The US proposes banning companies receiving CHIPS subsidies from purchasing chip equipment from China for 10 years.

A bipartisan group of US lawmakers on November 20 introduced a bill in the House of Representatives to prevent companies receiving subsidies from the CHIPS and Science Act from purchasing Chinese chipmaking equipment for 10 years.

Specifically, the bill targets a range of chipmaking tools, from sophisticated photolithography equipment like that made by Dutch manufacturer ASML, to machines that cut and process silicon wafers. While Chinese equipment is the primary target, the bill also blocks tools from other countries deemed to be of concern, such as Iran, Russia, and North Korea.

However, the bill does include an exception that would allow the US government to issue licenses if certain tools are not manufactured in the US or in allied countries. Importantly, the bill would only block the import of the equipment into the US and would not affect the overseas operations of companies that receive subsidies from the CHIPS and Science Act.

The move comes as China has invested more than $40 billion in the chip industry, focusing especially on manufacturing equipment, significantly increasing the market share of Chinese companies.

Against this backdrop, US chip equipment makers such as Applied Materials, Lam Research and KLA are increasingly concerned that export restrictions on their products to China will reduce sales and impact their ability to invest in research and development. The fact that companies that receive subsidies from the CHIPS and Science Act are using those funds to buy Chinese equipment further complicates matters.

Passed under the Joe Biden administration in 2022, the CHIPS and Science Act is designed to boost the US chip industry, with the government earmarking $39 billion to encourage the construction of new factories and expansion of existing facilities. Major chipmakers such as Intel of the US, TSMC of Taiwan (China) and Samsung Electronics of South Korea have all received subsidies under the act.

Source: VTV

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