U.S. proposes to safeguard $52bn semiconductor funding from China

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The U.S. Commerce Department has proposed new rules to prevent $52 billion in semiconductor manufacturing and research funding from being used by China and other countries of concern.

The measures are intended to prevent recipients of U.S. funding from expanding semiconductor manufacturing in foreign countries deemed to be of concern, such as China and Russia. They also prohibit recipients of incentive funds from engaging in collaborative research or technology licensing with foreign entities deemed to be of concern.

The proposed rules are part of a larger U.S. strategy to strengthen its semiconductor industry and secure its supply chains while reducing China’s. Gina Raimondo, Commerce Secretary, stated that these rules will help the U.S. stay ahead of competitors for decades to come.

It also deems certain semiconductors critical to national security, such as current-generation and mature-node chips used in quantum computing, radiation-intensive environments, and specialized military capabilities. Because they are not considered legacy chips, these chips are subject to stricter restrictions.

In late June, the Commerce Department plans to begin accepting applications for a $39 billion semiconductor manufacturing subsidy program. Furthermore, the proposed rules include the establishment of a 25% investment tax credit for the construction of chip plants, which is estimated to be worth $24 billion.

The proposed rules strengthen these controls by aligning prohibited technology thresholds for memory chips between export controls and CHIPS national security guardrails, with a more restrictive logic chip threshold than is used for export controls.

The sources for this piece include an article in Reuters.

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