US Senate passes CHIPS Act 2022, bans recipients from expanding advanced chip capacity in specific countries

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This is really big news and is designed to help companies design and manufacture the technology that is developed in the US.  Currently many semiconductor designs are actually produced in Taiwan and China which not only increases the chance of Intellectual Property theft but also removes an important revenue stream from the United States.

The chips act is designed to change that.

The Senate on July 27 passed CHIPS and Science Act of 2022, bipartisan legislation in a vote of 64-33. A total of US$52.7 billion will be spent as a 5-year incentive for developing domestic semiconductor manufacturing capabilities and other programs.

In the legislation, section 103 stipulates that recipients of Federal incentive funds are prohibited from expanding or building new manufacturing capacity for "certain advanced semiconductors in specific countries that present a national security threat to the United States." Though China is not specifically mentioned therewithin, media such as CNBC and Reuters have interpreted that the CHIPS Act is to boost US production in competition with China.

Within the US$52 billion funding, US$39 billion is allocated over 5 years to subsidize the domestic chip manufacturing capacities; US$2 billion is provided to focus on legacy chip production to advance economic and national security interests; US$6 billion may be used for the cost of direct loans and loan guarantees.

As with most things in the US, this is just a loan so, it will eventually need to be paid back making the whole process more of an investment for the future with a "bail out" option when things eventually go sideways.

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