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US blocks CHIPS-funded companies from investing in China

Companies should be able to apply for the $50 billion in funding from February 2023

The US has underlined that any company that receives funding from its new CHIPS programme will not be able to invest in its operations in China.

The new $50 billion funding is aiming to boost the US’s semiconductor production capabilities following the chip shortage, at a time when the US and China are experiencing trade tensions.

Commerce Secretary Gina Raimondo underlined yesterday that companies that receive CHIPS funds cannot compromise national security by using the money to invest in China, develop leading-edge technologies in China, or send the latest technology overseas.

Additionally, Raimondo said that the funding won’t be a blank check for companies and it won’t be for them to pad their bottom line. CHIPS funding can’t be used for stock buybacks and is not intended to replace private capital. 

She said the funds are intended to help companies maximise the scale of their projects, and warned that the Commerce Department can claw back money. The department will use the clawback authority if companies fail to start their project on time, fail to complete their project on time, and fail to meet their commitments.

“These are some of the most stringent taxpayer protections and guardrails we’ve ever had, and the American people are counting on us to get it right,” said Raimondo. “And it’s a responsibility that we take very seriously.”

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Raimondo added that the Commerce Department expects to start receiving applications from companies for the CHIPS funding no later than February 2023.

The commerce secretary also shared the goals the administration hopes to meet with the funding. First, it hopes to make large-scale investments in leading-edge manufacturing, which will target around $28 billion to establish domestic production of logic and memory chips.

Secondly, it’s set to invest around $10 billion in new manufacturing capacity for mature or current-generation semiconductors. It hopes to increase domestic production across a range of chips, including those used in cars or communication technology.

Lastly, it will dedicate $11 billion to research and development programmes, including the creation of a National Semiconductor Technology Center.

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