US finalises rules to prevent China from benefiting from US$52 billion in chips funding

If funding recipients violate restrictions, the Commerce Department can claw back federal awards.

Raimondo told Congress 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. And if we take another month or a few more weeks to get it right, I will defend that because it’s necessary.”

The regulation prohibits funding recipients from significantly expanding semiconductor manufacturing capacity in foreign countries of concern for 10 years.

It also restricts recipients from some joint research or technology licensing efforts with foreign entities of concern but allows for international standards, patent licensing, and utilising foundry and packaging services.

The final rules prohibit material expansion of semiconductor manufacturing capacity for leading-edge and advanced facilities in foreign countries of concern for 10 years. It also clarifies wafer production is included within semiconductor manufacturing.

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 per cent.

The rule prohibits recipients from adding new cleanroom space or production lines that result in expanding a facility’s production capacity beyond 10 per cent.

The rule 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 specialised military capabilities.