Congress should hold the line on chips

Financial Times Europe7 Aug 2026The writer is an FT con trib ut ing editor and chief eco nom ist at Amer ican Com pass Oren Cass

ChangXin Memory Tech no lo gies (CXMT) gained 466 per cent dur ing its first day oftrad ing on the Shang hai Stock Exchange last week, clos ing as the most valu able list -ing in China. The com pany, foun ded only a dec ade ago, has very quickly become amajor global sup plier of memory chips.

It is a poster child for Chinese indus trial policy, enjoy ing bil lions of dol lars in sub -sidies, with more than one-third of equity held dir ectly by the state. PC makers HP,Asus, and Acer have begun using CXMT memory chips and Apple is qual i fy ing themfor devices sold in China while lob by ing for per mis sion to integ rate them into its USsup ply chain.

What is sur pris ing is CXMT’s suc cess in this par tic u lar sec tor. Semi con ductor man u -fac tur ing equip ment (SME) is the rare area where developed demo cra cies haveheld the line against Chinese mer cant il ism, pro hib it ing sales of the most advancedtech no logy for etch ing cir cuits on sil icon. Unfor tu nately, the Biden admin is tra tionchose to exempt CXMT from many of those restric tions. While the com pany is lis tedby the Pentagon as a “Chinese mil it ary com pany,” the com merce depart ment neverplaced it on the “Entity List” that pro hib its access to SME — reportedly under pres -sure from Japan, where Tokyo Elec tron stood to make a killing sup ply ing its tools.

CXMT’s extraordin ary growth shows how quickly China can make inroads in thechip mar ket if allowed to do so. And while soar ing demand has all the majormemory makers run ning at full capa city right now, the industry is a fam ously cyc -lical one. If CXMT is allowed to con tinue on its tra ject ory, the con sequences in thenext down turn for a US com pany like Micron Tech no logy, cur rently invest ing hun -dreds of bil lions of dol lars in expand ing US-based capa city, could be cata strophic.

For all his tough talk, Pres id ent Don ald Trump appears unlikely to address the situ -ation. On the con trary, under pres sure from China, he has repeatedly backed down.The com merce depart ment has stopped adding Chinese com pan ies to the Entity Listand paused a plan under way to sweep in com pan ies con trolled by oth ers alreadylis ted. Mean while, the admin is tra tion has put the key Amer ican advant age in the AIrace up for sale. It has gran ted per mis sion for exports of increas ingly advancedchips and pushed Con gress to drop a pro posal that would at least have given USbuy ers a right of first refusal before the chips went to China.Con gress is push ing back. In a rare show down between the White House and Con -gres sional Repub lic ans, the Sen ate is includ ing three dif fer ent pieces of legis la tionin the com ing year’s National Defense Author iz a tion Act that would rem edy someof the admin is tra tion’s mis-steps. The Match Act replaces the com pany-by-com panyEntity List with a blanket, coun try-level ban on export ing advanced SME to China.

It also pro hib its ser vi cing of equip ment already sold, degrad ing China’s estab lishedcapa city over time. Mean while, the AI Over watch Act pro hib its sales of advancedchips and requires the com merce depart ment to ensure that for eign sales will notlimit chip avail ab il ity for domestic use. And the Chip Secur ity Act takes steps to pre -vent chip smug gling.

Trump should sup port all three pieces of legis la tion. If he adopts a pos ture sim ilarto last year’s, twist ing arms to get pro vi sions dropped, Repub lic ans in Con gressmust refuse. Their will ing ness to chart their own course thus far under scores boththe import ance and time-sens it ive nature of these issues, and the absence of even ahalfway per suas ive defence of the White House pos i tion. They should also go fur -ther.

SME con trols pre vent China from mak ing its own chips. Chip con trols pre- ventChina from buy ing chips. But right now, Chinese firms still have broad remoteaccess to the data centres that do have the chips. The Chinese model closest to theUS fron tier, Kimi K3, was reportedly trained this way. It’s an absurd, hyper scale-sized loop hole in the legal regime and, yes, there’s pro posed legis la tion here too —the Remote Access Secur ity Act has passed the House of Rep res ent at ives by 369-22,but remains stalled in the Sen ate.

The US can claim few wins in its indus trial com pet i tion with China. The bipar tisansuc cess of the export con trol regime, where imple men ted, is a remark able achieve -ment that, if broad- ened, could secure long-term US leader- ship in the dec ade’smost import ant tech no logy. It will be a tragedy if policy- makers instead choose tosnatch defeat from the jaws of vic tory