A bipartisan group of U.S. lawmakers is advancing a proposal that would bar companies receiving federal CHIPS Act funding from purchasing Chinese-made semiconductor manufacturing equipment. The initiative, outlined in newly introduced House legislation and paired with a companion effort planned in the Senate, reflects mounting concern in Washington over supply chain vulnerabilities, technology transfer risks, and the long-term strategic implications of China’s rapidly expanding chip equipment industry.

The measure, spearheaded in the House by Representatives Jay Obernolte and Zoe Lofgren, would prohibit CHIPS Act grant recipients from buying Chinese-produced chipmaking tools for a period of ten years. The lawmakers backing the bill argue that federal subsidies intended to rebuild U.S. chip production should not indirectly support foreign suppliers whose operations may be influenced or controlled by competing geopolitical interests. The legislation is designed to apply only to domestic facilities receiving federal support and would not restrict companies’ overseas operations.

Legislative Details and Targeted Equipment

According to text and background explanations accompanying the proposal, the restrictions would cover an extensive range of semiconductor fabrication tools. These include both advanced lithography systems and a broad suite of equipment used throughout the chip manufacturing process, from wafer slicing machines to specialized handling systems. While the primary focus is on Chinese suppliers, the bill extends its reach to equipment originating from other governments identified as national security concerns, including Iran, Russia, and North Korea.

Lawmakers supporting the measure emphasize that the equipment covered by the bill forms the backbone of modern semiconductor production. High-precision machinery, like that produced by leading global manufacturers such as ASML, is central to national initiatives to expand U.S. chip capacity. The bill’s authors note that China has invested more than $40 billion in building its own chip equipment sector, with a growing share of the global market, prompting concerns that U.S. subsidy dollars could ultimately align with Beijing’s industrial ambitions if left unchecked.

Implications for U.S. Chipmakers and Industry Concerns

The proposal arrives during a period of rapid expansion among U.S. chip manufacturers. Companies including Intel, Taiwan Semiconductor Manufacturing Company (TSMC), and Samsung Electronics have already received federal grants for large-scale facility construction and upgrades under the CHIPS Act. Intel’s award, notably, was later restructured into a federal equity stake. These investments are intended to strengthen domestic semiconductor capacity and reduce long-term reliance on foreign production.

However, industry leaders have voiced concerns that the bill could introduce new strains into existing supply chains. U.S.-based semiconductor equipment firms such as Applied Materials, Lam Research, and KLA have expressed worry that broader export restrictions on tools shipped to China are already reducing sales and constraining their ability to invest in research and development. A ban preventing U.S. fabs receiving federal support from purchasing certain Chinese-made equipment could further limit accessible suppliers and force companies to source alternatives in an industry where specialized tools are difficult to replace.

The bill includes waiver provisions allowing federal authorities to authorize specific equipment purchases if no equivalent tools are produced in the United States or allied nations. Lawmakers characterize these exceptions as necessary to avoid production bottlenecks or delays in facilities receiving federal support. Even with this flexibility, however, companies dependent on highly specialized machinery will need to evaluate procurement strategies and assess whether key components fall under the proposed restrictions.

Broader National Security and Policy Context

Supporters of the legislation frame the effort as part of a broader reevaluation of technology supply chains, particularly as they relate to semiconductors—components that anchor industries ranging from consumer electronics to defense systems. They argue that purchases of Chinese-made equipment by CHIPS grant recipients could pose risks involving technology leakage, intellectual property exposure, or long-term dependency on suppliers aligned with a strategic competitor.

The bill’s introduction follows a sequence of congressional and executive actions over the past several years aimed at curbing certain technological exchanges with China. These include export controls on advanced semiconductor tools and restrictions on outbound investment in sensitive technology sectors. The Chip EQUIP Act — the name referenced in some legislative drafts — seeks to turn procurement rules into statutory requirements, layering an additional safeguard onto the CHIPS Act’s existing framework.

Lawmakers who have publicly supported the measure have framed the effort as a continuation of the CHIPS Act’s original purpose: strengthening domestic semiconductor manufacturing and ensuring that the taxpayer-funded revival of U.S. chip production does not indirectly support strategic competitors. They point specifically to the need for “reliability and integrity” in domestic chipmaking tools, underscoring that national security considerations are closely tied to the equipment supply chain as well as the chips themselves.

Next Steps in Congress

The bill’s sponsors expect Senate consideration to begin in early December, supported by Senators Mark Kelly and Marsha Blackburn. Early bipartisan engagement suggests potential for the effort to move forward, though committee review will likely address technical questions surrounding implementation details, enforcement mechanisms, and the precise definition of “Chinese-made” equipment.

Companies seeking CHIPS Act funding will be watching the legislative process closely. Should the restriction become law, future applicants would need to restructure procurement strategies at the earliest stages of planning to ensure compliance. Analysts note that even if enacted without modification, the bill would apply only to U.S.-based facilities receiving subsidies and would not restrict the global operations of those companies, a distinction lawmakers have emphasized to avoid unintended impacts on multinational supply chains.

As the CHIPS Act continues to distribute tens of billions of dollars for new semiconductor investments, the push to regulate the source of manufacturing equipment signals an evolving phase in U.S. industrial and national security policy—one focused not only on producing more chips domestically but on reshaping the upstream tools and materials that make modern chipmaking possible.