Biden administration limits China investments by semiconductor chip subsidy recipients
Christopher Hutton
The Biden administration laid out new restrictions on investments in China by companies that receive subsidies for semiconductor production in the U.S. through last year’s bipartisan CHIPS Act.
The new limits, alongside export controls, are the latest blows dealt by the United States in a tech war between the two countries.
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The Commerce Department announced on Tuesday that it was implementing guardrails for recipients of funding from the CHIPS Act that would penalize companies for investing in expanding chip manufacturing in countries such as China, Russia, or North Korea. The CHIPS Act, which Congress passed last summer to provide funding to help the United States build more chips, will offer more than $53 billion in grants to companies growing their local chip plants in the U.S.
The CHIPS Act “is fundamentally a national security initiative, and these guardrails will help ensure malign actors do not have access to the cutting-edge technology that can be used against America and our allies,” Commerce Secretary Gina Raimondo said in a statement. “We will also continue coordinating with our allies and partners to ensure this program advances our shared goals, strengthens global supply chains, and enhances our collective security.”
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Recipients of CHIPS will be barred from expanding their output of chips in China by 5%, according to Bloomberg. They will also be blocked from increasing the production of older tech by 10%. Commerce has also attached a $100,000 spending cap on investments in advanced capacity in China.
Commerce has said it plans to help facilitate at least two new semiconductor factory hubs via the CHIPS Act. It has also incorporated several new rules for companies to abide by unrelated to chip development. These include providing child care, detailing their relationships with unions, offering additional training for those pursuing future employment outside the company, purchasing supplies from domestic producers, and ensuring compliance with the National Environmental Policy Act.