The U.S. Commerce Department on Friday finalized a rule to limit semiconductor subsidy recipients from enlarging their production capacity in China. The national security “guardrails” of the CHIPS and Science Act prohibit the material expansion of semiconductor manufacturing capacity for advanced facilities in “foreign countries of concern” for 10 years from the date of award.
The regulation defines material expansion as increasing a facility’s production capacity by more than five percent, and also prohibits the expansion of production capacity for legacy facilities beyond 10 percent.
The department removed an initially proposed $100,000 spending cap on investments in advanced capacity in China as chipmakers, including Samsung Electronics, have reportedly expressed concern over the potential impact of such restrictions on future business operations.
Secretary of Commerce Gina Raimondo commented that the guardrails “will protect our national security and help the United States stay ahead for decades to come.” South Korea’s Ministry of Trade, Industry and Energy expects that following the finalization of the guardrails, “normal” business activities of South Korean firms, which pose no security concerns, will be guaranteed.
“Going forward, we will continue cooperation with the U.S. government to strengthen global supply chains for semiconductors and guarantee our enterprises’ investment and business activities,” the ministry stated in a press release.
The guardrails were first proposed in March to “ensure technology and innovation funded by the CHIPS and Science Act is not used for malign purposes by adversarial countries against the United States or its allies.”
This photo provided by Samsung Electronics Co. shows the company's chip manufacturing plant in Pyeongtaek, 65 kilometers south of Seoul. (PHOTO NOT FOR SALE) (Yonhap)
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