Limits use of CHIPS Act funds due to national security concerns

On 22 September 2023, the United States Department of Commerce released the final rule implementing the CHIPS and Science Act. The new regulations restrict recipients of funds allocated under the Act from expanding semiconductor manufacturing capacities in selected foreign countries (China, Islamic Republic of Iran, Democratic People's Republic of Korea and Russian Federation) for 10 years. They also introduce limitations on the recipients' ability to establish certain joint research or technology ventures with foreign entities of concern. The rules shall enter into force on 24 November 2023.

The CHIPS and Science Act of 2022 introduced an incentives program via grants, cooperative agreements, loans, loan guarantees, and other transactions to support investments in manufacturing, research and development and assembly of semiconductors. The use of funding is, however, restricted to protect national security and the resilience of supply chains.

• Type:

  • Entry and establishment (Ownership and control)
  • Treatment and operation (Capital transfer and FOREX, Operational conditions)
  • Promotion and facilitation (Investment incentives)

• Industry:

  • Manufacturing (Manufacture of computer, electronic and optical products, and electrical equipment)
  • Services (Computer programming, consultancy and related activities, Scientific research and development, Other professional, scientific and technical activities)

• Sources:

  • U.S. Federal Register, Preventing the Improper Use of CHIPS Act Funding, https://www.federalregister.gov/documents/2023/09/25/2023-20471/preventing-the-improper-use-of-chips-act-funding, 25 Sep 2023
  • NIST US Department of Commernce, Biden-Harris Administration Announces Final National Security Guardrails for CHIPS for America Incentives Program, https://www.nist.gov/news-events/news/2023/09/biden-harris-administration-announces-final-national-security-guardrails, 22 Sep 2023