September 8, 2022
The Biden Administration has announced that all U.S. tech companies that receive federal funding will be barred from building “advanced technology” facilities in China for ten years, reports the BBC.
The guidelines were unveiled as part of a $50 billion plan aimed at building up the semiconductor industry. It comes as business groups have pushed for more government support in an effort to reduce reliance on China.
They are faced with a global microchip shortage, which has slowed production, the BBC notes.
“We’re going to be implementing the guardrails to ensure those who receive [Clearing House Interbank Payments System] (CHIPS) funds cannot compromise national security …. They’re not allowed to use this money to invest in China; they can’t develop leading-edge technologies in China … for a period of ten years,” according to U.S. Commerce Secretary Gina Raimondo, who discussed the conditions of the U.S. CHIPS and Science Act—signed into law by President Joe Biden on August 9.
America currently produces roughly 10% of the global supply of semiconductors, which are key to everything from cars to mobile phones—down from nearly 40% in 1990.
Some U.S. chipmakers already are experiencing the impact of Washington’s crackdown on selling American technology to China. Earlier this month, Nvidia and AMD were told by U.S. officials to stop the sale of artificial intelligence chips to China.
Dan Ives of Wedbush Securities called the restrictions a “gut punch” for Nvidia.
“This is really a shot across the bow at China and it’s really going to fan those flames in terms of geopolitical (tensions),” Ives had told the BBC.
Research contact: @BBC