The U.S. government has finalized maintaining the expansion limit of semiconductor production in China for companies receiving subsidies under the CHIPS Act at 5%, as per the draft.
According to Bloomberg and other sources on the 22nd (local time), the U.S. Department of Commerce released the final version of the semiconductor law guardrail regulations on the same day.
The final version requires companies that received subsidies to return the full amount if they "substantially expand" semiconductor production capacity in China or other countries of concern within the next 10 years. Substantial expansion is defined as 5% or more for advanced semiconductors and 10% or more for general-purpose semiconductors of the pre-28nm generation.
Bloomberg explained, "The semiconductor law enforcement authorities plan to provide $39 billion (approximately 52 trillion KRW) in subsidies and $75 billion (approximately 100 trillion KRW) in loans," adding, "Companies that significantly increase production or physically expand manufacturing space in China will be excluded from eligibility."
In particular, Bloomberg noted that the Department of Commerce had set a limit of $100,000 (approximately 133.55 million KRW) for "significant" transactions, which were prohibited in the March draft of the guardrails, but this limit regulation was removed in the final version. An anonymous Commerce official explained, "The definition of significant transactions in the future will be assigned to each company rather than being regulated."
Bloomberg stated, "This measure came after the Information Technology Industry Council (ITIC), representing Intel, TSMC, Samsung Electronics, and others, expressed opposition," and predicted, "All these manufacturers will receive federal incentives for new facilities established on U.S. territory."
Additionally, the Department of Commerce partially revised the restriction regulations, which were previously based solely on production capacity, to allow existing facilities to be maintained through equipment improvements during normal operational processes.
Commerce Secretary Gina Raimondo said in a statement on the day, "The CHIPS Act is fundamentally a national security initiative."
Secretary Raimondo emphasized, "These guardrails will help ensure that companies receiving U.S. government funds do not undermine our national security as we continue to cooperate with allies and partners to strengthen global supply chains and collective security."
In March, the Department of Commerce released a draft of the guardrail regulations that would prohibit companies receiving semiconductor subsidies from expanding production capacity in China by 5% or more for advanced semiconductors and 10% or more for older semiconductors within the next 10 years. Regarding this, the Korean government had requested doubling the substantial expansion standard of 5% set for advanced semiconductors.
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