Biden administration prohibits recipients of CHIPS Act funding from expanding in China

Chipmakers hoping to take advantage of the Biden administration’s $39 billion semiconductor manufacturing subsidy program will have to sign agreements promising not to expand production capacity in China. The requirement was one of a handful of funding terms the U.S. Department of Commerce outlined this week after it was set to begin accepting applications for money from the CHIPS bill at the end of June. Congress passed the $280 billion measure last July in a rare show of bipartisan cooperation, earmarking $52 billion in tax credits and funding for US semiconductor companies to expand domestic manufacturing.

“Recipients will have to enter into an agreement that limits their ability to expand semiconductor production capacity abroad for a period of 10 years after they receive the money,” Commerce Secretary Gina Raimondo told reporters. . Raimondo did not mention China by name. However, the superpower is one of the countries the US government considers a “foreign country of concern.”

In addition, Raimondo said recipients of the CHIPS Act cannot “knowingly participate in joint research or technology licensing efforts with a foreign entity of concern involving sensitive technologies or products,” a requirement likely intended to discourage domestic companies from signing agreements like Ford’s recently.

“I also want to make it clear that CHIPS dollars should not be spent on share repurchases,” Raimondo said. “This is about investing in our national security, not enabling these companies to use our money to increase their profits.” The Department of Commerce will also require companies applying for more than $150 million to explain how they plan to provide affordable childcare to employees, a funding requirement Raimondo reflects in today’s job market. In some cases, the agency may require the same recipients to return some of the money they receive from the CHIPS Act back to the government if they generate additional profits.