US technology companies receiving federal funding under the CHIPS and Science Act, will be banned for 10 years from building “advanced technology facilities” in China. During the briefing this was announced by US Commerce Secretary Gina Raimondo.

“We’re also going to be implementing the guardrails to ensure those who receive Chips funds cannot compromise national security… they are prohibited from using the money to invest in China, they cannot develop advanced technologies in China for ten years,” said Ms. Gina Raimondo, “Companies who receive the money can only expand their mature node factories in China to serve the Chinese market.”

The CHIPS and Science Act is a legislative initiative signed into law by US President Joe Biden in August 2022. The law provides $280 billion to support and expand high-tech manufacturing and research in the United States, amid concerns that the United States is losing its technological edge to China. The law provides tax incentives for companies that build factories for the production of microcircuits on the territory of the United States.

The US now produces about 10% of the world’s semiconductors, which are key to everything from cars and washing machines to mobile phones and missile guidance systems. In 1990, almost 40% of chips were produced in the USA.

China has already spoken out about the CHIPS and Science Act, calling it a reminder of the “Cold War mentality.”

As a reminder, a few days ago the US government forbade NVIDIA and AMD to sell some chips in China.