Biden Admin Bars Construction of ‘Advanced’ Semiconductor Factories in China for 10 Years

U.S. Commerce Secretary Gina Raimondo speaks during an interview at the Department of Commerce in Washington on Sept. 23, 2021. Kevin Lamarque/Reuters

The Biden administration announced this week that technology companies that receive funds from the $280 billion CHIPS and Science Act will be barred from building advanced facilities in China for a period of 10 years.

U.S. Secretary of Commerce Gina Raimondo announced the rule during a Sep. 6 press conference, framing it as an important step for safeguarding national security.

“Companies who receive [CHIPS] funds can’t build leading-edge or advanced technology facilities in China for a period of 10 years,” Raimondo said. “Companies who receive the money can only expand their mature node factories in China to serve the Chinese market.

“We’re also going to be implementing the guardrails to ensure those who receive 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. They can’t send latest technology overseas.”

U.S. President Joe Biden signed the CHIPS legislation in August. The spending legislation aims to kickstart a domestic base for semiconductor manufacturing and research.

The United States, like much of the world, is currently dependent on Taiwan and China for nearly all of its semiconductor manufacturing needs. This presents a problem, as the chips are required for innumerable modern technologies ranging from consumer vehicles to hypersonic missiles.

The reliance on overseas supply chains, combined with an increasingly antagonistic Sino–U.S. relationship and the ramifications of numerous COVID-19 policies, created a global microchip shortage that has pushed demand and prices up drastically for related technologies.

U.S. intelligence agencies have also stated that the Chinese Communist Party (CCP), which rules China as a single-party state, is engaged in a broad campaign to acquire advanced U.S. technologies through espionage and business deals.

Likewise, a report from Georgetown University’s Center for Security and Emerging Technology states that the CCP’s military wing is using advanced U.S. semiconductors to train its own artificial intelligence.

Raimondo’s comments are thus likely to alleviate some concerns that tech corporations might use CHIPS monies as a slush fund to design advanced chips in the United States, which they could then outsource to China for manufacturing.

“If they take the money, they can’t use the money to invest in China, they can’t build a leading-edge fab in China for a period of 10 years,” she said. “If they expand their mature node factories in China, it’s only to serve the Chinese market.

“And, by the way, if they take money and then do any of those things, we'll claw back the money.”