Tech Diplomacy Now: Commerce Issues the CHIPS Act Final Rule
After issuing a proposed rule in March 2023, the Commerce Department released its final rule on September 22, imposing restrictions on the recipients of CHIPS Act funding
TABLE OF CONTENTS
Top News of the Week
Announcements
Latest News
Technology Strategy and Policy
Artificial Intelligence
Telecommunications Networks and Infrastructure
Critical Minerals
Synthetic Biology
Quantum
Advanced Aerospace Technology
Semiconductors and Microelectronics
Energy and Climate
Opinion and Commentary
The Last Word
Top News of the Week – Commerce Issues the CHIPS Act Final Rule
After issuing a proposed rule in March 2023, the Commerce Department released its final rule on September 22, imposing restrictions on the recipients of CHIPS Act funding. Despite lobbying by Semiconductor companies, the Department imposed restrictions on both the expansion of semiconductor manufacturing in “foreign countries of concern” (in other words, China) and joint research and technology licensing with “foreign entities of concern” (in other words, entities from China).
To add teeth to these restrictions, the Commerce Department added claw back provisions which would allow the U.S. Government to seize back funding or take control of intellectual property if a company violates the restrictions.
One change from the earlier rule from March was the removal of a $100,000 threshold for a “significant” transaction. Now the determination of what is or isn’t a “significant” transaction, which would trigger the restrictions on investments in “foreign countries of concern” or collaboration with “foreign entities of concern,” will be determined on a case-by-case basis. This will likely allow semiconductor companies to lobby behind the scenes against the enforcement of the restrictions.
The rule also sets out a list of semiconductors that Commerce considers “critical” which will limit Chinese entities from gaining access to chips used in quantum computing, specialized military chips, and chips that are radiation-hardened.
The restrictions set forth in this final rule will open the door for the CHIPS Program Office to begin disbursing $39 billion in grants and another $75 billion in loans and loan guarantees.
These steps will change the business landscape for the semiconductor industry, but Beijing is also pursuing its own incentive program, along with its own restrictions. Overtime, we should expect to see the semiconductor industry, as well as the broader electronics industry, fracture along geopolitical lines.
More background:
U.S. Issues Final Rules to Keep Chip Funds Out of China – NYTs, September 22, 2023
Biden-Harris Administration Announces Final National Security Guardrails for CHIPS for America Incentives Program – Department of Commerce, September 22, 2023
CHIPS Act Tries to Keep Quantum Away from China – Tom’s Hardware, September 25, 2023
U.S. Blacklists 28 Entities from China, Russia and Other Countries, Citing National Security Risks – WSJ, September 25, 2023
China’s state investment arm said to be planning US$14 billion fund to support strategic new industries – SCMP, September 25, 2023
The US-China chip war is still escalating – MIT Technology Review, July 12, 2023
Announcements
TODAY: at 1p.m. ET, The Krach Institute for Tech Diplomacy at Purdue will stream an in-depth conversation between Montana Attorney General Austin Knudsen and former U.S. Deputy Assistant Secretary of State Len Khodorkovsky. The discussion will center on Montana's recent ban of TikTok.
During the interview, the Attorney General will delve into the ongoing lawsuit filed by TikTok against the State of Montana and reveal how TikTok, along with its parent company, ByteDance, actively shares personal information with the CCP.
