US House Report Links Semiconductor Firms to China Military Sales, Stocks Fall

Shares of major U.S. semiconductor companies, including Nvidia, AMD, Micron, Qualcomm, and several semiconductor equipment makers like Applied Materials, ASML, KLA, and Lam Research, have fallen sharply amid rising tensions over U.S.-China trade and export controls. President Donald Trump threatened to impose massive tariff increases on Chinese imports, contributing to market declines in chip stocks. A U.S. House Select Committee released a report revealing that American, Dutch, and Japanese semiconductor equipment firms have supplied critical technology to Chinese state-owned and military-linked entities, raising national security concerns and calls for expanded export restrictions. These companies have significant revenue exposure to China, with sales to flagged military-linked customers increasing substantially, which the Committee warns could jeopardize U.S. technological leadership and economic security. The industry is also grappling with increased export controls and geopolitical challenges, highlighted by China's tightened restrictions on rare earths and the semiconductor sector's efforts to enhance manufacturing capabilities domestically, as seen in recent announcements at SEMICON West. Despite no accusations of legal violations, the ongoing scrutiny and potential policy actions weigh heavily on the semiconductor market's outlook.