The US has decided how to prevent China from benefiting from US chip subsidies

The U.S. Department of Commerce has promulgated rules that will prevent the use of subsidies for the production of semiconductors by China and other countries that are considered to pose a threat to U.S. national security, writes Reuters.

We are talking about a $39 billion subsidy program. These funds are provided under the Chips and Science Act, which allocates $52.7 billion to support domestic semiconductor production.

The regulations establish “safeguards” to limit recipients of funding from investing in production expansion in foreign countries of concern, such as China and Russia. The rules also restrict recipients from engaging in joint research or technology licensing projects with such entities.

If the recipients of funding violate the restrictions, the Ministry of Commerce may withdraw the grants.

“We have to be absolutely vigilant that not a penny of this helps China to get ahead of us,” Commerce Secretary Gina Raimondo told Congress Tuesday.

By the way, it was recently reported that the Chinese government is going to launch a new state-owned investment fund aimed at raising about $40 billion for the semiconductor sector. It is likely to be the largest of the three funds established by the China Integrated Circuit Industry Investment Fund, also known as the Big Fund.