A bombshell congressional report has accused three of California's most powerful tech bosses of quietly helping China build the army of the future -- while pocketing tens of millions in pay and bonuses.
A bipartisan probe by the US House Select Committee on the Chinese Communist Party has uncovered what it calls 'alarming new information' about how US tech firms have fueled China's military rise through the sale of high-end chip making gear.
The report names three Silicon Valley giants -- Lam Research, Applied Materials and KLA Corporation -- whose machines make the chips that power everything from smartphones to hypersonic missiles.
Together, they've made 'sizable returns' selling this equipment to Chinese state-owned and military-linked firms, despite repeated US warnings and tough export restrictions.
At the center of the storm are three CEOs: Lam Research's Timothy Archer, Applied Materials' Gary Dickerson and KLA's Rick Wallace -- all hailed as visionaries in Silicon Valley and each earning more than $25 million this year.
The 53-page report -- bluntly titled Selling the Forges of the Future -- accuses the companies of putting profits before patriotism.
By 2024, Lam Research made 42 percent of its revenue from China, KLA 41 percent, and Applied Materials 36 percent, making China their biggest market.
That dependence, the committee says, creates 'structural incentives for noncompliance' with US export rules and 'undermines efforts to prevent sensitive technology from reaching Beijing's military.'
House Democrat Raja Krishnamoorthi says US tech firms are helping China build its army of the future
US-made chip making machines help China develop hypersonic missiles, like those displayed at a recent parade in Beijing
Committee chair John Moolenaar called the trend 'deeply alarming.'
'These companies are large-scale producers of the equipment China is using to fuel its military ambitions,' he said in a statement.
'They are growing their profits at the expense of US national security.'
The panel's top Democrat Raja Krishnamoorthi agreed.
'It makes little sense to sell the CCP the chips they need to modernize their military and violate human rights -- but it makes even less sense to sell them the machines and tools they need to produce those chips themselves,' he said.
At the heart of the row is China's vision for its 'intelligentized' military -- a future force powered by artificial intelligence, automation, and high-performance computing.
Advanced chips are the lifeblood of that system.
They drive autonomous drones, hypersonic missiles, satellite tracking and cyberwarfare platforms.
They also allow the People's Liberation Army (PLA) to integrate data, simulate battles and make instant decisions through AI.
Chips power China's vast surveillance and facial-recognition networks, giving Beijing both domestic control and global reach.
The report warns that access to US-made chip making tools has helped China close the tech gap with the West and build homegrown processors for defense and intelligence use.
'The ability to design and produce semiconductors lies at the heart of the technology competition with China,' the report says.
Investigators found that Applied Materials, KLA and Lam Research kept selling to Chinese firms already blacklisted by the US, including Huawei affiliates and companies tied to Beijing's military-civil fusion program, the report says.
In 2022, Western chip-equipment firms sold $9.5 billion worth of gear to Chinese state-owned enterprises -- about 11 percent of total global sales.
By 2024, that figure had nearly tripled to $26.2 billion, or 27 percent of total revenue, says the document.
The report says US companies -- along with ASML in the Netherlands and Tokyo Electron in Japan -- are part of a wider pattern of Western firms 'fueling China's semiconductor surge.'
Their technology, it adds, is helping Beijing 'build a vertically integrated and resilient chip industry that can one day evade Western export controls altogether.'
The three companies did not respond to Daily Mail requests for comment.
But in calls with investors, their CEOs have repeatedly insisted they follow the law -- even when it hurts.
Timothy Archer, a Caltech and Harvard-trained physicist who enjoys adventure holidays with his family, told investors in 2022 that Lam Research had taken 'the necessary steps to ensure full compliance with the rules and have ceased shipments.'
He warned the company could lose $2.5 billion in revenue as a result.
Gary Dickerson, a University of Missouri graduate praised by Forbes and Barron's, said export curbs would wipe $400 million off 2025 sales.
In August, he complained that tariffs and sanctions had created 'a level of uncertainty' and caused Chinese demand to slump.
KLA Corporation's Rick Wallace has warned 'China weakness' and 'lower overall demand from China' being a drag on sales
Rick Wallace, a Michigan-educated CEO and avid cyclist who brags he's never taken a sick day, was more upbeat in July.
He said AI demand was lifting profits but warned of 'China weakness' and 'lower overall demand from China' in the coming months.
Experts say export rules are complicated and change constantly, forcing firms to navigate shifting limits.
Companies can still legally sell older-generation tools to China, as long as they have the right licenses.
China remains the world's biggest buyer of chip making gear, accounting for more than one-third of global demand.
Tens of thousands of Californian engineers depend on these companies for work.
Executives warn that cutting off China could lead to layoffs and slow US innovation -- a move, they argue, that would ultimately benefit Beijing.
Still, the report accuses the three firms of following the letter of the law but not its spirit.
They allegedly continue selling mid-tier lithography and etching tools -- equipment just below the most advanced thresholds -- allowing China to produce chips powerful enough for military and surveillance use, it claims.
The report says some Chinese firms have even stockpiled these mid-level machines, sidestepping US controls through foreign subsidiaries and middlemen.
That, the report warns, 'erodes America's strategic advantage' and risks 'handing over the foundations of AI-driven warfare to a geopolitical rival.'
The select committee has long warned about China getting its hand on American military tech
The committee, formed in 2023, includes both Republicans and Democrats.
It's not a law-enforcement body -- its reports shape policy, not prosecutions -- but its findings influence how Washington handles trade with China.
Chips have become a flashpoint in President Donald Trump's trade war with Beijing.
He has threatened 100 percent tariffs on key technologies and new curbs on 'critical software' after China hit back with restrictions on rare-earth exports.
The new report gives Trump fresh ammunition.
White House officials see it as proof that the US must tighten export controls and punish firms that 'put profit over patriotism.'
The panel is urging Washington and its allies to act fast.
Recommendations include aligning export rules with Japan and the Netherlands, blacklisting more Chinese military-linked firms, restricting exports of key chip making components, and setting up a whistleblower program to report violations.
It also calls for more funding for enforcement agencies and greater investment in American innovation to keep the US ahead in the chip making race.
Moolenaar and Krishnamoorthi put it bluntly: 'It is far past time that the toolmakers start treating the CCP and its national champions as threats to their corporate longevity, rather than as valued customers.'
For decades, Silicon Valley's success has relied on global reach -- selling the tools of the digital age to buyers far and wide.
But this report suggests that open-door model may come at a dangerous cost.
As China races to build a high-tech army powered by American-made machines, the line between business and national interest grows ever thinner -- and even America's brightest tech minds are struggling to navigate it.