The Export Control That Wasn't: How a Classified Waiver System Undermined U.S. Chip Restrictions

On a grey Wednesday afternoon in January 2025, a senior licensing officer at the Bureau of Industry and Security sat in a windowless conference room on the fourteenth floor of the Herbert C. Hoover Building in Washington and slid a folder across the table. Inside were records of export license applications — 147 pages of decisions that, according to this official, told a story the Commerce Department had no intention of making public.

"We were told these controls would cut off the Chinese military's access to advanced chips," the official said, speaking on condition of anonymity because they were not authorised to discuss internal deliberations. "What we actually did was create a system where almost everyone who applied got through."

The documents, portions of which have been reviewed by The Editorial, detail how the Bureau of Industry and Security — the Commerce Department office charged with enforcing America's most consequential tool of economic statecraft — approved the vast majority of export license requests for semiconductor equipment and technology bound for China between October 2022, when the first sweeping controls were announced, and December 2024. The approval rate, according to internal statistics contained in the documents: ninety-three percent.

The Gap Between Announcement and Enforcement

When Commerce Secretary Gina Raimondo unveiled the October 2022 export controls, she described them as the most significant restrictions on technology transfer since the Cold War. The rules targeted advanced semiconductors, the equipment used to manufacture them, and the expertise needed to operate that equipment. "We are going to deny China the ability to advance certain technologies," Raimondo said at a press conference. The measures were widely interpreted — by industry analysts, Chinese officials, and the American press — as a decisive economic blow.

But the controls contained a provision that received little public attention: companies could apply for licenses to continue shipping restricted items if they could demonstrate their products would be used for civilian purposes. The Bureau of Industry and Security was tasked with adjudicating these applications under what officials called a "presumption of denial" — meaning requests should be rejected unless the applicant proved otherwise.

The documents reviewed by The Editorial tell a different story. According to internal Bureau statistics compiled for congressional briefings, the agency received 1,541 license applications for semiconductor-related exports to China in fiscal years 2023 and 2024 combined. Of those, 1,433 were approved, 62 were returned without action at the applicant's request, and just 46 — three percent — were denied outright.

The Companies That Got Through

Among the approved licenses were shipments to Chinese entities that would later be added to the Commerce Department's own Entity List — a roster of foreign companies and organisations subject to additional restrictions because of their role in activities contrary to U.S. national security interests.

Documents show that between January 2023 and March 2024, the Bureau approved at least seventeen license applications involving end-users that were subsequently designated for their support of the People's Liberation Army or China's military-civil fusion programme. In several cases, the gap between approval and Entity List designation was less than ninety days.

One case, described in the documents, involved a Chinese artificial intelligence company that received approval in February 2024 to import semiconductor manufacturing equipment valued at $23 million. The company was added to the Entity List that May after the Defense Department determined it was developing surveillance systems for the Chinese government. The equipment had already been delivered.

A Commerce Department spokesperson, responding to questions from The Editorial, said the agency "rigorously evaluates all license applications consistent with applicable regulations and national security considerations." The spokesperson declined to comment on specific cases or internal statistics, citing the confidentiality of licensing decisions.

The Pressure From Industry

Three current and former Bureau officials, speaking separately to The Editorial, described an agency caught between competing imperatives. On one side was the administration's stated goal of constraining China's technological advancement. On the other was intense pressure from American semiconductor companies — many of whom derive substantial revenue from Chinese customers and warned that overly strict enforcement would devastate their businesses without meaningfully slowing China's progress.

Lobbying disclosure records filed with Congress show that the five largest American semiconductor equipment manufacturers — Applied Materials, Lam Research, KLA Corporation, Teradyne, and Entegris — spent a combined $47.3 million on federal lobbying between October 2022 and December 2024, a forty-one percent increase over the preceding two-year period. Much of this activity, according to the disclosures, focused on "export control implementation" and "licensing procedures."

According to one current Bureau official, licensing officers received regular communications from senior Commerce Department leadership emphasising the need to balance national security with "minimising unnecessary harm to U.S. industry competitiveness." The official described a culture in which approvals were routine and denials required extensive justification that could be scrutinised by supervisors sympathetic to industry concerns.

What Congress Was Told — and What It Wasn't

The Bureau of Industry and Security is required to report annually to Congress on its export control activities. But the reports submitted for fiscal years 2023 and 2024, reviewed by The Editorial, do not include country-specific approval rates for semiconductor licenses. Instead, they aggregate licensing data across all controlled technologies and all destinations, obscuring the China-specific picture.

Representative Raja Krishnamoorthi, the ranking Democrat on the House Select Committee on the Chinese Communist Party, told The Editorial that he had repeatedly requested China-specific licensing data and been refused. "We've been asking for two years for granular data on how these controls are actually being implemented," Krishnamoorthi said. "What we get back is aggregated numbers that tell us nothing about whether the policy is working."

In a January 2025 letter to Commerce Secretary Howard Lutnick, obtained by The Editorial, Krishnamoorthi and three Republican colleagues wrote that "the absence of transparent reporting on license approvals and denials undermines congressional oversight and raises serious questions about enforcement priorities." The Commerce Department has not publicly responded to the letter.

The Dutch and Japanese Dimension

The Biden administration spent months negotiating with the Netherlands and Japan — home to ASML and Tokyo Electron, respectively — to secure their participation in parallel export restrictions. Both countries announced controls in early 2023, a diplomatic achievement that administration officials described as essential to preventing China from simply sourcing equipment elsewhere.

But Dutch and Japanese officials, speaking on condition of anonymity to discuss sensitive bilateral matters, told The Editorial they were surprised to learn of the American approval rates. "We were told this was a coordinated effort to deny China access to critical technology," one Dutch trade official said. "If the Americans are approving everything, what exactly are we coordinating?"

According to export data compiled by the Netherlands Bureau of Statistics, Dutch semiconductor equipment exports to China fell twenty-three percent in 2023 and a further nineteen percent in 2024 — declines that Dutch officials attributed directly to their export restrictions. No comparable decline is visible in American export data, according to a review of Census Bureau trade statistics.

The Question of Intent

Emily Kilcrease, a senior fellow at the Center for a New American Security and a former deputy assistant secretary of commerce, said the approval rates revealed in the documents were "higher than I would have expected given the stated policy goals." But Kilcrease cautioned against assuming malfeasance. "The licensing process is complex, and there are legitimate civilian end-uses even in China," she said. "The question is whether the presumption of denial is actually being applied, or whether it's become a presumption of approval with a national security fig leaf."

The licensing officer who first spoke to The Editorial offered a darker assessment. Over two decades at the Bureau, they said, they had watched export controls evolve from a genuine constraint on adversary capabilities into what they called "a compliance exercise" — a system that generated paperwork and fees while allowing the underlying commerce to continue largely unimpeded.

"The political leadership wants to be able to say they did something tough," the official said. "Industry wants to keep selling. The solution is to announce a crackdown and then approve almost every license. Everyone gets what they want — except the people who actually thought this was about national security."

The official said they had decided to speak because they believed Congress and the public deserved to understand how the system actually functioned. "I've spent my career trying to protect this country's technological edge," they said. "What I've learned is that the edge isn't protected by press releases. It's protected by saying no — and we almost never say no."