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Authors: Alexandra Alper and Max A. Cherny
WASHINGTON/SAN FRANCISCO (Reuters) – Chipmaker Intel this year tested chipmaking tools produced by a China-based toolmaker and two overseas subsidiaries subject to U.S. sanctions, according to two sources with direct knowledge of the matter.
In August, Intel obtained the tools from ACM Research, a Fremont, Calif.-based maker of chipmaking equipment, as President Donald Trump called for his chief executive to resign over alleged ties to China. ACM’s two subsidiaries in Shanghai and South Korea were among several companies banned from receiving U.S. technology last year over claims they supported Chinese government efforts to exploit commercial technology for military purposes and to make advanced chips or chipmaking tools. ACM denies the allegations.
The two so-called wet etch tools, used to remove material from silicon wafers and then turn them into semiconductors, were tested for use on Intel’s most advanced chip manufacturing process, known as 14A. The process is expected to first start in 2027.
Reuters could not determine whether Intel decided to add these tools to its advanced chip manufacturing process, and there was no evidence that the company violated any U.S. regulations. Intel declined to comment on whether it tested ACM’s tools for 14A this year, but said in a statement to Reuters that ACM’s tools “are not used in our semiconductor production processes and we comply with all applicable U.S. laws and regulations.”
ACM said it could not comment on “specific customer engagements,” but could confirm that “ACMR’s U.S. team has sold and delivered multiple tools from our Asia operations to domestic customers.” It also said it had disclosed shipping three tools to “a major U.S. semiconductor manufacturer” that are being tested and that some of the tools have met performance standards.
But China hawks say the fact that Intel, now partly owned by the U.S. government, would consider adding tools from a company with sanctioned units to its state-of-the-art production lines raises important national security concerns. They noted that Intel’s sensitive technical knowledge could be transferred to China, trusted Western tool suppliers could eventually be replaced by companies with ties to China, and that Beijing could even engage in sabotage.
U.S. President Donald Trump abandoned much of his tough policy on Chinese chip exports in the face of Beijing’s export controls on rare earth minerals and on Monday gave Nvidia the green light to sell its second-most advanced artificial intelligence chips in China.
But concerns have grown as Chinese toolmakers begin to invade global markets, and earlier this month lawmakers from both parties reintroduced legislation that would ban chipmakers that receive billions in U.S. government subsidies from using Chinese equipment as part of their government-backed expansion plans.
Responding to Reuters’ findings, Chris McGuire, a former White House National Security Council official under President Joe Biden and a senior fellow at the Council on Foreign Relations, said Intel’s testing of ACM tools “highlights significant gaps in U.S. technology protection policy and should not be allowed.”
“China’s tools can easily be manipulated remotely or physically by Beijing to slow down or even stop U.S. chip production. U.S. companies should not be involved in helping China improve its chip manufacturing tools, which are the basis for all advanced technology development,” he added.
ACM said it did not pose a threat to national security, noting that its U.S. operations are “bifurcated and isolated” from the sanctioned Shanghai unit, that U.S. clients receive direct support from U.S. personnel and have strong safeguards to protect clients’ trade secrets.
The Chinese Embassy in Washington did not respond to the specific concerns raised by China hawks, but said that “normal economic and trade cooperation between companies should not be politicized. We urge certain people in the United States to abandon ideological prejudice and stop generalizing the concept of national security.”
ACM has longstanding ties to China
ACM Research was founded in 1998 by David Wang, who remains CEO and owns more than 57% of the company’s voting shares. ACM’s Chinese website lists Wang as a U.S. citizen with permanent residency in China.
ACM also sells equipment to sanctioned Chinese chipmaker Yangtze Memory as well as to China’s Changxin Memory, which is listed by the Defense Department as a Chinese military-backed company, according to a recent profile on its website. Semiconductor Manufacturing International Corp., another ACM customer subject to U.S. sanctions over alleged ties to China’s military-industrial complex, accounts for 14% of ACM’s sales, the company said.
While the company is headquartered in California, much of the company’s R&D work occurs in China, where ACM established a Shanghai-based R&D facility in 2006, according to a May 2025 investor presentation. “ACM currently has complete R&D, engineering and manufacturing operations at its Zhangjiang Hi-Tech Park facility in Shanghai, China,” the ACM website states.
A massive hub in Oregon’s “Silicon Forest”
In November 2023, ACM announced the opening of a new facility in Hillsboro, Oregon, an area known as the state’s Silicon Forest, “strategically located close to key customers and partners” to serve as the company’s new sales and service center.
The building is about a mile from Intel’s flagship research and development and early manufacturing facility and there are no other cutting-edge chip factories in the state.
The facility is designed to support ACM’s relationship with Intel, U.S. hedge fund Kerrisdale Capital said in a January report, noting that ACM validated a new tool there in late 2023 and delivered more in mid-2024.
Kerrisdale said in a follow-up report released last month that ACM “has laid the foundation for expansion outside of China through strategic partnerships with global leaders such as Intel,” which could come to fruition in 2026. The toolmaker has “active tool evaluation across a range of cleaning process steps” at Intel, and the company is “upgrading its customer demonstration labs and local R&D capabilities to enable Intel to run wafers natively on ACMR tools,” it added.
Intel did not respond to a request for comment on the report. ACM said it is not a significant equipment supplier to any major U.S. chipmaker.
China competes for global market share
ACM remains a small player on the global stage, ranking 24th in the global semiconductor equipment market and accounting for 8% of the cleaning tools segment, according to Gartner Research.
But Beijing has been working to build a competitive domestic semiconductor manufacturing industry since at least 2015, long before Washington began restricting China’s access to U.S. tools, the House Select Committee on China said in an October report, noting the growth of Chinese toolmakers’ global market share.
The committee “even scrutinized with concern that ACM Research… has sold (semiconductor manufacturing equipment) to a semiconductor manufacturer with operations in the United States, which has also formally certified ACM Research’s tools for use in its production lines,” the report added, without providing further details.
Dan Hutcheson, vice chairman of TechInsights Inc, said tools produced by ACM and its Chinese counterparts are 20 to 30 percent cheaper than those made by rivals such as Applied Materials and Lam, putting downward price pressure on more established rivals.
(Additional reporting by Eduardo Baptista, Pan Che and Stephen Nellis; Editing by Kenneth Li, Chris Sanders and Anna Driver)
