The "semiconductor" battle between the United States and China continues

In a pivotal move, the U.S. Commerce Department announced its final regulations, aimed at safeguarding national security, which will effectively prevent countries deemed as potential threats, including China and Russia, from benefiting from semiconductor manufacturing subsidies. These regulations pave the way for the Biden administration to channel $39 billion from the “Chips and Science” law, a fund totaling $52.7 billion, into semiconductor production, research, and workforce development.

Originally proposed in March, these stringent regulations outline the stipulations for utilizing U.S. funds. Notably, they prohibit beneficiaries from expanding semiconductor operations in countries such as China and Russia, which are earmarked as national security risks. The regulations also dissuade from initiating joint research or technology licensing partnerships with entities hailing from the aforementioned nations.

Commerce Secretary Gina Raimondo underscored the criticality of these measures, asserting, “We have to ensure not a single cent of this aids China in surpassing us.” Granting the Commerce Department significant power, the guidelines authorize the retrieval of federal awards should beneficiaries flout these restrictions.

The "semiconductor" battle between the United States and China continues

Recipients of the grant face a decade-long prohibition from significantly augmenting semiconductor manufacturing in the identified nations. Joint research collaborations and technology licensing from untrusted foreign entities are also strictly off-limits. Yet, the rules do accommodate the employment of global standards, patent licensing, and certain foundry and packaging services.

Furthermore, the regulations explicitly describe “material expansions” as any production surge surpassing 5%, linking such growth to the erection of cleanrooms or similar infrastructural enhancements. Any endeavor to establish extra cleanrooms or production lines, which would propel a facility’s production potential by over 10%, is firmly restricted.

The regulations also demarcate specific semiconductors of paramount national security importance, subjecting them to tighter control measures. This bracket includes both current-generation processors and mature-node processors tailored for quantum computing, radiation-intense environments, and specialized military deployments.

Overall, these decisive regulations amplify the U.S. government's dedication to preserving its leadership in semiconductor technology, all the while fortifying its defenses against perceived national security threats.

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