immersion lithography systems, has seen its stock plunge since the introduction of the bill. China accounted for 33% of ASML’s 2025 revenue. The company expects that share to fall to about 20% in 2026, even without the MATCH Act. If the bill passes, the reduction will be even steeper. Applied Materials forecasts lost China revenue of $600 million to $710 million for fiscal 2026. Lam Research said China still accounted for 43% of first-quarter 2026 fiscal revenue, at $2.28 billion, but expects that share to fall below 30% this year.
Answer
China’s countermeasures are already extensive. Beijing imposed export bans on gallium, germanium and antimony in December 2024, suspending them for a year in November 2025, but maintaining licensing requirements. It restricted exports of seven medium and heavy rare earth elements, including terbium, dysprosium and yttrium, in April 2025, then partially lifted those restrictions in November 2025. On December 31, 2025, it announced the control of silver exports. On April 7, 2026, the State Council issued Decree No. 834. Security, which creates a single legal framework overseen by more than 15 agencies, including MOFCOM and the Ministry of Industry and Information Technology, and allows legal action against companies deemed to be harming Chinese supply chains.” China has ordered domestic chipmakers to buy 50% of their equipment from Chinese suppliers, threatening $18 billion in annual equipment sales in the U.S. MOFCOM said in a statement Friday that China’s “legal and legitimate rights of Chinese enterprises and will resolutely take the necessary measures to vigorously protect its interests.” No specific new responses were announced, but the regulatory architecture for them is now in place.
The supply chain implications go far beyond the two main combatants. Japan, which sells Tokyo Electron, Nikon, Canon, Screen Holdings and Advantest equipment to Chinese factories, has already implemented control over 23 types of equipment in July 2023. The MATCH Act would require Japan to extend these restrictions within 150 days or face losing access to American technology in its supply chain. The Netherlands faces the same deadline. South Korean memory giants SK Hynix and Samsung operate fabs in China that depend on servicing equipment from companies that would be restricted by the MATCH Act. EU invests €700 million in NanoIC semiconductor pilot line The imec at Leuven, supported by ASML and national governments, reflects Europe’s assessment that the chip supply chain is fragmenting and that building domestic capacity is no longer optional.
Race
China’s semiconductor industry has made real progress under pressure. SMIC makes 7-nanometer chips for Huawei’s Kirin processors and aims to double 7-nanometer capacity in 2026. It has entered 5-nanometer trials aimed at mass production for Huawei and Alibaba, although improving productivity remains a critical challenge. CXMT is mass-producing DDR5 and LPDDR5 memory and targeting HBM3 production, although the timeline has slipped and mass production in 2026 now seems unlikely. YMTC expands NAND flash output and develops HBM packaging technologies. Huawei is reportedly preparing to submit a 3-nanometer chip design using carbon nanotubes and 2D materials to SMIC, an unconventional approach that has not been independently confirmed with technical details. China’s semiconductor self-sufficiency rate is estimated to be about 33% in 2024 and about 50% in 2025. The new target included in the 15th Five-Year Plan is 80% by 2030, with priorities including a fully indigenous 7-nanometer equipment line and stables. Tom’s Hardware estimated that China “has spent hundreds of billions and is still a decade behind despite significant progress.”
The United States is pursuing the opposite strategy: limiting China’s access to equipment while building domestic manufacturing capacity on an unprecedented scale. The US government’s $36 billion stake in Intel under the CHIPS ActConverted from grants to capital in Ohio and Arizona. Intel’s foundry partnership with Musk’s $25 billion Terafab chip megaproject adds another advanced manufacturing facility. TSMC is building factories in Arizona. Samsung is expanding in Texas. The theory is that export controls take time for domestic capacity to kick in, at which point the US can supply its own and its allies’ advanced chips regardless of the supply chain that passes through a geopolitical rival. The problem is that the timeline for building fabs is years, the timeline for Congressional legislation is months, and the timeline for retaliatory export restrictions on rare earths and critical minerals is days. China warned on Friday that the MATCH Act would not restrict its chip industry. This meant that the disruption would not be limited to China. When both sides of the supply chain use the constraint as a weapon, the chain is not maintained. It falls apart and everyone pays for their own rebuilding.
