The MATCH Act: Closing Export Control Gaps, at What Cost?

Semiconductor manufacturing equipment (SME) and its components are a key competitive advantage for the U.S. America and its allies, particularly Japan and the Netherlands, possess critical capabilities in producing SME, and maintaining an advantage in these technologies has become a national security priority. By limiting foreign adversaries’ access to SME, the U.S. government aims to stop them from developing the advanced chips that power AI and other critical technologies, while maintaining its competitive advantage in AI.

But persistent gaps in existing export controls can undermine these efforts. While a country may restrict its companies from selling certain SME to China, suppliers in other countries may still sell comparable equipment under their own national rules. To close this gap, Congress introduced the Multilateral Alignment of Technology Controls on Hardware (MATCH) Act. The bill aims to restrict adversaries’ access to SME by strengthening export controls on covered equipment and components, requiring licenses for applicable items, and pressuring U.S. allies to adopt equivalent restrictions. If the administration cannot certify that allies have implemented the required controls within 150 days, it would have to issue regulations extending U.S. restrictions to covered equipment and components exported from noncompliant supplier countries.

The MATCH Act raises questions about international cooperation, economic competitiveness, and the long-term effectiveness of these controls. If challenges in securing cooperation from allies persist, or if the costs of implementing these restrictions outweigh their benefits, the bill could end up working against the goals it seeks to achieve.

One major challenge relating to its implementation is international cooperation and alignment. Today’s AI supply chain is highly globalized, and countries have different economic interests and relationships with China, making it difficult to align export controls. Allies may avoid imposing restrictions if they believe their companies will lose market share to competitors in countries that have less restrictive rules. They may also face legal or administrative constraints that make it difficult to adopt equivalent measures within the proposed timeline.

The Netherlands illustrates this challenge. The Dutch government has noted that while it can sometimes implement unilateral controls, it prefers not to do so because such controls are generally considered ineffective and conflict with the principles of the European single market. Although the Netherlands shares U.S. concerns about advanced semiconductor technology, it must operate within its own legal framework and the broader European Union regulatory system.

The MATCH Act would also seek to extend U.S. restrictions to certain equipment and components exported from allied countries that have not adopted the required controls, raising questions about national sovereignty and who should have the authority to regulate local markets outside of American territory. Enforcing administrative penalties on a foreign entity for exercising lawful property rights could raise concerns about the extraterritorial reach of U.S. export controls, particularly when the transaction has no direct connection to the United States.

This illustrates a key challenge for the MATCH Act, because even when allies share similar security concerns, differences in their legal frameworks and economic interests can make it difficult to align export controls. While there is nothing unusual about countries trying to unify their legal frameworks, forcing foreign countries and companies to agree to U.S. terms in this manner is a significant step further.

There are also economic tradeoffs to consider. China is a significant market for semiconductors, and restricting access to this market can reduce sales opportunities for U.S. technology companies, potentially limiting the revenues they can reinvest in research and development. Nvidia provides a concrete example. Last year, the U.S. imposed new export licensing rules on Nvidia’s H20 AI chips—chips built specifically for the Chinese market under earlier controls. The new requirements limit Nvidia’s ability to ship the chips to China, and the company reported a $4.5 billion charge related to excess H20 inventory and purchase obligations in the first quarter of fiscal year 2026.

Broader export controls also increase compliance costs. As restrictions become more complex, governments must continually update licensing requirements, enforcement mechanisms, and coordination with international partners. Companies, in turn, face more licensing requirements, additional legal and compliance work, and greater uncertainty about which products they can sell and to whom. The export license application review process often exceeds 180 days, and affected companies routinely report more than $10 million in delayed exports. It’s little wonder that the vast majority of surveyed exporters have full-time dedicated export compliance staff—an expense that small competitors are likely unable to afford.

Ultimately, the effectiveness of the MATCH Act will depend not only on its ability to close existing gaps in export controls, but also on whether these restrictions can achieve their intended goals in the long term. Export controls may slow China’s technological progress in the short term while accelerating its efforts to develop domestic alternatives. But at the same time, these restrictions could limit U.S. companies’ access to international markets and reduce the revenues they need to continue investing in the development of semiconductors and other critical technologies, potentially undermining the very technological advantage the U.S. seeks to protect.