The US Department of Commerce on Friday issued its final rules to prevent semiconductor manufacturing subsidies from being used by China and other countries deemed to pose US national security concerns.
The regulations are the final hurdle before the administration of US President Joe Biden can begin awarding US$39 billion in subsidies for semiconductor production. The landmark Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act provides US$52.7 billion for US semiconductor production, research and workforce development.
First proposed in March, the regulations set “guardrails” by limiting recipients of US funding from investing in expanding chip manufacturing in countries of concern such as China and Russia, and limit recipients of incentive funds from engaging in joint research or technology licensing efforts with foreign entities of concern.
Photo: Reuters
In October last year, the department issued new export controls to cut China off from certain semiconductor chips made with US equipment in its bid to slow Beijing’s technological and military advances.
“We have to be absolutely vigilant that not a penny of this helps China to get ahead of us,” US Secretary of Commerce Gina Raimondo told the US Congress on Tuesday.
If funding recipients contravene restrictions, the department can claw back federal awards.
Raimondo told Congress that she is working as fast as possible to get awards approved.
“I feel the pressure,” Raimondo said. “We are behind, but it is more important that we get it right.”
The regulations prohibit funding recipients from significantly expanding semiconductor manufacturing capacity in foreign countries of concern for 10 years. They also restrict recipients from some joint research or technology licensing efforts with foreign entities of concern, but allow for international standards, patent licensing, and utilizing foundry and packaging services.
The rules prohibit material expansion of semiconductor manufacturing capacity for leading-edge and advanced facilities in foreign countries of concern for 10 years.
They also clarify that wafer production is included within semiconductor manufacturing.
The final rule ties expanded semiconductor manufacturing capacity to adding clean-room or other physical space, defining material expansions as increasing production capacity by more than 5 percent.
The rule prohibits recipients from adding new clean-room space or production lines that result in expanding a facility’s production capacity beyond 10 percent.
It also classifies some semiconductors as critical to national security, triggering tighter restrictions, including quantum computing current-generation and mature-node chips, in radiation-intensive environments and for other specialized military capabilities.
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