The legislation, approved by Congress in August, provides $10 billion to invest in regional centers nationwide, and also a 25% investment tax credit for chip plants, where construction begins from 2023.

Called the US Chips and Science Act (Chips), the legislation also provides tax breaks to firms that build computer chip manufacturing plants in the United States.

Yet, according to the U.S. Secretary of Commerce Gina Raimondo, U.S. technology firms that receive federal funding will have a restricted level of activity with China.

“We are also going to be implementing the guardrails to ensure those who receive Chips funds cannot compromise national security,¨ Reimondo said. ¨They are not allowed to use this money to invest in China; they cannot develop leading-edge technologies in China; they cannot send latest technology overseas.”

Reimondo cleared up that those firms can only expand their node factories in China to serve domestic market, referring to an older, cheaper chip production generation still used in computer displays and automobiles.

China´s embassy in Washington previously opposed the bill, saying it was reminiscent of a cold war mentality.

Some U.S. chipmakers claimed to already be experiencing pressure from Washington’s crackdown on the sale of U.S. technology to their partners in China.

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