WASHINGTON (Parliament Politics Magazine) – The Biden government has announced plans to promote domestic semiconductor production while prohibiting US technology companies that receive government assistance from constructing “advanced technology facilities” in China for ten years.
The US government’s roughly $53 billion (£46 billion) plan to increase the production of semiconductor chips, the “brain” of every electronic device, from cars to home appliances, calls for the criteria. These chips are primarily made in Asia.
As US businesses desire more government support to lessen reliance on components made in Chinese factories, the US Chips and Science Act (Chips), which was approved by Congress in August, is a component of the American reaction to a protracted technology conflict between China and the US.
The US Department of Commerce stated that it wanted to start soliciting applications for the $39 billion in government subsidies for semiconductors by next February in order to build new production factories in the US. A 25% investment tax credit will also be provided by the plan for chip plants, whose construction will start in 2023.
Gina Raimondo, the US Commerce Secretary stated, they were also going to be putting in place the guardrails to guarantee that those who got Chips funding couldn’t compromise national security. They couldn’t use that money to invest in China, they couldn’t develop cutting-edge technology there, and they couldn’t export the latest technology.
The coronavirus pandemic-related global shortage of computer chips has significantly slowed down production for carmakers in the UK and elsewhere, as well as for technology firms and other industries.
Additionally, the industry has grown in geopolitical importance as China has started to make its presence felt on the international stage under the leadership of President Xi Jinping, especially by threatening Taiwan.
In the US, as well as in Japan and the EU, this has encouraged investment in and an increase in semiconductor manufacture.
 Those funds were meant to assist businesses in increasing the scope of their projects. They were going to encourage businesses to take bigger, more bold steps, Raimondo added. The companies getting government financing would need to show that the money was absolutely necessary to make those investments, she continued, adding, they were going to negotiate those transactions one at a time.
The Chips Act, which pledges $280 billion in total to high-tech manufacturing and research, aims to make the US more competitive with China.
Previously, the Chinese embassy in Washington opposed the law on the grounds that it reflected a “cold war mentality.”
The US crackdown on the sale of technology to China has already started to have an effect. Last week, US chip designer Nvidia said that US officials had ordered it to stop exporting two of its top computing chips to China for use in artificial intelligence projects.
