The Biden administration announced guardrails for the CHIPS Act to boost domestic semiconductor manufacturing and restrict foreign entities of concern from acquiring advanced technologies. Meanwhile, Beijing is reportedly changing tack on its way to semiconductor self-sufficiency.
US Department of Commerce released a notice of proposed rule-making for the guardrails included in the CHIPS Incentives Program, saying the US government will limit grant recipients from investing in the expansion of semiconductor manufacturing in foreign countries of concern, explicitly stated as China, Russia, Iran, and North Korea.
The outlined guardrails prohibit significant transactions involving the material expansion of manufacturing capacity for leading-edge and advanced facilities in foreign countries of concern for ten years. The definition of a significant transaction is on a monetary level of US$100,000, with material expansion defined as increasing the production capacity of advanced technology by 5%.
The rules also limit the expansion of legacy technology facilities in foreign countries of concern. Grant recipients cannot add new production lines or expand a facility's production capacity of matured technology beyond 10%. The official document explicitly distinguishes between advanced and legacy technologies by the 28nm process.
On the other hand, Financial Times quoted sources reporting that Beijing would give a few selected champions, including SMIC, Hua Hong Semiconductor, Huawei, Naura, and Advanced Micro-Fabrication Equipment, easier access to subsidies and more control over state-backed research, instead of putting tonnes of investments into the likes of National Integrated Circuit Industry Investment Fund Co., also known as the Big Fund, following an anti-corruption campaign launched by Beijing and several key players in China's semiconductor industry under investigation on graft allegations, including chip tycoon Zhao Weiguo.
Beijing's rumored cherry-picking of national champions came after China's tightened grip on technology development by launching the National Data Bureau, creating a new party science commission, and restructuring the Ministry of Science and Technology in the Two Sessions meeting of the National People's Congress (NPC) and the Chinese People's Political Consultative Conference (CPPCC) held in early March.
