The US government has banned its tech companies that receive federal funding 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 up the local semiconductor industry in the US and comes following calls in the US to reduce reliance on China, a major producer of semi-conductors in the world.
Reliance on China for semiconductors has led to global microchip shortage which has slowed production of electronics and machines in the US.
“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,” US Commerce Secretary Gina Raimondo said on Wednesday, September 7 while 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 have been locked in a long-running dispute over trade and technology.
In August, US President Joe Biden had 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 investments include tax breaks for companies that build computer chip manufacturing plants in the US.
The US currently produces roughly 10% of the global supply of semiconductors, which are key to everything from cars to mobile phones, down from nearly 40% in 1990.