U.S. to Prevent China from Benefiting from $52B in Chips Funding

by Carolyn Mathas

The U.S. Commerce Department is issuing final rules to prevent semiconductor manufacturing subsidies from being used by China and other countries that pose American national security concerns.

The regulation limits fund recipients from investing in expanding their offshore semiconductor manufacturing efforts in China, Russia, and other countries of security concern. It defines those receiving funds from engaging in research and technology licensing with these countries.

The regulation prohibits funding recipients from expanding semiconductor manufacturing capacity, including wafer production, in foreign countries of concern for ten years. It allows for international standards, patent licensing, and foundry and packaging services.

The final rule ties expanded semiconductor manufacturing capacity to adding a cleanroom or other physical space, defining material expansions as increasing production capacity by more than 5%. It also classifies some semiconductors as critical to national security. It triggers tighter restrictions, including quantum computing current-generation and mature-node chips in radiation-intensive environments and other specialized military capabilities.

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