Supply constraints, export control bottlenecks threaten US chip capacity

A new array of supply chain disruptions, coupled with staffing shortages in export control, has raised fresh concerns about US semiconductor competitiveness, experts told lawmakers and S&P Global Market Intelligence.

At a recent House Energy and Commerce Committee hearing, lawmakers and witnesses grappled with a semiconductor landscape reshaped by AI demand, Chinese competition, and calls for increased staffing and funding at the US Department of Commerce agency responsible for national security and high technology issues.

The hearing, convened by the Subcommittee on Commerce, Manufacturing and Trade, took place days after the Bureau of Industry and Security (BIS) extended a key compliance deadline for allied-nation chip designers by eight months, citing the need for additional time to process applications. Specifically, BIS extended the deadline for integrated circuit designers headquartered in Taiwan, as well as those in South Korea, Japan and other allied nations, to submit applications for approved status from April 13 to Dec. 31, according to a final rule published April 9.

Kevin Wolf, a former assistant secretary of commerce for export administration at BIS and a partner in the international trade group at Akin Gump, said the extension preserves the status quo for allied designers.

"Designers from allied countries can continue to be 'authorized IC designers' without having to worry that their status will run out in 180 days," Wolf said in a written response to questions from S&P Global Market Intelligence.

Capacity constraints

Others, though, see the extension as a tacit acknowledgment that the agency had fallen behind on a framework implemented by the previous administration in January 2025.

"Congress must give the agencies tasked with implementing economic security policies the staff, resources and mission clarity they need to protect US economic security," Information Technology Industry Council Inc. President and CEO Jason Oxman said, backing the administration's proposed $215 million budget increase for BIS. The group, whose members include every major chip designer and manufacturer, also cited BIS staffing levels as a priority alongside codifying key agency programs.

The BIS capacity questions came amid broader alarm over the state of US semiconductor competitiveness. Jason Grebe, senior vice president at Intel Corp., told lawmakers that the US maintains a technology lead in advanced logic chips but faces mounting pressure from Chinese state investment and supply chain concentration in Taiwan. More than 90% of advanced logic production is concentrated on the island, Grebe said, making supply chain resilience a national security concern.

"If you do not build the chips, you do not control the future of AI," Grebe said.

Charles Wessner, a senior adviser at the Center for Strategic and International Studies Inc., pushed back on the idea that export controls alone can contain Chinese technological progress.

"Chinese firms have made substantial progress in overcoming the effects of controls in the critical areas of semiconductor manufacturing equipment and materials," Wessner said, adding that tightening controls without investing in US capabilities risks cutting revenue that American companies reinvest in domestic research and development. "You cut revenue by 20%, you've cut R&D by 20%."

Supply chain pressures

The semiconductor industry faces mounting supply chain pressures linked to the conflict in Iran. In March, Iranian missile strikes caused extensive damage to Qatar's Ras Laffan Industrial City, home to one of only two plants worldwide that produce semiconductor-grade helium.

Brandon Daniels, CEO of supply chain risk firm Exiger LLC, told S&P Global Market Intelligence on the sidelines of the Semafor World Economy Summit that this represents a new form of economic warfare. "This is using military capabilities to create diplomatic and economic pressure on a reverberating basis," Daniels said.

Daniels expects semiconductor supply chains to feel the helium pressure unevenly, with price increases and some degree of rationing likely over the next three to six months. He said margin-tolerant industries, including semiconductor manufacturers, would be buffered compared to lower-value applications, but cautioned that sustained energy price increases could begin to erode the cost differentials that make overseas sourcing attractive, accelerating reshoring pressures already underway from tariffs and chips incentives.

A sustained interruption to Qatari helium exports, which account for 30% of global helium production, would eventually hit semiconductor markets, while also driving up memory prices and threatening non-data-center applications as producers prioritize their highest-margin chips, according to research from S&P Global Energy.

Structural risks

The hearing featured bipartisan agreement on the strategic importance of semiconductors and the need to extend the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act incentive, the Advanced Manufacturing Investment Credit, which is set to expire at the end of 2026. Oxman called the credit's expiration a potential disaster for manufacturers. Grebe agreed, saying targeted tariff relief for specialized manufacturing inputs unavailable domestically was equally critical.

Asad Ramzanali, director of AI and technology policy at the Vanderbilt Policy Accelerator, raised a separate concern about financial concentration in the AI chip market, warning that circular investing, in which vendors such as Nvidia Corp. invest in unprofitable customers that then buy Nvidia chips, creates systemic risk that could cascade across the broader economy if AI valuations correct sharply. He urged the subcommittee to investigate the practice, as it did capacity swaps ahead of the dot-com crash in 2002.

Ramzanali also pointed to the administration's dismantling of Natcast as a longer-term threat to US semiconductor leadership that would not be immediately reflected in manufacturing metrics. In August 2025, the Commerce Department voided approximately $7.4 billion in CHIPS Act funding previously allocated to Natcast, a nonprofit established to operate the National Semiconductor Technology Center.

"The R&D investments we were making included workforce development," he said. "We need to continue to fund those programs."

A spokesperson for the House Energy and Commerce Committee and the Bureau of Industry and Security did not respond to requests for comment.

What's happening this week?

Below is a list of hearings, webinars and other technology, media and telecom-related events taking place virtually and in person in the nation's capital and beyond this week:

April 21

➤ House Science, Space, and Technology Subcommittee on Research and Technology: Robots Made in America — Advancing US Leadership in Manufacturing and Automation

April 22

➤Consumer Technology Association: CES on the Hill 2026

April 23

➤ Potomac Institute for Policy Studies: The Imperative for a Resilient AI Manufacturing Supply Chain

April 24

➤ S&P Global Market Intelligence: Dips, ships and chips — Supply chain outlook for Q2 2026 and beyond