US blocks China and Russia from gaining $52 bn semiconductor fund

The U.S. Commerce Department has released proposed rules to prevent $52 billion in semiconductor manufacturing and research funding from being used by US rivals including China and Russia, among others.
5G spectrum auction in BelgiumThe proposal in the CHIPS Incentives Program limits recipients of U.S. funding from investing in the expansion of semiconductor manufacturing in foreign countries of concern like China and Russia and limits recipients of incentive funds from engaging in joint research or technology licensing efforts with a foreign entity of concern.

United States does not want countries such as China, Russia, Iran, and North Korea to benefit from the semiconductor incentive program.

Secretary of Commerce Gina Raimondo said in a news statement: “CHIPS for America is fundamentally a national security initiative and these guardrails will help ensure malign actors do not have access to the cutting-edge technology that can be used against America and our allies.”

The proposal in  in the CHIPS Incentives Program also classifies some semiconductors as critical to national security – defining these chips as not considered to be a legacy chip and therefore subject to tighter restrictions.

This measure covers chips “including current-generation and mature-node chips used for quantum computing, in radiation-intensive environments, and for other specialized military capabilities.”

The proposed rule also adds entities from the BIS Entity List, the Treasury Department’s Chinese Military-Industrial Complex Companies (NS-CMIC) list, and the Federal Communications Commission’s Secure and Trusted Communications Networks Act list of equipment and services posing national security risks.

A federal investment in semiconductor design and R&D of approximately $20 billion to $30 billion through 2030 — including $15 billion to $20 billion for an investment tax credit for semiconductor design — will help maintain U.S. chip design leadership, a report in November 2022 by Semiconductor Industry Association (SIA) and the Boston Consulting Group (BCG) said.