65600 Federal Register / Vol. 88, No. 184 / Monday, September 25, 2023 / Rules and Regulations 

San Francisco, CA, KSFO, GLS RWY 19L, 

Amdt 1 

San Francisco, CA, KSFO, GLS RWY 19R, 

Amdt 1 

San Francisco, CA, KSFO, ILS OR LOC RWY 

19L, Amdt 23 

San Francisco, CA, KSFO, RNAV (GPS) RWY 

19L, Amdt 4 

San Francisco, CA, KSFO, RNAV (GPS) Y 

RWY 19R, Amdt 4 

San Francisco, CA, KSFO, RNAV (GPS) Z 

RWY 19R, Orig 

Ankeny, IA, KIKV, ILS OR LOC RWY 36, 

Amdt 3A 

Des Moines, IA, KDSM, RNAV (GPS) RWY 5, 

Amdt 4 

Des Moines, IA, KDSM, RNAV (GPS) RWY 

23, Amdt 3 

Des Moines, IA, KDSM, Takeoff Minimums 

and Obstacle DP, Amdt 13 

Indianapolis, IN, KUMP, Takeoff Minimums 

and Obstacle DP, Amdt 4 

Flemingsburg, KY, KFGX, RNAV (GPS) RWY 

7, Amdt 1 

Flemingsburg, KY, KFGX, RNAV (GPS) RWY 

25, Amdt 1 

Flemingsburg, KY, KFGX, Takeoff Minimums 

and Obstacle DP, Amdt 1 

Faribault, MN, KFBL, RNAV (GPS) RWY 12, 

Amdt 2 

Marshall, MO, KMHL, Takeoff Minimums 

and Obstacle DP, Amdt 1 

Nevada, MO, KNVD, RNAV (GPS) RWY 2, 

Orig–B 

Nevada, MO, KNVD, RNAV (GPS) RWY 20, 

Orig–B 

Rocky Mount, NC, KRWI, VOR RWY 22, 

Amdt 3C 

Clovis, NM, KCVN, ILS RWY 4, Orig 

Clovis, NM, KCVN, ILS OR LOC RWY 4, 

Amdt 1, CANCELED 

Dayton, OH, KGDK, RNAV (GPS) RWY 7, 

Amdt 1A 

Dayton, OH, KGDK, RNAV (GPS) RWY 25, 

Amdt 1B 

Marysville, OH, KMRT, Takeoff Minimums 

and Obstacle DP, Amdt 3 

Ardmore, OK, KADM, RNAV (GPS) RWY 31, 

Amdt 1G 

Bellefonte, PA, N96, VOR–A, Amdt 2A, 

CANCELED 

Ebensburg, PA, 9G8, RNAV (GPS) RWY 7, 

Orig–D 

Ebensburg, PA, 9G8, RNAV (GPS) RWY 25, 

Orig–F 

Ebensburg, PA, 9G8, VOR–A Amdt 7B, 

CANCELED 

Mount Joy/Marietta, PA, N71, VOR RWY 28, 

Amdt 2 

Punxsutawney, PA, N35, Takeoff Minimums 

and Obstacle DP, Amdt 3A 

St Marys, PA, KOYM, RNAV (GPS) RWY 10, 

Amdt 1D 

St Marys, PA, KOYM, RNAV (GPS) RWY 28, 

Amdt 1F 

Wilkes-Barre/Scranton, PA, KAVP, ILS OR 

LOC RWY 22, Amdt 11 

Arlington, TX, KGKY, RNAV (GPS) RWY 16, 

Orig 

San Angelo, TX, KSJT, RADAR 1, Amdt 1C, 

CANCELED 

Berkeley Springs, WV, W35, VOR RWY 29, 

Amdt 6B, CANCELED 

[FR Doc. 2023–20550 Filed 9–22–23; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF COMMERCE 

National Institute of Standards and 

Technology 

15 CFR Part 231 

[Docket Number: 230915–0220] 

RIN 0693–AB70 

Preventing the Improper Use of CHIPS 

Act Funding 

AGENCY: CHIPS Program Office, 

National Institute of Standards and 

Technology, Department of Commerce. 

ACTION: Final rule. 

