(Bloomberg) -- The Commerce Department will this month release rules to limit companies’ activity in China should they receive some of the $52 billion that the US is providing to boost its semiconductor industry. 

“The guardrails are intended to make sure that no US taxpayer dollars benefit technology or manufacturing in China or any other country of concern” — including Russia, North Korea and Iran — for 10 years, said Morgan Dwyer, the chief strategy officer in the chips program office at the Department of Commerce.

In addition, incentive recipients may not knowingly engage in joint research or technology licensing efforts of advanced technologies or technologies that threaten national security, Dwyer said at a national-security summit in Washington Tuesday. 

The so-called notice of proposed rulemaking will provide more detail on the guardrails, and Commerce seeks feedback from companies and allies that are also offering incentives to beef up their chip industries such as the European Union, South Korea and Japan, she said. 

The hope of the Chips and Science Act — signed into law last year — is to revitalize US semiconductor manufacturing after decades of production shifting to Asia. The promise of $52 billion in subsidies has already led to at least 40 projects and some $200 billion in private-sector investment, according to the semiconductor industry.

Given that so many countries are incentivizing local production, the Commerce Department seeks coordination with allies and it has set up an international engagement team to spearhead efforts, Dwyer said. 

“There is a need really to coordinate our incentive programs to avoid the risk of oversupply,” she said. “It’s a huge priority and it’s something that we’re staffing up to tackle.”


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