China’s Ministry of Commerce warned on Friday that US legislation advancing through Congress would “severely disrupt the international economic and trade order and seriously undermine the stability of the global semiconductor industry chain and supply chain.” The legislation in question is the MATCH Act, the Multilateral Alignment of Technology Controls on Hardware, which passed the House Foreign Affairs Committee on April 22 as part of what lawmakers described as the largest markup on semiconductor export controls in congressional history. The bill would require the Netherlands and Japan to align their chip equipment export restrictions with American rules within 150 days or face unilateral US enforcement, including an expanded Foreign Direct Product 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 the servicing of machines already installed, a step that would affect every advanced and near-advanced fab in the country.

The markup

The House Foreign Affairs Committee advanced more than 20 export control bills on April 22, chaired by Representative Brian Mast. 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 as “covered facilities,” including all subsidiaries and affiliates, and would prohibit the export of DUV immersion lithography equipment to any of them. It would also ban allied firms from providing engineering services to maintain or upgrade machines already operating in Chinese fabs, a servicing restriction that would degrade existing capacity over time as machines require regular maintenance to sustain yield.

The committee also advanced the Chip Security Act, which would require advanced chips to include location verification mechanisms before export so that exporters can flag the government if a chip reaches an unauthorised destination. The Semiconductor Industry Association opposes this provision, warning of “untested and potentially infeasible on-chip mechanisms” that could undermine global trust in American semiconductors. The ECRA Penalty Increase Act would quadruple civil penalties for export violations, raising the per-violation ceiling from $300,000 to $1.2 million. The ECRA Statute of Limitations Extension Act would double the window for prosecution from five to ten years. The Deterring American AI Model Theft Act would authorise sanctions on Chinese AI firms accused of misusing US-developed models. Smuggling $2.5 billion of Nvidia servers to China, as Super Micro Computer’s co-founder is alleged to have done through a diversion scheme routed via Southeast Asia, demonstrates both the scale of demand for restricted chips and the limits of an enforcement regime that relies on declared end-use and corporate compliance teams.

The escalation

The MATCH Act would be the most significant escalation in US semiconductor export controls since the initial restrictions imposed in October 2022. Those rules prohibited the export of advanced computing chips and chipmaking equipment to China. They were updated in October 2023 to close loopholes, expanded in December 2024 to cover high-bandwidth memory and additional equipment, and supplemented in January 2026 when the Trump administration imposed a 25% Section 232 tariff on advanced semiconductor imports and shifted the export review policy for Nvidia’s H200 and AMD’s MI325X from presumption of denial to case-by-case evaluation. Blackwell-class chips remain under presumption of denial. The January 2026 changes were partly a response to pressure from Nvidia, whose CEO Jensen Huang had dinner with Trump at Mar-a-Lago and argued that overly restrictive controls would push Chinese AI labs toward domestic alternatives. DeepSeek optimising AI models for Huawei chips instead of Nvidia hardware is, in Huang’s words, “a horrible outcome” for the United States, because it would break the software dependency on Nvidia’s CUDA ecosystem that currently gives American chips their lock-in advantage.

The MATCH Act moves in the opposite direction from the January relaxation. Where the executive branch loosened restrictions on finished chips, Congress is tightening 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 servicing 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 shares fall since the bill’s introduction. China accounted for 33% of ASML’s 2025 revenue. The company expects that share to drop to approximately 20% in 2026 even without the MATCH Act. If the bill passes, the decline would be far steeper. Applied Materials projects $600 million to $710 million in lost China revenue for fiscal 2026. Lam Research reported that China still accounted for 43% of its Q1 fiscal 2026 revenue, $2.28 billion, but expects that share to fall below 30% this year.

The response

China’s countermeasures are already extensive. Beijing imposed export bans on gallium, germanium, and antimony in December 2024, suspended them in November 2025 for one year but retained licensing requirements. It restricted exports of seven medium and heavy rare earths, including terbium, dysprosium, and yttrium, in April 2025, then partially suspended those restrictions in November 2025. It announced silver export controls on December 31, 2025. On April 7, 2026, the State Council published Order No. 834, the “Regulations on Industrial and Supply Chain Security,” which creates a unified legal framework monitored by more than 15 agencies, including MOFCOM and the Ministry of Industry and Information Technology, authorising legal action against companies deemed to be harming China’s supply chains. China has mandated that domestic chipmakers procure 50% of their equipment from Chinese suppliers, a requirement that threatens an estimated $18 billion in annual US equipment sales. The MOFCOM statement on Friday said China would “resolutely take necessary measures to firmly safeguard the legitimate and lawful rights and interests of Chinese enterprises.” No specific new retaliatory measures were announced, but the regulatory architecture for them is now in place.

The supply chain consequences extend well beyond the two principal combatants. Japan, whose Tokyo Electron, Nikon, Canon, Screen Holdings, and Advantest all sell equipment to Chinese fabs, already implemented controls on 23 types of equipment in July 2023. The MATCH Act would require Japan to expand those restrictions within 150 days or lose access to American technology in its own supply chain. The Netherlands faces the same deadline. South Korea’s memory giants, SK Hynix and Samsung, operate fabs in China that depend on equipment servicing from the companies the MATCH Act would restrict. The EU’s 700 million euro investment in its NanoIC semiconductor pilot line at imec in Leuven, backed 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.

The race

China’s semiconductor industry has made genuine progress under pressure. SMIC is producing 7-nanometre chips for Huawei’s Kirin processors and is working to double 7nm capacity in 2026. It has entered pilot runs at 5nm, targeting mass production for Huawei and Alibaba, though yield improvement remains the critical challenge. CXMT is mass-producing DDR5 and LPDDR5 memory and is targeting HBM3 production, though the timeline has slipped and mass production within 2026 now appears unlikely. YMTC is expanding NAND flash output and developing HBM packaging technologies. Huawei is reportedly preparing to send a 3nm chip design using carbon nanotubes and 2D materials to SMIC, an unconventional approach that has not been independently confirmed with technical detail. China’s semiconductor self-sufficiency rate was approximately 33% in 2024 and is estimated at roughly 50% in 2025. The new target, embedded in the 15th Five-Year Plan, is 80% by 2030, with priorities including a fully domestic 7nm equipment line and stable 14nm production. Tom’s Hardware assessed that China remains “still a decade behind, despite hundreds of billions spent and significant progress.”

The United States is pursuing the inverse strategy: restricting China’s access to equipment while building domestic manufacturing capacity at unprecedented scale. The US government’s $36 billion stake in Intel under the CHIPS Act, converted from grants to equity, funds fab construction in Ohio and Arizona. Intel’s foundry partnership with Musk’s $25 billion Terafab chip megaproject adds another advanced manufacturing facility. TSMC is building fabs in Arizona. Samsung is expanding in Texas. The theory is that export controls buy time for domestic capacity to come online, at which point the United States can supply its own advanced chips and those of its allies without depending on a supply chain that runs through a geopolitical adversary. The problem is that the timeline for building fabs is measured in years, the timeline for Congressional legislation is measured in months, and the timeline for retaliatory export restrictions on rare earths and critical minerals is measured in days. China’s warning on Friday was not that the MATCH Act would fail to restrict its chip industry. It was that the disruption would not be confined to China. When both sides of a supply chain use restriction as a weapon, the chain does not hold. It fragments, and everyone pays the cost of rebuilding separate ones.