Commerce Department Outlines Proposed National Security Guardrails for CHIPS for America Incentives Program

Guardrails will ensure innovations and technology funded by CHIPS Act bolsters technological and national security for America and our allies.

The U.S. Department of Commerce today released a Notice of Proposed Rulemaking for the guardrails included in the CHIPS Incentives Program to advance America’s technological and national security. The national security guardrails are intended to ensure technology and innovation 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 CHIPS and Science Act is part of President Biden’s Investing in America agenda for unleashing a manufacturing and innovation boom, driving U.S. competitiveness and strengthening economic and national security.

The proposed rule offers additional details on national security measures applicable to the CHIPS Incentives Program included in the CHIPS and Science Act, 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 innovation and technology funded in the CHIPS Act is how we plan to expand the technological and national security advantages of America and our allies; these guardrails will help ensure we stay ahead of adversaries for decades to come,” said Secretary of Commerce Gina Raimondo. “CHIPS for America is fundamentally a national security initiative and these guardrails will help ensure malign actors do not have access to the cutting-edge technology that can be used against America and our allies. We will also continue coordinating with our allies and partners to ensure this program advances our shared goals, strengthens global supply chains, and enhances our collective security.”

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

Today’s proposed rule outlines additional details on and definitions for these national security guardrails. The proposed rule will:

The Department is seeking public comment on the Notice of Proposed Rulemaking and will accept comment for 60 days. Industry, partners and allies, and other interested parties are encouraged to submit comment to inform the final rule to be published later this year.

Advanced Manufacturing Investment Credit

The proposed rule aligns with the national security guardrails included in the U.S. Department of the Treasury’s Notice of Proposed Rulemaking also issued today, which details the Advanced Manufacturing Investment Credit (Investment Tax Credit) administered by the Internal Revenue Service. The Investment Tax Credit is a federal income tax credit for qualifying investments in facilities manufacturing semiconductors or semiconductor manufacturing equipment, and a critical component of the suite of incentives provided by the CHIPS and Science Act. The Department of Commerce and the Department of the Treasury have been coordinating closely on CHIPS funding and the Investment Tax Credit to ensure these incentives are complementary and advance the Biden Administration’s economic and national security goals.

International Coordination with U.S Partners and Allies

The Department has appreciated extensive input and cooperation from U.S. partners and allies while developing this proposed rule, and it looks forward to further public comment. The Department will continue coordinating with international allies and partners to support a healthy global semiconductor ecosystem that drives innovation and is resilient to cybersecurity threats, natural disasters, pandemics, geopolitical conflict, and more. As semiconductors and technologies continue to evolve, the U.S. will work with allies and partners and develop coordinated strategies to ensure the latest technology cannot be used by entities of concern to undermine our collective economic and national security.

As the Department has been implementing the CHIPS and Science Act, it has remained in close contact with U.S. partners and allies, including through engagements with the Republic of KoreaJapanIndia, and the United Kingdom, and through the Indo-Pacific Economic FrameworkEuropean Union-United States Trade and Technology Council, and North America Leaders’ Summit. The Department will continue coordinating closely with U.S. partners and allies to advance these shared goals, advance our collective security, and strengthen global supply chains.

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