Biden-Harris Administration Reveals National Security Guidelines for 'CHIPS for America'

By IndraStra Global News Team

Guardrails Finalized by the Department of Commerce to Safeguard National Security Interests
On September 22, the U.S. Department of Commerce unveiled the definitive regulations for implementing the national security guardrails outlined in the bipartisan CHIPS and Science Act. This release expounds upon two pivotal provisions of the legislation: firstly, it bars recipients of CHIPS funds from expanding material semiconductor manufacturing capacity in foreign countries deemed concerning for a period of ten years. Secondly, it places restrictions on recipients engaging in specific collaborative research or technology licensing endeavors with foreign entities of concern.
These guidelines are poised to ensure that investments made under the CHIPS Act effectively bolster the technological and national security interests of the United States and its allies and partners. The CHIPS and Science Act represents a crucial component of President Biden's ambitious agenda to promote American innovation, revitalize manufacturing, enhance U.S. competitiveness, and fortify economic and national security.
This final rule follows an exhaustive assessment of comments and suggestions received in response to the proposed rule published in March 2023. The Department revealed that it meticulously considered input from a wide array of stakeholders, including representatives from the domestic and foreign semiconductor industry, academia, labor organizations, trade associations, and other interested parties. The resulting rule provides comprehensive guidance and precise definitions regarding the national security measures applicable to the CHIPS Incentives Program, including the prohibition on expanding semiconductor manufacturing in foreign countries of concern.
Secretary of Commerce Gina Raimondo emphasized the administration's commitment to safeguarding national security interests, stating, "One of the Biden-Harris Administration’s top priorities – made possible by the CHIPS and Science Act – is to expand the technological leadership of the U.S. and our allies and partners. These guardrails will protect our national security and help the United States stay ahead for decades to come."
The bipartisan CHIPS and Science Act established clear guardrails to reinforce national security, including:
1. Prohibition of Foreign Semiconductor Facilities: Recipients of CHIPS incentives funds are prohibited from using the funds to construct, modify, or improve semiconductor facilities outside of the United States.   2. Restrictions on Foreign Semiconductor Manufacturing: Recipients of CHIPS incentives funds are restricted from investing in most semiconductor manufacturing activities in foreign countries of concern for a decade after receiving the award.
3. Limits on Joint Research and Technology Licensing: Recipients of CHIPS incentives funds are limited in engaging in joint research or technology licensing with foreign entities of concern in areas that raise national security concerns. 
Violating these guardrails can result in the Department retracting the entire federal financial assistance award.
The final rule provides intricate details and definitions pertaining to these national security guardrails. Notable aspects of the rule include:
- Standards for Expansion of Advanced Facilities: The rule defines and restricts the material expansion of semiconductor manufacturing capacity for advanced facilities in foreign countries of concern for a ten-year period. It also clarifies that wafer production falls within the definition of semiconductor manufacturing.
- Constraints on Legacy Facilities: Limits are imposed on expanding and constructing legacy facilities in foreign countries of concern. The rule establishes a notification process for recipients planning to expand legacy chip facilities to ensure compliance with the national security guidelines.
- Semiconductors Classified as Critical: The rule classifies specific semiconductors as critical to national security, subjecting them to tighter restrictions. This classification encompasses chips critical for U.S. national security needs, including those used for quantum computing, in radiation-intensive environments, and for specialized military capabilities.
- Detailed Restrictions on Joint Research: The rule provides specific guidelines on joint research and technology licensing efforts with foreign entities of concern, specifying the types of engagements that are exempted from these restrictions.
While discussing the implementation of the CHIPS and Science Act, the Department of Commerce has seemingly emphasized its efforts in cultivating strong connections with American partners and allies. It has been actively working in tandem with various nations, notably the Republic of Korea, Japan, India, and the United Kingdom, ostensibly to reaffirm a dedication to shared objectives and the reinforcement of global supply chains. The Department's participation in initiatives like the Indo-Pacific Economic Framework, the European Union-United States Trade and Technology Council, and the North American Semiconductor Conference can be seen as emphasizing its commitment to collective security and the pursuit of common goals, albeit with potential skepticism toward China's role in the equation.
About CHIPS for America
CHIPS for America is integral to President Biden's economic agenda, aiming to invest in the United States, stimulate private sector investment, create high-quality jobs, revitalize communities, and promote domestic manufacturing. This initiative comprises the CHIPS Program Office, responsible for manufacturing incentives, and the CHIPS Research and Development Office, in charge of R&D programs, housed within the National Institute of Standards and Technology (NIST) at the Department of Commerce. NIST's expertise and trusted reputation make it well-suited to administer the CHIPS for America program, supporting U.S. innovation and industrial competitiveness while enhancing economic security.  

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