Intel has tested chipmaking tools from firm with sanctioned China unit, sources say

Chipmaker Intel has tested chipmaking tools this year from a toolmaker with deep roots in China and two overseas units that were targeted by US sanctions, according to two sources with direct knowledge of the matter.

Intel, which fended off calls for its CEO’s resignation from President Donald Trump in August over his alleged ties to China, got the tools from ACM Research, a Fremont, California-based producer of chipmaking equipment. Two of ACM’s units, based in Shanghai and South Korea, were among a number of firms barred last year from receiving US technology over claims they have supported the Chinese government’s efforts at harnessing commercial technology for military use and making advanced chips or chipmaking tools. ACM denies the allegations.

The two so-called wet etch tools, used for removing material from the silicon wafers that are transformed into semiconductors, were tested for possible use in Intel’s most advanced chipmaking process, known as 14A. That process is due for an initial launch in 2027.

Reuters could not determine if Intel had made a decision to add the tools to the advanced chipmaking process and has no evidence that the company violated any US regulations. ACM said it could not comment on “specific customer engagements,” but can confirm that “ACMR’s US team has sold and delivered multiple tools from our Asian operations to domestic customers.” It also said it has disclosed the shipment of three tools to a “major US-based semiconductor manufacturer,” which are being tested and some of which have met performance standards.

But the fact that Intel, which is now part-owned by the US government, would consider adding tools made by a firm with sanctioned units into its most advanced manufacturing line, raises important national security concerns, China hawks said. They flagged the possible transfer of Intel’s sensitive technological know-how to China, the eventual displacement of trusted Western tool suppliers with China-linked firms and even the potential for sabotage efforts by Beijing.

Faced with Beijing’s imposition of export controls on rare earth minerals, US President Donald Trump has backed off most hardline policies on chip exports to China and on Monday gave the green light for Nvidia to sell its second most advanced AI chips in China.

But as Chinese toolmakers begin to make incursions into the global marketplace, concern is growing among lawmakers of both parties, who earlier this month reintroduced legislation to bar chipmakers that have received billions in US government subsidies from using Chinese equipment as part of their government-backed expansion plans.

Intel’s testing of ACM tools “highlights egregious gaps in US technology protection policies and should not be permitted,” said Chris McGuire, a former White House National Security Council official under President Joe Biden and Senior Fellow with the Council on Foreign Relations, in response to Reuters’ findings.

“Chinese tools could easily be remotely or physically manipulated by Beijing to degrade or even halt U.S. chip production. And US companies should play no part in helping China improve its chipmaking tools, which are the foundation of all advanced technology development,” he added.

ACM said it does not pose a national security threat, noting that its US operations are “bifurcated and isolated” from the sanctioned Shanghai-based unit, and that US customers are supported directly by U.S. personnel, with robust safeguards to protect customer trade secrets.

The Chinese embassy in Washington did not address the specific concerns cited by China hawks but said “Normal trade and economic cooperation between companies should not be politicized. We urge certain individuals in the U.S. to abandon ideological biases and stop generalizing the concept of national security.”

ACM has longstanding China ties

ACM Research was founded in 1998 by David Wang, who still serves as CEO and owns over 57% of the company’s voting shares. ACM’s Chinese-language website lists Wang as an American citizen with Chinese permanent residence.

ACM also sells equipment to sanctioned Chinese chipmaker YMTC as well as China’s CXMT, which was named by the Defense Department as a Chinese military-backed company, according to a recent presentation on its website. SMIC, another ACM customer targeted by US sanctions over alleged ties to the Chinese military industrial complex, accounts for 14% of ACM’s sales, the company says.

While the company is headquartered in California, most of the company’s research and development take place in China, where ACM established its Shanghai-based R&D facility in 2006 according to a May 2025 investor presentation. “ACM now has complete R&D, engineering and manufacturing operations at its Zhangjiang High-Tech Park facility in Shanghai, China,” ACM’s website says.

Big hub in Oregon’s ‘silicon forest’

In November 2023, ACM announced the opening of a new facility in Hillsboro, Oregon- an area nicknamed the state’s Silicon Forest- “strategically located near key customers and partners” to serve as the company’s new sales and service hub.

The building is about a mile from Intel’s flagship R&D and early-stage manufacturing plant and there are no other cutting-edge chip factories in the state.

A January report by US-based hedge fund Kerrisdale Capital said the facility was aimed at supporting ACM’s relationship with Intel, noting that ACM qualified a new tool there in late 2023, and delivered additional tools in mid-2024.

ACM “has laid the foundation for expansion outside China through strategic engagements with global leaders such as Intel” which could bear fruit in 2026, Kerrisdale said in a follow-up report released last month. The toolmaker has “active tool evaluations across a range of cleaning process steps” at Intel and the firm is “upgrading its customer demonstration lab and local R&D capabilities there to enable Intel to run wafers locally on ACMR tools,” it added.

Intel did not respond to a request for comment on the report. ACM said it is not a significant supplier of equipment to any major U.S. chipmaker.

China’s push for global market share

ACM is still a small player on the global stage, ranking 24th in the global semiconductor equipment market with an 8% share of the segment for cleaning tools, according to Gartner Research.

But Beijing has been striving since at least 2015 to build a competitive domestic semiconductor manufacturing industry, long before Washington began restricting Chinese access to U.S. tools, the House Select Committee on China said in an October report, citing gains in global market share for Chinese toolmakers.

The committee “has even reviewed with concern reports that ACM Research…has sold (semiconductor manufacturing equipment) to a semiconductor manufacturer with US operations that also formally certified ACM Research’s tools for use in its production line,” the report adds, without further detail.

Ti ools from ACM and Chinese counterparts are 20% to 30% cheaper than those made by rivals like Applied Materials and Lam, according to Dan Hutcheson, Vice Chair of TechInsights Inc, creating a downward price pressure on more established competitors. – Rappler.com