The Biden administration has stated that US tech companies that receive federal funding will be prohibited for ten years from constructing “advanced technology” facilities in China. The policies were unveiled as part of a $50 billion (£43 billion) plan to expand the domestic semiconductor industry.
It occurs at a time when business associations have pushed for increased government assistance in an effort to lessen reliance on China. Due to a global shortage of microchips, production has slowed.
“We’re 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…. for a period of ten years,” according to US Commerce Secretary Gina Raimondo., explaining the US Chips and Science Act.
“Companies who receive the money can only expand their mature node factories in China to serve the Chinese market.”
The US and China are embroiled in a protracted trade and technological dispute.
A law committing $280 billion to high tech manufacturing and scientific research was signed by US President Joe Biden in August amid worries that China is gaining ground on the US in terms of technology.
Tax incentives are included in the investments for businesses constructing computer chip manufacturing facilities in the US.
Since 1990, the US has decreased its production of semiconductors, which are essential to everything from cars to mobile phones, from nearly 40% to about 10% of the global supply.
The semiconductor bill was opposed by the Chinese Embassy in Washington, which claimed it was reminiscent of a “Cold War mentality.”
The consequences of Washington’s restrictions on the export of US technology to China are already being felt by some US chipmakers.
US officials ordered Nvidia and AMD earlier this month to stop selling artificial intelligence chips to China.
The limitations, according to Dan Ives of Wedbush Securities, are 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.
(Adapted from TransContenentalTimes.com)