TMTPost -- A new bill showcases the U.S. Capitol Hill is seeking further curbs on China’s semiconductor industry.


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The Chip Equipment Quality, Usefulness, and Integrity Protection Act of 2024, a biartisan bill introduced Tuesday, requires to companies which receive federal fundings under the 2022 Chips and Science Act (CHIP and Science Act) from purchasing specialized manufacturing tools or equipment made by entities owned or controlled by the Chinese government, or other foreign entities of concern.

“As the United States revitalizes its domestic semiconductor manufacturing industry, we must do everything in our power to stop China and other foreign entities of concern from compromising our microchip manufacturing facilities,” Senator Mark Kelly, an Arizona Democrat who sponsored the bill and , said in a statement. As a chief negotiator of the Chips and Science Act, Kelly said the new bill will strengthen U.S. national security and ensure that America’s advanced semiconductor tools remain the world’s best.

A Bloomberg report on Tuesday suggested established chip manufacturers like Intel Corp. and Taiwan Semiconductor Manufacturing Co. (TSMC) will be hit by the new bill if it is signed into law. Around 85% of the money granted under the CHIP and Science Act is allocated, with most of it set aside for leading-edge projects by Intel, TSMC, Samsung Electronics Co. and Micron Technology Inc, according to the report.

Nowadays, nearly all the specialized tools and equipment used throughout the semiconductor manufacturing supply chain are made in the U.S. or allied nations like Japan and the Netherlands. However, demand is surging for Chinese-made semiconductor tools. China launched last month a new fund with multi-billion dollars to bolster the semiconductor industry amid increasing tech curbs from the Western world.

The China Integrated Circuit Industry Investment Fund, a state-owned investment company also know as the Big Fund, has established a limited liability company called the third phase of National Integrated Circuit Industry Investment Fund on May 24. With a registered capital of RMB344 billion (US$47.5 billioin), the new fund, or the Big Fund III, has been allowed to engage in private equity investment fund management, venture capital fund management services, activities backed by private equity funds like equity investment and asset management and corporate management consulting.

Chinese brokerage companies expected the Big Fund III will mainly invest in the cutting edge tech in the semiconductor industry. The sectors hit by the U.S. restrictions most are expected to be focus of the latest fund, such as artificial intelligence (AI) chips, advanced semiconductor equipments, especially lithography machines, and semiconductor materials like photoresists, according to a note of AVIC Securities Co., Ltd. Besides support for semiconductor equipments and materials, the Big Fund III is more likely to go toward High Bandwidth Memory (HBM) and other high value-added Dynamic random-access memory (DRAM) chips, China Fortune Securities Co., Ltd said.

Erlier this month, the Biden administration was reported to mull further restrictions on China’s access to chip technology used for AI. The measures being discussed would limit China’s ability to use a cutting-edge chip architecture known as gate all-around, or GAA, according to the report. GAA is a transistor architecture that helps improve chip performance and reduces power consumption.

Whatever the scope will be, the U.S. goal is to make it more difficult for China to assemble the sophisticated computing systems needed to build and operate AI models, the report said. The report indicated the new restrictions would impact chip giants including Nvidia Corporation. It said chipmakers like Nvidia, Intel and Advanced Micro Devices Inc. (AMD) along with manufacturing partners TSMC and Samsung Electronics are looking to start mass-producing semiconductors with the GAA design within the next year.