China exploited gaps in chip export rules to buy $38 billion of advanced chipmaking gear last year, according to a new U.S. House probe, prompting bipartisan calls for a wider ban.

Foreign chip equipment makers sold to Chinese firms that American firms were banned from supplying, lawmakers said, hindering U.S. efforts to curb Beijing’s progress in the global semiconductor race. That's because of inconsistencies in the rules set by the U.S., Japan and the Netherlands in exporting to Chinese companies, per the report by the House Select Committee on China.

\\"These are the sales that made China increasingly competitive in the manufacture of a wide range of semiconductors, with profound implications for human rights and democratic values around the world,\\" the report said.

It singled out ASML in the Netherlands, Tokyo Electron (TEL) in Japan, and three U.S. firms: Applied Materials, KLA, and Lam Research for making “sizable returns” selling gear to Chinese state-owned and military-linked companies.

Between them, they sold $38 billion to Chinese companies without breaking the law. That marked a 66% uptick from 2022, when a range of export controls initially came in.

Rep. John Moolenaar, a Michigan Republican and the committee chair, called the companies “large-scale producers of equipment that China is using to fuel its military ambitions. They are growing their profits at the expense of U.S. national security.”

“We must not allow this critical equipment to be handed over to our foremost adversary, or America could lose the technology arms race,” he added.

ASML, Tokyo Electron, Applied Materials, KLA, and Lam Research did not immediately respond to requests for comment.

The report called for widening bans on selling parts that China could use to build its own chipmaker tools. That would include “aligning allied, such as Dutch and Japanese, exports controls with U.S. restrictions,” it said.

Successive U.S. administrations have moved to restrict China’s access to the most advanced American-made chips and tools.

“This bipartisan investigation reveals that the scale of these sales by Dutch, Japanese, and American firms is even more vast than we realized,\\" said Rep. Raja Krishnamoorthi, an Illinois Democrat on the committee. \\"Alongside our allies, we need to protect our national security and ensure we remain the world’s leading innovators in SME.\\"