Commerce Secretary Gina Raimondo unveiled tight new proposed restrictions on semiconductor manufacturers doing business in China.
The Biden administration unveiled tight restrictions on new operations in China by semiconductor manufacturers that get federal funds to build in the U.S.
Intel shares fell as much as 4.1% on Tuesday, but the stock recovered somewhat to close at $28.46, down 2.4%. Although the proposed rule limits manufacturing expansion, grant recipients can still make technology upgrades to existing facilities to produce more-advanced semiconductors, if the companies receive any necessary export control licenses from the Commerce Department for doing so, an official familiar with the rule said. For example, a recipient upgrading the technological capability of a facility can include making logic chips at a smaller node size or memory chips with more layers.
Grant recipients also aren’t allowed to increase capacity by more than 10% at their existing facilities in countries of concern for logic chips that are 28 nanometers or less-advanced, which the law defines as legacy semiconductors. If they want to build new factories for this type of chip, at least 85% of the output must be consumed by the host country and the companies must notify the Commerce Department.
The new restrictions will make it even more challenging for Taiwan Semiconductor to expand its most-advanced Chinese plant in the eastern city of Nanjing, where it’s manufacturing 28-nanometer and more-advanced 16-nanometer chips. In October, Chief Executive C. C. Wei said the company was granted a one-year license from the U.S. government to expand production in China, temporarily exempting it from sweeping export control measures rolled out that month.
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