US technology companies that receive federal funding will be barred from building “advanced technology” facilities in China for 10 years.
As President Joe Biden‘s Administration points out, this stop is part of a $50 billion plan to boost the local semiconductor industry.
Also, the announcement comes as business groups have asked for more help from the US government in order to reduce dependence on China.
There is a worldwide shortage of microchips that is also slowing down the production of other devices.
“We will enforce these guidelines to ensure that everyone who receives federal funds does not jeopardize national security.
They will not be allowed to use this money to invest in China, they cannot develop advanced technology in China for a period of 10 years,” said US Commerce Secretary Gina Raimondo.
American companies that already have factories in China can expand them just to serve the Chinese market. The US and China are at odds over trade and technology issues.
In August, Biden signed a law that allocated $280 billion for high-tech manufacturing and scientific research, after fears that the US was losing its technological advantage to China.
The US currently produces about 10 percent of the world’s supply of semiconductors, which are key to building everything from cars to cellphones. In the 1990s, the US produced close to 40 percent of the world’s semiconductor supply.