White House Moves To Block Funds For Chinese Semiconductors 

(FiveNation.com)- On Tuesday, the Commerce Department released a proposed rule to prevent federal funding allocated by the CHIPS Act from helping adversarial nations develop semiconductors. 

In a press release on Tuesday, Commerce Secretary Gina Raimondo explained that the CHIPS Act is “fundamentally a national security initiative” and the proposed rule would provide “guardrails” to ensure “malign actors” cannot access the “cutting edge technology” funded through the CHIPS Act to use against the United States or its allies. 

Signed into law last year, the CHIPS Act provides $39 billion in incentives for the manufacturing of semiconductors in the United States, along with another $13.2 billion for research and development. 

The proposed rule would limit funding recipients from developing semiconductor production in China, Iran, North Korea, and Russia. Funding recipients would not be permitted to use the CHIPS Act funding overseas or expand existing overseas semiconductor manufacturing by more than 10 percent for ten years after receiving the funds. Recipients would also be unable to launch research initiatives in China, Iran, North Korea, or Russia. 

At a press briefing on Wednesday, Chinese Foreign Ministry spokesman Wang Wenbin said Beijing has lodged a diplomatic complaint over the proposed rule, according to Bloomberg. 

Wang described the Commerce Department’s additional guardrails as a “sci-tech blockade and protectionism.” He vowed that the Biden administration’s “hobbling and containment” would not prevent China from “growing” but would “only strengthen” its decision to pursue “self-development.” 

The Taiwan-based TSMC recently invested $40 billion in a new semiconductor facility in Arizona. TMC, which maintains operations in China, is expected to receive CHIPS Act funding. 

Both Samsung and Intel, which have operations in China, are also expected to receive funding through the CHIPS Act. 

According to data from the Brookings Institute, nearly 80 percent of global semiconductor manufacturing comes from China, South Korea, and Japan.