The United States and its allies control roughly 90 percent of the world’s semiconductor manufacturing equipment, with U.S., Dutch, and Japanese firms holding the dominant chokepoint positions[s]. China controls 85 percent of the rare earth minerals needed to build everything from fighter jets to electric cars[s]. Washington’s semiconductor export controls are designed to exploit this advantage, choking off Beijing’s access to the machines that make advanced chips. But China has its own chokepoints, and the result is something that was once theoretical: the construction of two parallel technological systems.
On April 22, 2026, the House Foreign Affairs Committee advanced the MATCH Act in what lawmakers called the largest semiconductor export controls markup in congressional history[s]. The bill would give the Netherlands and Japan 150 days to align their chip equipment restrictions with American rules or face unilateral enforcement[s]. If enacted, it would cut off China’s access to the deep ultraviolet lithography machines that ASML still sells there and ban the servicing of machines already installed.
What Are Semiconductor Export Controls?
Semiconductor export controls are rules that restrict which countries can buy the machines and technology used to manufacture computer chips. The United States began its modern campaign in October 2022, blocking China from accessing advanced computing chips and the equipment to make them. The logic is simple: chips power everything from smartphones to missiles, and whoever controls chip production controls the future of both the economy and national security.
The strategy targets what policymakers call “chokepoints,” the handful of technologies so specialized that no country can replicate them quickly. A single company, the Dutch firm ASML, makes all the world’s extreme ultraviolet lithography machines, the tools required for the most advanced chips. Washington’s approach has been to leverage allied control of these chokepoints to slow China’s technological advance.
China’s Counter-Move
Beijing has responded with its own restrictions. In December 2024, China banned exports of gallium, germanium, and antimony to the United States[s]. These minerals are essential for everything from semiconductors to night-vision goggles. In April 2025, it restricted seven more rare earth elements. The escalation in September 2025 erased over $1.5 trillion in equity market value in two days[s], forcing both sides to the negotiating table in Busan, South Korea. They agreed to a one-year mutual suspension that expires in November 2026.
The MATCH Act signals that Congress is ready to escalate before that truce ends. China’s Ministry of Commerce warned the legislation would “severely disrupt the international economic and trade order”[s].
Why This Leads to a Split Internet
When both sides weaponize their supply chains, the chains do not hold. They fragment. The result is what analysts call a “splinternet,” two technological ecosystems that cannot fully communicate with each other[s].
China’s semiconductor self-sufficiency rate jumped from 33 percent in 2024 to roughly 50 percent in 2025[s]. The 15th Five-Year Plan targets 80 percent by 2030. SMIC is producing 7-nanometer chips for Huawei. Every restriction accelerates Beijing’s drive to build its own complete supply chain, one that would eventually need nothing from the West.
The AI race makes the stakes clearer. Stanford’s 2026 AI Index found that China has “nearly erased” the American lead, with the gap between top models shrinking from hundreds of points to just 39[s]. If AI systems run on different chip architectures with incompatible software, trained on data that cannot cross borders, the internet itself will split into zones.
What Happens Next
The one-year truce expires in November. The MATCH Act is moving through Congress. China has the regulatory architecture in place for retaliation. The pattern is now stable: escalation, market reaction, summit, partial suspension, legislative ratchet, repeat.
The question is no longer whether semiconductor export controls will fragment the technological world, but how deeply, and who pays the cost of rebuilding separate systems.
The architecture of semiconductor export controls rests on a simple asymmetry: the United States and its allies control roughly 90 percent of global semiconductor manufacturing equipment and about 92 percent of the broader chip supply chain value[s]. China controls 85 to 90 percent of global rare earth processing capacity, including the refining of heavy lanthanides, and dominates parallel supply chains for related critical minerals such as graphite, gallium, germanium, and antimony, without which precision-guided munitions, electric vehicles, and frontier chip fabs cannot be built[s].
Each side sits on a different chokepoint along the same circulatory system. The semiconductor export controls war is the working out of who can squeeze hardest without inducing fatal blowback at home.
The MATCH Act: Semiconductor Export Controls 2.0
On April 22, 2026, the House Foreign Affairs Committee advanced more than 20 export control bills, the largest such markup since the Export Control Reform Act of 2018[s]. The centerpiece is the Multilateral Alignment of Technology Controls on Hardware Act (MATCH Act), which shifts semiconductor export controls from fab-based restrictions to a hybrid entity-based model[s].
The current regime regulates shipments to specific fabs, not entities. SMIC can legally purchase advanced ASML Twinscan NXT:1950i machines for nominally trailing-node facilities, then redeploy them to 7nm-class production lines. The MATCH Act would close this loophole by designating SMIC, Huawei, Hua Hong, CXMT, and YMTC as “covered facilities,” including all subsidiaries and affiliates, and prohibiting export of DUV immersion lithography equipment to any of them[s].
