United States Prohibits 'Advanced Tech' Firms From Building Factories In China

The Biden administration has announced that US technology companies that receive federal funding will be prohibited from establishing "advanced technology" facilities in China for ten years. The guidelines were released as part of a $50 billion (£43 billion) plan to expand the local semiconductor industry. It comes as business groups have pushed for increased government assistance in order to reduce reliance on China. They are dealing with a global shortage of microchips, which has slowed production.

"We're going to be implementing the guardrails to ensure those who receive CHIPS funds cannot compromise national security... they're not allowed to use this money to invest in China, they can't develop leading-edge technologies in China.... for a period of ten years,"  said US Commerce Secretary Gina Raimondo, explaining the US Chips and Science Act.

In August, US President Joe Biden signed legislation committing $280 billion (£232 billion) to high-tech manufacturing and research, amid concerns that the US is losing its technological edge to China.

Tax breaks are included in the investments for companies that build computer chip manufacturing plants in the United States. The United States now produces roughly 10% of the world's supply of semiconductors, which are essential in everything from automobiles to mobile phones, down from nearly 40% in 1990. The Chinese Embassy in Washington had lobbied against the semiconductor bill, calling it "Cold War mentality."