SUMMARY: The CHIPS and Science Act of 

2022, which amended Title XCIX of the 

William M. (Mac) Thornberry National 

Defense Authorization Act for Fiscal 

Year 2021 (collectively, the CHIPS Act 

or Act) established an incentives 

program to reestablish and sustain U.S. 

leadership across the semiconductor 

supply chain. The Department of 

Commerce, through the National 

Institute of Standards and Technology, 

is issuing this final rule to implement 

conditions in the Act that seek to 

prevent funding provided through the 

program from being used to directly or 

indirectly benefit foreign countries of 

concern. The rule defines terms related 

to these conditions, describes the types 

of activities that are prohibited by those 

conditions, and sets forth procedures for 

notifying the Secretary of Commerce 

(Secretary) of non-compliance and the 

process by which the Secretary will 

enforce these provisions. 

DATES: This final rule is effective 

November 24, 2023. 

FOR FURTHER INFORMATION CONTACT: Sam 

Marullo at (202) 482–3844 or askchips@

chips.gov. Please direct media inquiries 

to the CHIPS Press Team at press@

chips.gov. 

SUPPLEMENTARY INFORMATION: On March 

23, 2023, the National Institute of 

Standards and Technology published 

and requested public comment on a 

proposed rule that defined terms used 

in the Act (including terms that will be 

used in required agreements with 

covered entities), identified the types of 

transactions that are prohibited under 

the Expansion Clawback and 

Technology Clawback sections of the 

Act, and provided a description of the 

proposed process for notification of 

certain transactions to the Secretary (88 

FR 17439). This final rule includes final 

definitions of terms, describes the types 

of conditions that will apply to 

expansion, joint research, and 

technology licensing activities, 

establishes a process for notifying the 

Secretary of potentially impermissible 

activities, and articulates processes by 

which the Secretary will enforce these 

provisions. 

Background 

The CHIPS Act, 15 U.S.C. 4651 et seq, 

established a semiconductor incentives 

program (CHIPS Incentives Program) to 

provide funding via grants, cooperative 

agreements, loans, loan guarantees, and 

other transactions, to incentivize 

investments in facilities and equipment 

in the United States for the fabrication, 

assembly, testing, advanced packaging, 

production, or research and 

development of semiconductors, 

materials used to manufacture 

semiconductors, or semiconductor 

manufacturing equipment. The CHIPS 

Incentives Program is administered by 

the CHIPS Program Office (CPO) within 

the National Institute of Standards and 

Technology (NIST) of the Department. 

To protect national security and the 

resiliency of supply chains, CHIPS 

funds may not be provided to a foreign 

entity of concern, such as an entity that 

is owned by, controlled by, or subject to 

the jurisdiction or direction of a country 

listed in 10 U.S.C. 4872(d). In addition, 

the Act establishes guardrails, including 

the Expansion Clawback (15 U.S.C. 

4652(a)(6)) and the Technology 

Clawback (15 U.S.C. 4652(a)(5)(C)), to 

prevent the beneficiaries of CHIPS funds 

from supporting the semiconductor 

manufacturing and technology 

development of foreign countries of 

concern. To effectuate these conditions, 

and to prevent their circumvention, 

covered entities are required to enter 

into a binding agreement with the 

Department. 

This final rule codifies the Expansion 

Clawback in Subpart B, including 

exceptions to the prohibition on 

semiconductor manufacturing capacity 

expansions that apply to existing 

facilities that manufacture legacy 

semiconductors and for significant 

transactions involving semiconductor 

manufacturing capacity expansion for 

new facilities producing legacy 

semiconductors that predominately 

serve the market of a foreign country of 

concern. 

This final rule requires covered 

entities to fulfill certain obligations 

ahead of taking certain actions. A 

covered entity must notify the Secretary 

of any planned significant transaction 

by the covered entity or a member of its 

affiliated group involving the material 

expansion of semiconductor 

manufacturing capacity in a foreign 

country of concern, including in cases 

where it believes the transaction may be 


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allowed under the exceptions. Terms 

related to this notification requirement 

are defined in Subpart A of this final 

rule, and procedures for submission and 

review of these notifications are detailed 

in Subpart C. Failure by a covered entity 

or member of its affiliated group to 

comply with the conditions of the 

Expansion Clawback may result in 

recovery of the full amount of Federal 

financial assistance provided to the 

covered entity. 

