The US chipmaker tested equipment this year from ACM Research, a toolmaker with deep roots in China and two overseas units targeted by US sanctions, according to two sources with direct knowledge.

Intel only recently fended off calls for the chief executive’s resignation from US President Donald Trump in August, after accusations of cosy ties with China circulated.

The tools came from ACM Research, a California-based outfit, even though two of its units in Shanghai and South Korea were barred last year from receiving US technology.

Those restrictions were imposed over claims the units supported Beijing’s efforts to harness commercial tech for military use and to make advanced chips or chipmaking tools, allegations ACM flatly denies.

The two wet etch tools are used to strip material from silicon wafers and were tested for possible use in Troubled Chipzilla’s most advanced manufacturing process, known as 14A.

That 14A process is due to launch in 2027, putting the tests right at the sharp end of the company’s future ambitions.

Reuters could not establish whether Troubled Chipzilla plans to add the tools to the 14A line and found no evidence of any breach of US regulations.

Troubled Chipzilla declined to say whether it tested ACM’s tools this year for 14A, but said in a statement that ACM’s tools “are not used in our semiconductor production process, and we comply with all applicable US laws and regulations.”

ACM said it could not comment on “specific customer engagements,” but confirmed that “ACMR’s U.S. team has sold and delivered multiple tools from our Asian operations to domestic customers.”

The company added that it had disclosed shipments of three tools to a “major U.S.-based semiconductor manufacturer,” noting that they are being tested and that some have met performance standards.

The idea that a US government part-owned chipmaker would even consider kit from a firm with sanctioned units for its most advanced line has set off loud national security alarm bells.

China hawks warned about possible transfers of sensitive know-how, the displacement of trusted Western suppliers and even the risk of sabotage directed from Beijing.

Those fears stem from Donald Trump's easing off hard-line chip export policies after Beijing imposed controls on rare earth minerals.

On Monday, Trump even cleared Nvidia to sell its second-most advanced AI chips into China, underscoring the shifting ground.

As Chinese toolmakers push into global markets, concern is growing among lawmakers from both parties.

Earlier this month, they reintroduced legislation to bar chipmakers that have received billions in US subsidies from using Chinese equipment in government-backed expansion plans.

Former White House National Security Council official Chris McGuire did not mince his words.

Council on Foreign Relations senior fellow Chris McGuire said: “Intel's testing of ACM tools highlights egregious gaps in U.S. technology protection policies and should not be permitted.”

“Beijing could remotely or physically manipulate Chinese tools to degrade or even halt U.S. chip production,” he said, adding that US firms should not help China sharpen its chipmaking kit.

ACM rejected the idea it poses a security threat, arguing its US operations are “bifurcated and isolated” from its sanctioned Shanghai unit.

The firm said US customers are supported directly by US staff, with safeguards in place to protect trade secrets.

China’s embassy in Washington brushed aside the specific concerns, saying: “Normal trade and economic cooperation between companies should not be politicised.”

“We urge certain individuals in the U.S. to abandon ideological biases and stop generalising the concept of national security,” the embassy said.

ACM Research was founded in 1998 by chief executive David Wang, who still owns more than 57 per cent of the firm’s voting shares.

Its Chinese-language website lists Wang as an American citizen with Chinese permanent residence.

ACM sells equipment to sanctioned Chinese chipmakers, including YMTC and CXMT, the latter of which the Pentagon has named as a military-backed firm.

Another customer, SMIC, which accounts for 14 per cent of ACM’s sales, has also been targeted by US sanctions over alleged military ties.

Despite being headquartered in California, most of ACM’s research and development is carried out in China.

The company set up its Shanghai R&D facility in 2006 and now boasts “complete R&D, engineering and manufacturing operations” at its Zhangjiang High-Tech Park site.

In November 2023, ACM opened a new sales and service hub in Hillsboro, Oregon, in the so-called Silicon Forest.

The building sits about a mile from Troubled Chipzilla’s flagship R&D and early-stage manufacturing plant, with no other cutting-edge fabs nearby.

A January report by hedge fund Kerrisdale Capital said the site was designed to support ACM’s relationship with Troubled Chipzilla.

It noted ACM qualified a new tool there in late 2023 and delivered more in mid-2024.

Kerrisdale added that ACM “has laid the foundation for expansion outside China through strategic engagements with global leaders such as Intel,” with potential pay-off in 2026, the hedge fund said.

Troubled Chipzilla did not comment on the report, while ACM insisted it is not a significant supplier to any major US chipmaker.

Globally, ACM remains a minor player, ranking 24th in semiconductor equipment with an eight per cent share of the cleaning tools segment, according to Gartner.

Still, Beijing has been pushing since at least 2015 to build a competitive domestic chip industry, long before Washington tightened the screws.

A House Select Committee on China report last October said it had “reviewed with concern reports that ACM Research…has sold” equipment to a chipmaker with US operations that certified ACM’s tools for production use.