Time: 1:00p.m. ET
Location: LinkedIn + Twitter + YouTube
Register HERE
Latest News
Why Did Trudeau Dawdle on Chinese Election Meddling? – Foreign Policy, September 23, 2023
Taiwan reports record number of military incursions, urges China to stop 'harassment' – Focus Taiwan, September 18, 2023
Venture firm GGV Capital to split off China business after US pressure – Financial Times, September 22, 2023
Apple To Scale Up India Production Over Five Times To $40 Billion In Five Years – Bloomberg, September 24, 2023
Technology Strategy and Policy
The end of Germany’s China illusion – European Council on Foreign Relations, September 15, 2023
Treasury Department Announces Launch of Economic and Financial Working Groups with the People’s Republic of China – U.S. Treasury Department, September 22, 2023
UK bolts US ‘data bridge’ deal onto EU-US Data Privacy Framework – TechCrunch, September 21, 2023
White House could force cloud companies to disclose AI customers – Semafor, September 22, 2023
NATO’s €1bn venture fund offers defence start-ups an alternative to China – Financial Times, September 25, 2023
Artificial Intelligence
AI will revolutionise research. But could it transform science altogether? – The Economist, September 20, 2023
China Aims to Replicate Human Brain in Bid To Dominate Global AI – Newsweek, September 19, 2023
China's AI 'war of a hundred models' heads for a shakeout – Reuters, September 21, 2023
How one elite university is approaching ChatGPT this school year – MIT Technology Review, September 4, 2023
Telecommunications Networks and Infrastructure
Nordstream trauma leads Berlin to draw up fresh Huawei bans – Politico, September 19, 2023
The Billionaire Keeping TikTok on Phones in the U.S. – WSJ, September 20, 2023
Can TikTok conquer the American shopper? – Quartz, September 19, 2023
Huawei unit ships Chinese-made surveillance chips in fresh comeback sign – Reuters, September 20, 2023
Huawei makes processor breakthrough in flagship smartphone – Financial Times, September 21, 2023
Critical Minerals
Even the US's planned rare earth magnet factory can't shake the influence of China – Quartz, September 22, 2023
Inside Vietnam's plans to dent China's rare earths dominance – Reuters, September 24, 2023
China boosts rare earths production to bolster booming EV industry – Nikkei Asia, September 26, 2023
Synthetic Biology
China’s quest for human genetic data spurs fears of a DNA arms race – Washington Post, September 21, 2023
The Future of Sustainable Biomanufacturing is Microscopic Factories – SynBioBeta, September 19, 2023
Synthetic Biology Moves from the Lab to the Marketplace – WSJ, September 19, 2023
Chinese scientists use gene-edited silkworms to make spider silk that’s 6 times tougher than Kevlar – SCMP, September 22, 2023
Quantum
Bizarre Quantum Theory Explains Why Your Coffee Takes So Long to Drip through a Narrow Filter – Scientific American, September 25, 2023
New qubit circuit enables quantum operations with higher accuracy – MIT News, September 25, 2023
Preparing for the post-quantum cryptography environment today – CSO Online, September 26, 2023
Advanced Aerospace Technology
U.S. Space Force awards $25.5m to co-invest in satellite refuelling vehicle – Innovation News Network, September 26, 2023
Building in zero gravity: the race to create factories in space – The Guardian, September 25, 2023
Frontier Space Technologies is developing an on-orbit autonomous lab to make space science easy – TechCrunch, September 21, 2023
US-China rivalry spurs investment in space tech – BBC, September 25, 2023
Semiconductors and Microelectronics
Intel sees massive demand for AI chips designed for China amid LLM boom and US export curbs, report says – SCMP, September 21, 2023
The Most Important Tech Company You’ve Never Heard of Is a Major Reason Computers Keep Getting Faster – WSJ, September 22, 2023
Huawei unveils slew of new products but keeps quiet on breakthrough Mate 60 Pro and chip inside – SCMP, September 25, 2023
Intel’s Big Chip-Making Push in Germany Hits Bottleneck – WSJ, September 25, 2023
Energy and Climate
Solar supply chains must diversify away from China, warns EDP – Financial Times, September 25, 2023
Ford suddenly pauses massive EV battery project that Republicans are probing over CCP ties – Fox Business, September 25, 2023
Europe is working to slow down the global expansion of Chinese EVs – MIT Technology Review, September 26, 2023
Opinion and Commentary
China’s coming lawfare offensive – Jay Newman, Financial Times, September 18, 2023
Biden EV agenda threatens U.S. auto industry – Senator JD Vance, Toledo Blade, September 19, 2023
World events are not going America’s way – Elbridge Colby, The Spectator, September 18, 2023
The Rules-Based International Order Is Quietly Disintegrating – Walter Russell Mead, WSJ, September 25, 2023
The Biden Admins Clear Vulnerability to Chinese Espionage – Michael Ellis, The Daily Signal, September 25, 2023
The Last Word
“CHIPS for America is fundamentally a national security initiative and these guardrails will help ensure companies receiving U.S. Government funds do not undermine our national security as we continue to coordinate with our allies and partners to strengthen global supply chains and enhance our collective security.”
- Secretary of Commerce Gina Raimondo
About: Tech Diplomacy Now
The Krach Institute for Tech Diplomacy at Purdue is the world’s preeminent trusted technology accelerator. As the leader of the new category of Tech Diplomacy, the Institute integrates technology expertise, Silicon Valley strategies, and foreign policy tools to build the Global Trusted Tech Network of governments, companies, organizations and individuals to accelerate the innovation and adoption of trusted technology and ensure technology advances freedom.