Biden administration limits China investments by semiconductor chip subsidy recipients

The Biden administration has announced new restrictions on investments in China by companies that receive subsidies for semiconductor production in the US through the bipartisan CHIPS Act. The restrictions, combined with export controls, are the latest measures taken by the US in the ongoing tech war with China.

The Commerce Department has issued guardrails for companies that receive funding from the CHIPS Act, penalizing them for investing in expanding chip production in China, Russia or North Korea. The CHIPS Act provides over $53 billion in grants to US companies increasing their local chip plants. According to Commerce Secretary Gina Raimondo, the act is a national security initiative, and the newly imposed regulations will ensure that malicious actors cannot obtain cutting-edge technology to be used against the US and its allies. The act also includes rules for companies to follow, which include providing childcare for employees and detailing relationships with unions.

Recipients of CHIPS will face restrictions and will be barred from increasing chip production in China by 5% and from increasing production of older tech by 10%. There is also a $100,000 spending cap on investments in advanced capacity in China. Commerce has said that it will help facilitate two new semiconductor factory hubs through the CHIPS Act.

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