CNAS Insights | MATCHing Policy to Strategy

Advanced semiconductors underpin the growing capabilities of artificial intelligence (AI). The computing power they provide drives military capability, economic productivity, and scientific discovery. Talent, data, and energy matter, but chips are the foundation. This is why strong controls on advanced AI chip exports to China remain essential to U.S. national security.

But focusing only on chips is shortsighted. Chips degrade, overheat, or become obsolete, and require replacement every few years. Even when China smuggles chips successfully, they have a limited lifespan. If the United States wants lasting leverage, it should look upstream: to the chip manufacturing equipment. While controlling chip access restricts what China can acquire today, curtailing semiconductor production will limit what it can produce for years to come. Both steps are vital to maintain and extend the U.S. and allied lead in AI.

Indigenizing semiconductor production has been a long-term Chinese Communist Party (CCP) priority. China’s 2015 industrial strategy, Made in China 2025, explicitly aimed to build China’s chip manufacturing ability. Beijing has since poured tens of billions of dollars into its domestic chip industry through successive rounds of state-backed investment funds. U.S. export controls have only intensified these efforts. Despite this spending, China has had limited success and still cannot produce advanced chips at scale. But this bottleneck is not guaranteed to last.

Maintaining the U.S. lead in AI compute requires closing critical gaps in existing export controls for chipmaking equipment. The bipartisan Multilateral Alignment of Technology Controls on Hardware (MATCH) Act, introduced in both the U.S. House and Senate on April 2, does just that. It would prohibit the sale and servicing of critical chipmaking tools to advanced fabrication facilities in China, while allowing U.S.- or allied-controlled chipmaking facilities to continue doing business there. The equipment subject to restrictions under the bill includes critical machinery such as deep ultraviolet immersion lithography, cryogenic etch systems, and other key components. If passed, the bill would block Chinese chip champions, including Semiconductor Manufacturing International Corporation (SMIC), Huawei, Hua Hong, ChangXin Memory Technologies (CXMT), and Yangtze Memory Technologies Corp. (YMTC), from imports, servicing, and technical support—adding restrictions to Hua Hong and CXMT for the first time and expanding export controls for the rest. And it requires allied countries to align their own export controls or face unilateral U.S. action.

The MATCH Act builds on strong precedent. In 2018, the Trump administration began working with the Netherlands to block the sale of extreme ultraviolet (EUV) lithography machines to China. ASML is the sole manufacturer of EUV lithography machines, which are among the most complex devices ever built and represent a key chokepoint in China’s efforts to produce advanced chips domestically. Since then, the United States, the Netherlands, and Japan have worked on aligning semiconductor export controls, culminating in a 2023 trilateral agreement. And successive rounds of Bureau of Industry and Security export controls have brought more and more chipmaking equipment under restrictions. These controls have represented meaningful steps toward slowing China’s AI progress.

But critical gaps remain. Older-generation lithography machines capable of producing AI chips can still be sold to Chinese entities by allied firms. ASML and other companies have continued to service equipment already installed in China, extending the operational lifespan of machines that might otherwise become unusable. Without servicing, experts assess that China would struggle to keep its lithography equipment running. The MATCH Act would close these gaps, covering both the sale and servicing of equipment to select Chinese fabrication facilities, and extending controls to other critical chipmaking equipment.

The real challenge of expanding export controls in this way will be allied coordination. The bill impacts not just the Netherlands and Japan but any allied country that controls a bottleneck in the AI supply chain, such as Germany, where Zeiss—a company that dominates the precision optics critical to lithography—is domiciled. Allies have endured a difficult stretch in U.S. trade policy: sweeping tariffs, unpredictable reversals, and a growing sense that Washington asks others to bear costs American firms do not. The frustration is understandable. Washington is asking allied companies to give up significant Chinese revenue while American chip firms retain the freedom to sell some advanced AI chips to China.

But beyond lost revenue, allies are frustrated by the lack of clarity in U.S. export control strategy. For years, successive U.S. administrations had pushed allies to tighten export controls, and they were largely willing to cooperate. Now, allies sense contradictory signals from different branches of government: The executive branch seems open to doing business with China, while Congress proposes bills like the MATCH Act. The lack of coherence has led to confusion about a larger strategy and made it seem like export controls are negotiable. Even allies that share the long-term concern face a coordination problem: Restrictions only work if everyone moves together, and no country wants to be the first to cut themselves off from the massive Chinese market.

The MATCH Act includes a clear stick to compel allied coordination: If they do not demonstrate sufficient progress to align export controls within 150 days of the bill’s enactment, it would direct the secretary of commerce to apply foreign direct product rules (FDPRs) unilaterally (although a national security waiver can allow for additional negotiation time, if required). FDPRs allow the United States to assert jurisdiction over any product made anywhere in the world if it is produced using American technology, software, or equipment. Because U.S. technology is embedded throughout the global semiconductor supply chain, these rules give Washington enormous leverage.

Allies may balk at the use of these extraterritorial powers. The diplomatic cost is real but justified. Allied relationships have already absorbed major shocks and one more firm action on semiconductor equipment is unlikely to be the breaking point. Allies may also protest that further export controls will further fuel China’s efforts to indigenize its semiconductor supply chains. This argument overlooks how the status quo already facilitates indigenization, whereby Chinese engineers learn from foreign sales and services of imported chipmaking equipment to build local expertise.

Allies should also recognize the stakes: If China closes the gap in chipmaking equipment, the long-term costs will be borne not just by the United States but by every country that benefits from technological advantage over China. The short-term pain of lost revenue is real but manageable, given the rapidly growing demand for AI chips and the associated investments in building and equipping new fabrication facilities. With China using civilian advances in AI to fuel its military operations and collaborating with Russia on military AI, ceding the chipmaking advantage to China is in no democratic country’s interest.

The MATCH Act will be most effective as part of a broader, more coherent strategy for export controls. A clear, shared vision for AI chip controls would go a long way to help allies get on board. Washington must also show its willingness to bear costs to preserve the allied AI advantage. Expecting allied firms to forego Chinese revenue while American firms sell freely to the Chinese market is a hard ask. If the United States wants true allied buy-in, it needs to demonstrate willingness to tighten chip controls, too.

The United States has a narrow window to lock in its advantage with allies in semiconductor manufacturing equipment. Chips matter, but the machines that make them matter more. The MATCH Act is the most direct path Congress has to ensure that the future of AI is shaped by democracies, not Beijing.

Janet Egan is the deputy director and senior fellow of the Technology and National Security Program at the Center for a New American Security

Michelle Nie is a visiting fellow with the Technology and National Security Program at the Center for a New American Security.