US introduces safeguards ensuring CHIPS act funds remain exclusive to domestic semiconductor production

Oh, what a tangled web we weave.

Silicon wafer by Maxence Pira via Unsplash

This Friday past, the Biden Administration announced it had finalised guardrails to ensure funds from the massive $52 billion CHIPS act remain exclusive to US-based semiconductor manufacturers, preventing foreign investment in countries of concern, primarily China and Russia.

It makes complete sense, as the bill was designed to incentivise building of foundries across the country, effectively reducing the nation’s reliance on electronic components from outside the US. Intel has been the bill’s biggest supporters since its inception, as well as amongst the many proposed beneficiaries.

As such, in a statement, US Commerce Secretary, Gina Raimondo, explained that these safeguards were designed solely to protect US interests, “Chips for America is fundamentally a national security initiative, and these guardrails will ensure companies receiving US government funds do not undermine our national security.”

In essence, the changes made remain largely consistent with the rules set forward by the US Commerce Department back in February, except now it’s decidedly more defined in execution. For example, the rules state what investments are and aren’t allowed, specifically barring investment outside of the US, including preventing recipients from engaging in joint research efforts or technology licensing with those outliers for a period of 10 years. Subsidy holders who violate these rules are subject to a claw-back provision, i.e. pay back the money, Sonny.

Additionally, these clarified guardrails also make specific reference to quantum computing, supposedly to close the large technological gap and advantage China has within the field. This also includes; semiconductors designed for operation in cryogenic environments, sensors for quantum computing and semiconductor research, silicon photonic semiconductors, and semiconductors utilising nanomaterials, including 1D and 2D carbon allotropes and carbon nanotubes. Sounds complex, which they are, but the main takeaway is they have the potential for quantum computing and specialised military applications, all of which remain restricted outside of the US.

Finally, the rules more clearly define expanded semiconductor manufacturing capacity to adding clean room or other physical, defining material expansions as increasing production capacity by more than five percent. This is to allow for some fluctuation in capacity as a result of equipment upgrades or improvements to operation efficiency.

All in all, the Biden administration’s imposed mandate covers a lot of ground from a technological perspective, while also maintaining national security and ensuring US taxpayers’ hard-earned dollars are put to good use. As of August, the US Commerce Department said 460 companies across 42 states had expressed interest in CHIPS funds.