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The United States plans to restrict wafer companies funded by the federal government from expanding production capacity in China

he Biden government will restrict semiconductor manufacturers that have obtained federal funds to build factories in the United States from expanding production capacity in China.

According to Bloomberg and Reuters reports, the US Department of Commerce official in charge of funding said that the "Chip and Science Law", which provides $50 billion (the same below, about S $66.8 billion) in funding, will prohibit semiconductor companies that receive funding from expanding the production capacity of advanced chips (also known as chips) by 5% and old technology by 10% in countries of concern such as China or Russia, And restrict these companies from conducting joint research or technology licensing work with foreign entities of concern.

This measure covers current generation and mature process node wafers for quantum computing, radiation intensive environments, and other specialized military capabilities. The United States Department of Commerce will introduce these new restrictions on Tuesday (21st). The proposed rule will have a 60 day public consultation period, and the final rule will be announced later this year.

The proposed regulations indicate that in order to ensure that beneficiary companies with US federal funds cannot expand advanced production capacity in "countries of concern" (including China and Russia), the new regulations prohibit these companies from spending more than US $100000 on increasing production capacity of more advanced logic chips than 28 nanometers. "Any factory that produces these semiconductors in China cannot increase its existing capacity by more than 5%.".

Companies that receive funding are also not allowed to expand their existing facilities' 28 nm or lower level logic chip capacity by more than 10% in "countries of concern". "If these companies want to establish new factories for such wafers, at least 85% of their production must be absorbed in the host country, and the United States Department of Commerce must be notified.".

After the new regulations take effect, companies will also be prohibited from conducting joint research or licensing technology to foreign entities of concern, which includes any research and development work by two or more personnel. A technology license is defined as an agreement to provide another party with a patent, trade secret, or proprietary technology.

The list of foreign entities of concern will be expanded to include the U.S. Department of Commerce entity list, the U.S. Treasury's list of Chinese military companies, and the Federal Communications Commission's list of communications equipment and services that pose a national security risk. Among them are Huawei, China's largest technology company, Shangtang Group, an artificial intelligence giant, and Changjiang Storage Technology, a leader in the chip industry.

An official familiar with the regulations said that although the proposed regulations limit wafer manufacturing expansion, if these companies obtain any necessary export control licenses from the Ministry of Commerce, they can still upgrade their existing facilities to produce more advanced semiconductors.

According to the report, the new measures are expected to affect some companies that do business in China and are expected to receive incentive funds, including world chip industry leaders TSMC, Samsung, and Intel. This is likely to hinder some wafer companies' long-term efforts to pursue growth in China, the world's largest semiconductor market, and also make it difficult for Beijing to develop its ability to create cutting-edge technology in China.

In a statement, U.S. Commerce Secretary Raymond said that the Chip and Science Act is fundamentally a national security initiative for the United States. These barriers will help ensure that malicious actors do not have access to cutting-edge technology that can be used against the United States and its allies, and will also ensure that the United States remains ahead of its competitors for decades to come.

"The United States will also continue to coordinate with allies and partners to ensure that the plan advances our common goals, strengthens global supply chains, and promotes collective security," she said