The bill includes a 150-day allied alignment deadline. The Netherlands and Japan must harmonize their restrictions with American rules or face an expanded Foreign Direct Product Rule that would give Washington jurisdiction over equipment containing any American technology, regardless of where it was manufactured[s]. ASML derived 33 percent of its 2025 revenue from China[s]; the servicing ban alone would degrade every advanced and near-advanced fab in the country as machines require regular maintenance to sustain yield.
The MATCH Act introduces a 75 percent threshold: restrictions apply only to genuine chokepoints that China cannot produce domestically[s]. If Chinese firms can meet 75 percent of domestic demand for a tool category, controls on that category lapse. This calibration mechanism acknowledges the paradox at the heart of Washington’s strategy.
The Paradox of Acceleration
Every blunt instrument applied accelerates Chinese indigenization, strains allied relationships, and narrows the window in which Western equipment remains indispensable[s]. China’s semiconductor self-sufficiency rate was approximately 33 percent in 2024 and is estimated at roughly 50 percent in 2025[s]. The 15th Five-Year Plan targets 80 percent by 2030, with priorities including a fully domestic 7nm equipment line[s].
SMIC is producing 7nm chips for Huawei’s Kirin processors and targeting 5nm pilot runs. CXMT is mass-producing DDR5 and LPDDR5 memory. YMTC is expanding NAND flash output. China has mandated that domestic chipmakers procure 50 percent of equipment from Chinese suppliers, threatening an estimated $18 billion in annual U.S. equipment sales.
The Tit-for-Tat Mechanics
The post-2022 sequence has been remarkably symmetrical. Washington restricts by performance threshold, end use, and entity. Beijing responds with licensing regimes, extraterritorial reach, and selective approvals that deliver pain through ambiguity rather than outright bans.
The October 2022 BIS rules began the modern phase. Updates followed in October 2023 and December 2024. The Trump administration’s September 2025 affiliates rule extended entity-list reach to companies 50 percent or more owned by listed parties. Beijing met it ten days later with extraterritorial licensing on rare earth oxides, metals, and magnet products covering items produced abroad with Chinese inputs. The escalation erased over $1.5 trillion in equity market value in two days, forcing the Busan summit and a one-year mutual suspension that expires in November 2026[s].
China’s Ministry of Commerce warned that the MATCH Act would “severely disrupt the international economic and trade order and seriously undermine the stability of the global semiconductor industry chain and supply chain”[s]. On April 7, 2026, the State Council published Order No. 834, the “Regulations on Industrial and Supply Chain Security,” creating a unified legal framework monitored by more than 15 agencies and authorizing legal action against companies deemed to be harming China’s supply chains.
Two Parallel Systems
The United States and China have stopped competing within a shared technological system and started constructing two parallel ones[s]. The Economist Intelligence Unit identifies six steps toward a “splinternet”: banning software, banning hardware, banning key technology, banning sales, banning components, and banning manufacturing. Most have already occurred sporadically[s].
Stanford’s 2026 AI Index found the gap between top U.S. and Chinese AI models shrank from over 300 Arena points in May 2023 to just 39 by March 2026[s]. The number of AI scholars moving to the United States dropped 89 percent since 2017[s]. China’s 15th Five-Year Plan mentioned AI over 50 times, targeting it as the solution to structural challenges from demographic decline to slowing growth[s]. It bluntly states that the “great power game is becoming more complex and intense”[s].
Data centers now account for 70 percent of all memory chip demand[s]. Any disruption to CXMT and YMTC would amplify price pressure at precisely the moment the United States is seeking supply chain resiliency. CSIS warns that, by threatening core pillars of the transatlantic relationship, “the United States risks undermining the partnerships and opportunities that have led to sustained U.S. technological leadership”[s].
The Structural Bind
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[s].
The theory behind Washington’s semiconductor export controls is that they buy time for domestic capacity to come online. Roughly $19 billion in finalized CHIPS Act direct awards to Intel, TSMC’s Arizona fabs, and Samsung’s Texas expansion aims to supply advanced chips without depending on a supply chain running through a geopolitical adversary. But the timeline for building fabs is measured in years. The timeline for congressional legislation is measured in months. The timeline for retaliatory export restrictions on rare earths is measured in days.
The truce expires in November. The MATCH Act is advancing. The pattern is now stable: escalation, market reaction, summit, partial suspension, legislative ratchet, repeat. The question is no longer whether the technological world will fragment but how deeply, and at what cost.
