China is outspending the United States in the race to develop cutting-edge chips needed for artificial intelligence and other key technologies, industry representatives said at a hearing of the House Subcommittee on Commerce, Manufacturing and Trade. To compete, the U.S. must build more domestic capacity in all phases of the semiconductor supply chain, they said.

In particular, the representatives called for more “proactive investments” in semiconductor plants and supporting infrastructure, such as reliable sources of electricity. They also said the U.S. should streamline the permitting process for building fabrication plants and otherwise scale back regulations that hamper industry efforts to keep up with China.

“For decades, the U.S. has dominated the world stage of semiconductors — leading in areas such as global revenue, manufacturing capacity and semiconductor design, to name a few,” Rep. Gus Bilirakis, R-Fla., chairman of the Subcommittee on Commerce, Manufacturing and Trade, said in his opening statement. “But that leadership is no longer guaranteed.”

Bilirakis noted that American semiconductor manufacturing capacity has declined by more than 25% since 1990. “Our adversaries, particularly China, are actively seeking to unseat us from global leadership and disrupt our supply chains,” he said.

AI race with China not letting up

All of the industry representatives testified that AI is the world’s leading driver of demand for state-of-the-art semiconductors.

“Leadership in semiconductors will determine leadership in AI,” said Jason Grebe, senior vice president of corporate planning at Intel. “If you do not build the chips, you do not control the future of AI.”

Grebe said Intel has invested more than $100 billion in new and expanded facilities in Arizona, New Mexico, Oregon and Ohio. It also has committed about $93 billion in domestic research and development since 2020. However, the Ohio project has been delayed to 2030, and some have noted that the company continues to have manufacturing capacity issues that will not be easily fixed.

The semiconductor industry is unlike most others because it underpins much of the modern world, said Jason Oxman, president and CEO of the Information Technology Industry Council, which represents information and communications technology companies. He added that the U.S. semiconductor industry “commands over 50% of the global market and generated $318 billion of revenue in 2025, making semiconductors critical to the U.S. economy.”

According to Oxman, semiconductor companies are planning to invest about $1 trillion globally through 2030 in new fabrication plants. Much of that investment will come from China.

“China’s goal is to make its [semiconductor] technology dominant around the world, and its technology stack is increasingly competitive, especially in developing markets,” he said. “U.S. policymakers must enact the right polices to keep the U.S. industry ahead.”

Industrial policy is key U.S. efforts should focus on establishing a robust industrial policy around semiconductors, said Charles Wessner, a nonresident senior advisor in the Renewing American Innovation Program at the Center for Strategic and International Studies.

“We’ve had industrial policy since about 1787,” he said, pointing to things like agriculture subsidies. “We shouldn’t be afraid to pick winners. [The Chinese] intend to be the winners.”

Wessner added that the U.S. should not try to entirely prevent China or other countries from gaining access to advanced U.S. semiconductor technologies. For example, the MATCH Act closes loopholes that allow countries to obtain restricted technology through front companies, subsidiaries and allied countries. In addition, the Trump administration has placed conditions on Nvidia chip exports to China.

According to Wessner, such strategies can backfire. “They end up being toughest on our own industry” by imposing limits on revenue “that’s absolutely crucial for [U.S. semiconductor companies] to compete,” he said. “This is not an idle point. When you cut revenue by 20%, you cut R&D by 20%.”

While slowing China’s access to certain technologies “may be a useful thing to do, it has to be a targeted effort to slow, not to block,” he added.

“What we need are proactive investments,” Wessner said. “We have to combine our defensive efforts with a careful assessment of their impact. What we have to avoid here is [asking], ‘Who’s toughest on China?’”

CHIPS and Science Act successes, failures The 2022 CHIPS and Science Act, which appropriated billions of dollars for semiconductor research and development, has made “visible progress” in boosting U.S. industry, said Asad Ramzanali, director of AI and technology policy at Vanderbilt University.

For example, he said that before that legislation was passed, the U.S. produced no advanced-node logic chips, which include graphics processing units commonly used to train AI models. Almost 90% of those chips were produced in TSMC facilities in Taiwan.

That situation has improved. “By the end of the Biden administration, the U.S. was on track to have 28% of advanced-node capacity by 2032 and had crowded-in over $500 billion in private semiconductor investments,” he told the committee.

However, he said that some U.S. policies under the Trump administration have been counterproductive. These include “gutting CHIPS Act office staffing, conflicts of interest in certain deals and equity investments, including the recent one with Intel, without clear legal authority and transparency.”

As the remainder of CHIPS and Science Act manufacturing funds are distributed, Congress should ensure that they are being used for their intended purpose in the public interest rather than the interest of private entities, he said.

According to the subcommittee chair’s memo, as of March 2026, Commerce has given 46 final awards to 39 different companies, totaling over $29.5 billion in investments. There are a further 14 preliminary memoranda of terms with 12 different companies, totaling over $1.6 billion in potential investments.

Ramzanali also criticized how the Trump Administration has funded research and development through the National Institute of Standards and Technology’s National Semiconductor Technology Center. For example, he said it should not have disbanded key programs like the SMART USA Institute and Industrial Advisory Committee.

The U.S. Department of Commerce has announced it will take a “venture capital-style approach” to NSTC through a broad funding solicitation. However, “That is not what is needed for public investments in CHIPS R&D,” he said.

“Companies already invest vast sums in semiconductor R&D, and this new approach could end up subsidizing what companies would do anyway. Rather, the goal of these funds should continue to be supporting R&D efforts that no one company has an incentive to do alone.”

By: DocMemory
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