Today: Wednesday, 1 February 2023 year

US bans state-funded tech giants from building new factories in China

US bans state-funded tech giants from building new factories in China

US technology companies, which will receive funding from the state budget, will not be able to build facilities in China using advanced technologies for 10 years. This was stated by US Secretary of Commerce Gina Raimondo.

We are talking about the so-called bill on chips, for the implementation of which $52.7 billion was allocated. In August, the document was approved by the US Congress. Its goal is to strengthen the competitiveness of the semiconductor industry in the United States, where Taiwan, South Korea, Japan and Singapore are among the leaders. Large companies such as Intel and Taiwan Semiconductor Manufacturing will suffer from the implementation of this program. The agency explained that IT giants for at least 10 years will not be able to create in China, as well as in Russia, more advanced chips than 28-nanometer ones (they are in many modern cars, smartphones and other equipment). The document also extends the ban on memory cards and integrated circuits. If companies that receive state subsidies are caught in violation, they will be required to return federal funds.

“We are introducing these measures… so that those who receive these funds cannot jeopardize national security… they are not allowed to use this money to invest in China, they cannot develop advanced technologies in China… for 10 years,” Raimondo said.


The minister added that companies that receive federal funds will only be able to expand production at existing factories in China to serve the Chinese market. Business representatives, according to the BBC, have previously asked the White House for additional government support to reduce dependence on China. Against the background of the ongoing trade war between the US and China, American entrepreneurs are facing a severe shortage of microchips, which has a depressing effect on production volumes.

In August, US President Joseph Biden signed into law a bill that allocates $280 billion for high-tech production and scientific research.

The American leader approved the document amid fears that Washington is losing its advantage over Beijing. The law also included tax breaks for companies that build computer chip factories in the United States. The Chinese embassy in Washington criticized the Biden-signed document, saying it reflects a “Cold War mentality.”

In early September, US authorities demanded that Nvidia and AMD stop selling chips to China. Now the US share of the global semiconductor market is approximately 10% (in 1990, this figure was almost 40%, recalls the BBC). American chips are produced for a wide segment – from cars to mobile phones.