The Biden administration is preventing recipients of CHIPS Act funding from expanding in China

Chipmakers hoping to take advantage of the Biden administration’s $39 billion subsidy program for semiconductor manufacturing will have to sign agreements promising not to expand manufacturing capacity in China. The requirement was among a handful of funding conditions the U.S. Commerce Department outlined this week after it would begin accepting applications for money from the CHIPS Act in late June. Congress passed $280 billion last July in a rare show of bipartisan cooperation, setting aside $52 billion in tax credits and funding for U.S. semiconductor companies to expand domestic production.

“Recipients will be required to enter into an agreement limiting their ability to expand semiconductor manufacturing capacity in foreign countries of concern for a period of 10 years after receiving the money,” Commerce Secretary Gina Raimondo told reporters, according to . Raimondo did not name China by name. However, the superpower is among the nations that the US government considers a “foreign country of concern.”
In addition, Raimondo said CHIPS Act recipients cannot knowingly engage in any joint research or technology licensing efforts with a foreign entity involving sensitive technologies or products, a requirement likely designed to discourage domestic firms from signing agreements like the Ford recently.

“I also want to be clear that no CHIPS dollars can be used for stock buybacks,” Raimondo said. “This is about investing in our national security, not enabling these companies to use our money to increase their profits.” The Commerce Department will also require companies applying for more than $150 million to outline how they plan to offer affordable child care to workers, a funding condition that Raimondo said reflects the current labor market. In some cases, the agency may require those same recipients to return some of the money they receive from the CHIPS Act to the government if they generate a profit.