Huawei has been accused of building a a series of secret chip-making facilities across China, under the names of other companies, to help the technology company bypass US sanctions, according to the Washington-based association.
The Chinese tech firm reportedly moved into chip production last year and was receiving an estimated $30bn (£23.7bn) in state funding from the government.
The association claims Huawei has acquired at least two chip plants and is overseeing the construction of three additional facilities.
By building the facilities under names of other companies, the company could be able to indirectly purchase American chip-making equipment, circumventing the sanctions, the report claimed.
The US has restricted China's access to semiconductor technology since at least 2019 when the Trump administration banned Huawei from buying vital US technology, citing national security concerns.
Despite the change in administration, the country has continued to impose strict export controls on the Chinese electronics maker. In August 2022, the US further prohibited the export of four technologies tied to semiconductor manufacturing and signed a 'historic' bill aimed at boosting the domestic production of semiconductors.
In January, it was revealed the government had stopped approving licences for US companies to export most items to China's Huawei. Both Huawei and the Chinese government have continued to deny any spying accusations.
The US Department of Commerce said: "It is no surprise that they have sought substantial state support to attempt to develop indigenous technologies.
"BIS [Bureau of Industry and Security] is continually reviewing and updating its export controls based on the evolving threat environment and, as evidenced by the October 7, 2022 rules, will not hesitate to take appropriate action to protect US national security."
President Joe Biden recently wrote to Congress, saying he was declaring a national emergency to deal with the threat of advancement by countries such as China "in sensitive technologies and products critical to the military, intelligence, surveillance or cyber-enabled capabilities".
The US currently produces about 10 per cent of global microchip production "and none of the most advanced chips", the White House has said.
In May, China made its first major move in the trade war with Washington, by telling its operators not to use Micron chips in certain infrastructure projects because of national security concerns.
