When the U.S. Congress passed a landmark $52 billion federal program to boost national chipmaking capabilities, it included an important caveat: Companies receiving the funding must promise not to ramp up production of advanced chips. in China. From a report: It is a condition that will certainly add to the escalation of tensions between Washington and Beijing. The brakes will hit companies like Intel Corp. and Taiwan Semiconductor Manufacturing Co., major chipmakers that have tried to expand their business in China. TSMC will not be able to significantly upgrade or expand its existing facilities, thereby losing some growth opportunities in the world’s largest semiconductor market.
Specifically, the Chips and Science Act prohibits companies that get federal funding from dramatically ramping up production of chips more advanced than 28 nanometers in China — or a country of concern like Russia — for 10 years. Although 28-nanometer chips are several generations behind the most advanced semiconductors currently available, they are still used in a wide range of products, including cars and smartphones. The ban covers both logic chips and memory chips.