The Biden administration barred CHIPS Act funding recipients from expanding into China

Chipmakers hoping to tap into the Biden administration’s $39 billion semiconductor manufacturing subsidy program must sign agreements promising they will not expand production capacity in China. The requirement is one of several funding conditions outlined by the US Commerce Department this week after it begins accepting applications for money from the CHIPS Act in late June. Congress passed a $280 billion measure in July in a rare display of bipartisan cooperation and allocated $52 billion in tax credits and funding for US semiconductor companies to expand local production.

“Recipients must enter into an agreement restricting their ability to expand semiconductor manufacturing capacity in the foreign countries concerned for 10 years after receiving the money,” said Commerce Secretary Gina Raimondo to reporters, respectively . Raimondo did not mention China by name. However, the superpower is one of the countries that the US government considers a “foreign country of concern.”

Additionally, Raimondo said CHIPS Act recipients will not “knowingly engage in any joint research or technology licensing effort with a foreign entity of concern involving sensitive technologies or products,” a requirement likely designed to prevent domestic companies from signing agreements like the one Ford recently did.

“I also want to be clear that no CHIPS dollars will be spent on stock buybacks,” Raimondo said. “It’s about investing in our national security, not allowing these companies to use our money to increase their profits.” The Commerce Department also requires companies applying for more than $150 million to outline how they plan to provide affordable child care to workers, a condition of the funding that Raimondo said reflects the current labor market. In some cases, the agency may require the same recipients to return some of the money they received from the CHIPS Act to the government if they generate excess revenue.

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