CHIPS Act will Refrain Producers from Expanding Facilities into “Hostiles Nations”

The Chips and Science Semiconductor Production Subsidies Bill (CHIPS) has been passed by the US Senate and it will probably only take a few days for the House of Representatives to adopt it and the President to sign it into law, opening the door for chipmakers to receive federal subsidies and various incentives. All chip manufacturers who construct new fabs are qualified to receive them, but they must fulfill specific requirements.

The Chips and Science Act’s legislation reveals that businesses receiving Federal incentive funding are not allowed to increase or construct “new production capacity for certain sophisticated semiconductors in designated nations that create a national security danger to the United States.”

CHIPS Act would act as a great incentive for producers | Image: Digital Europe

China, Iran, North Korea, and Russia are the four nations that the U.S. Intelligence community views as threats to national security, though the law is vague about which industrial hubs it refers to. Lawmakers do not want beneficiaries of the Chips fund to increase or develop new semiconductor manufacturing capacity in China when one considers the fact that no global chipmaker has facilities in Iran, North Korea, or Russia.

GlobalFoundries, Intel, Samsung Foundry, TSMC, and Texas Instruments are currently either constructing new fabs in the U.S. or increasing the capacity of their current facilities, and as long as they meet the criteria, they are all qualified to receive financial incentives and subsidies from the federal government. 

The proposed legislation intends to support the U.S. semiconductor sector, which is experiencing a resurgence as a result of the construction or optioning of several new fabs. Both the American economy and chip supply issues will benefit from it. Additionally, it guarantees a steady supply of chips to American businesses. The law would also increase the U.S.’s capacity for scientific research and guarantee its long-term competitiveness with China.

Muhammad Zuhair
Passionate about technology and gaming content, Zuhair focuses on analysing information and then presenting it to the audience.