The U.S. Commerce Department on Friday is issuing final rules to prevent semiconductor manufacturing subsidies from being used by China and other countries deemed to pose American national security concerns.
The regulation is the final hurdle before the Biden administration can begin awarding $39 billion in subsidies for semiconductor production. The landmark “Chips and Science” law provides $52.7 billion for U.S. semiconductor production, research and workforce development.
In October 2022, the department issued new export controls to cut China off from certain semiconductor chips made with U.S. equipment in its bid to slow Beijing’s technological and military advances.
If funding recipients violate restrictions, Commerce Department can claw back federal awards.
Raimondo told Congress she is working as fast as possible to get awards approved.
“I feel the pressure,” Raimondo said. “We are behind but it is more important that we get it right. And if we take another month or a few more weeks to get it right, I will defend that because it’s necessary.”
The final rules prohibit material expansion of semiconductor manufacturing capacity for leading-edge and advanced facilities in foreign countries of concern for 10 years. It also clarifies wafer production is included within semiconductor manufacturing.
The final rule ties expanded semiconductor manufacturing capacity to adding cleanroom or other physical space, defining material expansions as increasing production capacity by more than 5%.
The rule prohibits recipients from adding new cleanroom space or production lines that result in expanding a facility’s production capacity beyond 10%.
The rule also classifies some semiconductors as critical to national security, triggering tighter restrictions, including quantum computing current-generation and mature-node chips, in radiation-intensive environments, and for other specialized military capabilities.