Cash Over Country


How Three American Semiconductor Manufacturing Equipment Companies Support China’s Flourishing Legacy Semiconductor Industry at the Cost of American National And Economic Security.


Executive Summary

  • On October 7, 2022, the Biden Administration imposed export controls targeting China’s advanced chip sector but did nothing to restrict the rise of China’s legacy chip businesses. (See for background.) American dependence on Chinese legacy chips would be destructive to our national security and economic interests.
  • Unfortunately, American semiconductor equipment manufacturers (SEMs) have succeeded in lobbying the U.S. government to permit them to sell some of the world’s most complex technology to Chinese government-aligned firms making legacy chips. As can be documented from public data, American SEMs Applied Materials, KLA, and Lam Research have grown their combined revenues from China by 102% between 2018 and 2022. Statements from these companies on recent earnings calls indicate that they intend to continue profiting from China.
  • Instead of capitulating to the SEM industry, the U.S. government should broaden export controls to cut off Chinese chipmakers’ access to coveted Western technologies before China can achieve global market dominance in legacy chips, just as they have done in other vital industries. Additionally, the U.S. should use funds from the CHIPS Act to promote the domestic production of legacy chips and other semiconductor-related technologies such as printed circuit boards and computers.

About The Co-Author

Roslyn Layton, PhD is an international technology expert who explains the economics, security, and geopolitics of broadband.

She is Senior Vice President of Strand Consult and Visiting Researcher at Aalborg University Copenhagen where she earned a doctorate in internet economics. She served on the Presidential Transition Team for the Federal Communications Commission (FCC).

Roslyn founded the think tank China Tech Threat for policy to protect Americans’ privacy, security and prosperity from malicious technology produced by the People’s Republic of China. Her research examines cybersecurity, radio spectrum economics and security, business models for broadband cost recovery, and the security advantages of 5G versus Wi-Fi.

About The Co-Author

JEFF FERRY is Chief Economist at the Coalition for a Prosperous America (CPA). CPA is the only national, bipartisan organization representing exclusively a coalition of domestic manufacturers, labor unions, and family farm groups dedicated to rebuilding U.S. manufacturing and broadly restoring American prosperity.

Ferry is an economist, author, and former technology executive. From 2005 to 2011, he served as a marketing executive at Infinera, a U.S. manufacturer of optical networking systems that designs and manufactures photonic integrated circuits in Sunnyvale, California.

In 2019, the CPA economics team won the Mennis Award from the National Association for Business Economics for a paper, Decoupling from China: an economic analysis of the impact on the U.S. economy of a permanent tariff on Chinese imports.