A bipartisan group of lawmakers in the United States introduced a bill in the House of Representatives on Thursday (November 20) aimed at prohibiting entities funded by the CHIPS Act from purchasing chip manufacturing equipment made in China within the next 10 years.
According to Reuters, the bill covers a range of equipment, from complex lithography machines to tools used for cutting and dicing silicon wafers in chip production.
The bill was introduced in the House by Republican representative Jay Obernolte and Democratic representative Zoe Lofgren. In the Senate, Democrat Mark Kelly and Republican Marsha Blackburn also plan to introduce the bill in December.
The CHIPS Act was passed in 2022 during the Biden administration to boost the U.S. chip manufacturing industry, allocating $39 billion for stimulating new factory construction and expanding existing facilities.
Chip manufacturers such as Intel, Taiwan Semiconductor Manufacturing Company (TSMC), and Samsung Electronics have already received funding under the CHIPS Act, although the U.S. later converted Intel’s funding into equity investment.
According to background materials provided by bipartisan lawmakers in Congress, China has invested over $40 billion in the chip industry, focusing on manufacturing equipment, leading to a significant increase in the market share of such equipment from China.
U.S. chip equipment manufacturers are increasingly concerned that limiting exports of their tools to China will reduce sales and harm investment in research and development. The practice of using funds from the CHIPS Act to purchase Chinese-made equipment further exacerbates this issue.
The largest chip manufacturing equipment companies in the U.S. currently include Applied Materials, Lam Research, and KLA.
While equipment produced in China is the primary target of this legislation, the bill also prohibits the import of equipment from other sanctioned countries, such as Iran, Russia, and North Korea.
The bill includes provisions for exceptions, allowing for waivers if a specific tool cannot be produced in the U.S. or its allies.
This bill only applies to imports into the U.S. and will not affect the business operations of entities funded under the CHIPS Act overseas.