The government support that US companies can receive through the recently announced CHIPS Act is subject to a condition. They are not allowed to set up ‘high tech’ factories in China.

President Biden’s administration announced the CHIPS Act a few weeks ago, a $43 billion aid package that would allow companies to build chip manufacturing in the United States. With this, the U.S. government wants to address the shortage of semiconductors, but the package also has the express goal of making the U.S. less dependent on Southeast Asian countries, where most of the chips are currently being built.

An arms race for technological progress

And it is also being used in a kind of arms race for technological advancement with main rival China. Companies using federal funds are barred from building “advanced technology” factories in the country for a decade. “We’re going to detain those who receive funding from the CHIPS Act to make sure they don’t endanger national security,” said US Commerce Secretary Gina Raimondo. “They can’t use this money to invest in China, and they can’t develop key technologies in China for ten years.” Companies are still allowed to expand existing factories in China to build for the Chinese market, Raimondo said.

The two countries have been embroiled in a trade dispute that amounts to a technological arms race for some time. For example, the U.S. imposes a whole series of restrictions on U.S. companies exporting chip technology to China, although in practice most companies are granted exemptions.

In association with Data News