The U.S. Department of Commerce (DoC) is proposing to create national security “guardrails” for the CHIPS Incentives Program to ensure that technology and innovation funded by the CHIPS and Science Act are not used for malign purposes by adversaries of the U.S. and its allies.

The CHIPS and Science Act, signed into law by President Biden in the summer of 2022, established an multi-billion dollar incentives program to reestablish and sustain U.S. leadership across the semiconductor supply chain.

The law already includes limitations for funding recipients – recipients of CHIPS incentives funds are prohibited from using the money in other countries; recipients are significantly restricted from investing in most semiconductor manufacturing in adversary nations for 10 years after the date of award; and recipients are limited from engaging in joint research or technology licensing efforts with an adversary country that involves technology or products that raise national security concerns.

In unveiling the security guardrails proposal, the Commerce Department said it is “issuing, and requesting public comments on, a proposed rule to set forth terms related to these limitations for funding recipients to notify the Secretary of Commerce of any planned significant transactions that may be prohibited,” according to a notice of proposed rulemaking.

“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,” Secretary of Commerce Gina Raimondo said in a press release.

The proposed national security guardrails, the agency said, will provide additional terms to ensure that funding provided through the program does not directly or indirectly benefit four adversarial countries – the People’s Republic of China, Russia, Iran, and North Korea.

According to the DoC, the guardrails will advance shared national security interests as the U.S. continues coordinating and collaborating with its allies and partners to make global supply chains more resilient and diversified.

“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,” said Raimondo.

The agency said the national security guardrails effort includes:

  • Establishing standards to restrict advanced facility expansion in foreign countries of concern;
  • Limiting the expansion of legacy facilities in adversarial nations;
  • Classifying semiconductors as critical to national security;
  • Reinforcing U.S. export controls; and
  • Defining restrictions on joint research and technology licensing efforts with adversary nations.,

The department will accept public comment on the notice for 60 days starting March 23, with a final rule expected later this year.

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Lisbeth Perez
Lisbeth Perez
Lisbeth Perez is a MeriTalk Staff Reporter covering the intersection of government and technology.