New rules have been proposed for the CHIPS Incentives Program by the Department of Commerce. The national security guardrails are intended to ensure technology funded by the CHIPS and Science Act is not used for malign purposes by adversarial countries against the United States or its allies and partners. 

The proposed rule offers additional details on national security measures applicable to the CHIPS Incentives Program, limiting recipients of funding from investing in the expansion of semiconductor manufacturing in foreign countries of concern.

The statute identifies those countries as the People’s Republic of China (PRC), Russia, Iran and North Korea. These guardrails will advance shared national security interests as the U.S. continues coordinating and collaborating with allies and partners to make global supply chains more resilient and diversified.  

The funding provided by the bipartisan CHIPS and Science Act included the following guardrails to strengthen national security: 

• The statute prohibits recipients of CHIPS incentives funds from using the funds in other countries. 
• The statute significantly restricts recipients of CHIPS incentives funds from investing in most semiconductor manufacturing in foreign countries of concern for 10 years after the date of award. 
• The statute limits recipients of CHIPS incentives funds from engaging in joint research or technology licensing efforts with a foreign entity of concern that relates to a technology or product that raises national security concerns.