US tech companies that receive federal funding will be barred from building “advanced technology” facilities in China for 10 years, the Biden administration has said.
The guidelines were unveiled as part of a $50bn (£43bn) plan aimed at building a local semiconductor industry.
It comes as business groups have called for more government support in an effort to reduce dependence on China.
They are facing a global shortage of microchips which has reduced production.
“We’re going to put guardrails in place to make sure that people who receive CHIPS funds can’t compromise national security … by allowing them to use that money to invest in China.” No, they cannot develop known technologies in China. … for a ten-year period,” according to U.S. Commerce Secretary Gina Raimondo, explaining the U.S. Chips and Science Act.
“Companies that receive money can only expand their mature node factories in China to serve the Chinese market.”
The US and China are locked in a long-running dispute over trade and technology.
In August, US President Joe Biden signed a law committing $280bn (£232bn) to high-tech manufacturing and scientific research, amid fears that the US is losing its technological edge to China.
The investment includes tax breaks for companies that build computer chip manufacturing plants in the United States.
The U.S. currently produces about 10 percent of the world’s supply of semiconductors, which are key to everything from cars to cellphones, down from about 40 percent in 1990.
The Chinese embassy in Washington opposed the semiconductor bill, calling it a reminder of “Cold War mentality”.
Some U.S. chipmakers are already feeling the effects of Washington’s crackdown on selling U.S. technology to China. Earlier this month, Nvidia and AMD were told by US authorities to stop selling artificial intelligence chips to China.
Dan Ives of Wedbush Securities called the bans a “gut punch” for Nvidia.
