U.S. chipmaker the embattled American semiconductor giant Intel has tested advanced chipmaking equipment from the China-focused U.S. tool supplier ACM Research, a move that is drawing political and national security scrutiny in Washington, according to multiple Reuters reports citing people familiar with the matter.

Sources said Intel evaluated two wet etch tools from ACM Research for potential use in its most advanced manufacturing node, Intel 14A, which is scheduled for an initial rollout in 2027 and is widely viewed as a make-or-break process for Intel's contract foundry ambitions. Intel has previously warned that failure to secure at least one major external customer for 14A could delay or even derail the node's launch.

There is no confirmation that the tools have been approved for production use. Intel told Reuters that ACM's equipment "is not used in our semiconductor production process" and stressed that the company complies with all applicable U.S. laws and regulations. Reuters also found no evidence that Intel violated U.S. export control rules.

Still, Intel's willingness to test tools from ACM has raised concerns because two ACM subsidiaries, located in Shanghai and South Korea, were added to the U.S. Commerce Department's Entity List in December 2024. U.S. authorities alleged the units supported China's efforts to manufacture advanced chips or chipmaking equipment for military use, accusations that ACM has denied.

ACM Research is headquartered in Fremont, California, but has deep operational roots in China, where it established a major R&D facility in Shanghai in 2006. According to company disclosures, much of its research and engineering work is still conducted there. ACM counts sanctioned Chinese chipmakers such as YMTC and CXMT among its customers, while SMIC accounts for about 14% of its revenue, the company has said.

Adding another layer of sensitivity, Walden International, a venture capital firm founded and chaired by Intel CEO Lip-Bu Tan, invested in ACM Research in 2019 through the Walden CEL Global Fund I, which was co-sponsored with China Everbright Limited. Public filings as of March 2025 indicate Walden was still invested in ACM, though the size of its current stake is unclear and does not appear to be a major holding. Intel's testing of ACM tools began well before Tan became CEO, when he was serving as an Intel board director.

Etching is a critical step in semiconductor manufacturing. Wet etch systems use liquid chemicals to selectively remove materials or clean wafer surfaces, while dry etch tools rely on plasma-based processes for highly directional pattern transfer. Modern fabs typically use both. ACM manufactures both wet and dry etch systems, competing with established suppliers such as Applied Materials, Lam Research, KLA, and Tokyo Electron.

ACM has been expanding its U.S. footprint in recent years. In November 2023, the company opened a new sales and service hub in Hillsboro, Oregon, about a mile from Intel's flagship D1D and D1X R&D facilities. ACM has confirmed that it has shipped multiple tools to U.S. customers and disclosed deliveries of three tools to a "major U.S.-based semiconductor manufacturer" for testing, with some meeting performance benchmarks.

National security critics argue that Intel's evaluation of ACM tools highlights gaps in U.S. technology protection policies, particularly as Intel is now partly owned by the U.S. government. Chris McGuire, a former White House National Security Council official and now a senior fellow at the Council on Foreign Relations, said the testing "should not be permitted," warning that China-linked tools could be manipulated to disrupt U.S. chip production or accelerate China's own equipment capabilities.

The controversy comes amid renewed congressional scrutiny of Chinese semiconductor equipment. Earlier this month, U.S. lawmakers reintroduced the Chip EQUIP Act, which would bar recipients of federal CHIPS Act subsidies from using equipment supplied by so-called "foreign entities of concern," including Chinese-linked firms.

ACM maintains that it poses no national security risk, saying its U.S. operations are isolated from its sanctioned Shanghai unit and supported directly by U.S.-based staff with safeguards to protect customer intellectual property. China's embassy in Washington has urged the U.S. not to politicize normal commercial cooperation.

While ACM remains a relatively small player globally, ranking 24th in the semiconductor equipment market with an estimated 8% share of the cleaning tools segment, analysts note that Chinese toolmakers are gaining traction internationally, in part because their products are typically 20% to 30% cheaper than those of established Western rivals.

For Intel, the episode underscores the growing tension between supply chain diversification, cost pressures, and rising geopolitical and security constraints as the race to regain process leadership intensifies.