WASHINGTON - The Biden administration has unveiled tight restrictions on new operations in China by chipmakers that receive federal funds to build in the United States, potentially hampering efforts to expand in the world's largest semiconductor arena.
The US$50 billion (S$67.2 billion) Chips and Science Act will now bar companies that win grants from expanding their output by 5 per cent for advanced chips and 10 per cent for older technology.
The US Department of Commerce also outlined other measures, including a US$100,000 spending cap on investments in advanced capacity in China.
Those so-called guardrails are part of Washington's efforts to thwart Beijing's ambitions while securing supply of the components that underpin revolutionary technologies, including artificial intelligence and supercomputers, as well as everyday electronics.
In past years, the US has blacklisted Chinese technology champions, sought to cut off the flow of sophisticated processors and banned its citizens from providing certain help to China's chip industry.
The new restrictions tied to the Chips Act aim to impose more onerous limitations on companies expected to secure incentives, including industry leaders Taiwan Semiconductor Manufacturing Company, Samsung Electronics and Intel, which all operate in China.
The restrictions could hamper longer-term efforts to chase growth in the world's No. 2 economy, while also making it hard for Beijing to build up cutting-edge capabilities at home.
Intel shares fell 2.4 per cent in New York. At market close on Wednesday, Samsung Electronics shares were up 1.33 per cent, while SK Hynix was up 3.95 per cent.
"Chips for America is fundamentally a national security initiative and these guardrails will help ensure malign actors do not have access to the cutting-edge technology that can be used against America and our allies," Commerce Secretary Gina Raimondo said in a statement.
This story is from the March 23, 2023 edition of The Straits Times.
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This story is from the March 23, 2023 edition of The Straits Times.
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