This final rule also defines terms used 

in and further explains the Act’s 

Technology Clawback, which prohibits 

the covered entity from knowingly 

engaging in any joint research or 

technology licensing effort with a 

foreign entity of concern that relates to 

a technology or product that raises 

national security concerns as 

determined by the Secretary and 

communicated to the covered entity 

before the covered entity engages in 

such joint research or technology 

licensing. A covered entity’s required 

agreement will include a commitment 

that the covered entity will not conduct 

such prohibited joint research or 

technology licensing. The Technology 

Clawback does not apply to joint 

research or technology licensing that is 

ongoing prior to the Secretary 

communicating to the covered entity the 

technologies or products that raise 

national security concerns, which is 

being done through this final rule. To 

effectuate this safe harbor, the required 

agreement will memorialize any 

ongoing joint research or technology 

licensing with foreign entities of 

concern that relates to technology or 

products that raise national security 

concerns. Failure to comply with this 

condition may also result in recovery of 

up to the full amount of Federal 

financial assistance. This final rule 

serves as the Secretary’s communication 

to covered entities of the categories of 

technologies and products that raise 

national security concerns. The 

Secretary retains discretion to not 

provide an award to an applicant if the 

applicant’s ongoing joint research or 

technology licensing activities are 

inconsistent with the goals of the Act. 

Subpart C articulates the process by 

which the Secretary will evaluate any 

possible violations of the Technology 

Clawback and provide notice to the 

covered entity. 

In addition, to address the risk of 

circumvention of the Technology 

Clawback, while accommodating 

commenters’ request for flexibility, CPO 

is clarifying in the final rule that it will 

impose additional conditions, as 

appropriate, in the funding agreement 

that are in addition to the Technology 

Clawback. The final rule provides that 

the Secretary may take appropriate 

remedial measures, including requiring 

mitigation agreements or recovering up 

to the full amount of the Federal 

financial assistance provided to a 

covered entity, if any entity that is a 

related entity of the covered entity 

engages in joint research or technology 

licensing that would violate the 

Technology Clawback if engaged in by 

the covered entity. The Secretary has 

discretion to impose lesser remedial 

measures, as appropriate. For purposes 

of this final rule, a related entity is any 

entity that directly, or indirectly 

through one or more intermediaries, 

controls or is controlled by, or is under 

common control with, the covered 

entity. This approach is necessary to 

prevent enterprises from circumventing 

the conditions that Congress required to 

avoid semiconductor technology 

transfer to foreign entities of concern. 

Discussion of Comments 

CPO received 27 comment 

submissions in response to the proposed 

rule. Comments were received from 

industry and trade associations, 

multinational semiconductor companies 

and companies in related industries, 

individuals, a law firm, a union, a 

foreign government, and one 

anonymous commenter. Three 

submissions included business 

proprietary information, along with a 

public summary. Commenters generally 

expressed support for the goals and 

objectives of the CHIPS Act, including 

the national security guardrails 

provisions that are the subject of this 

final rule. Many comments raised 

specific concerns about the potential 

negative business effects of certain 

definitions set forth in the proposed rule 

and provided detailed suggestions for 

alternatives. Other submissions were 

more general in nature and did not 

provide specific comments on the 

proposed rule itself. All submissions 

were carefully reviewed, and CPO 

thanks the public for its engagement. 

CPO’s responses to comments within 

the scope of this rulemaking have been 

grouped by the regulatory section to 

which they pertain and are summarized 

below. 

A. Comments Related to Subpart A— 

Definitions 

231.101 Affiliate 

Comment #1: Several commenters 

noted that the definition of ‘‘affiliate’’ in 

the proposed rule differed from the 

definition of ‘‘affiliated group’’ included 

in the statute at 15 U.S.C. 

4652(a)(6)(C)(iii). This resulted in an 

inconsistency between the threshold 

percentage to be used for identifying 

affiliates based on voting interest under 

the proposed rule (50 percent) and the 

threshold under the Act for identifying 

members of the affiliate group (80 

percent). 

Response: CPO is removing the 

defined term ‘‘affiliate’’ from the final 

rule to avoid confusion. CPO addresses 

the operation of the Expansion 

Clawback and the Technology Clawback 

in light of this change in each of those 

sections below. 

231.102 Applicable Term 

Three submissions included 

comments on the definition of 

‘‘applicable term.’’ The commenters 

argued that the statute specifies 

different applicable terms for the 

Expansion Clawback (a period of ten 

years following the date of the award) 

and the Technology Clawback (for the 

applicable term of the award), whereas 

the proposed rule harmonized the term 

of both clawbacks at ten years from the 

date of the award. Commenters 

questioned whether CPO had the 

authority to set this term for the 

purposes of the Technology Clawback. 

They suggested that this discrepancy be 

remedied by differentiating that there 

are two applicable terms, one for the 

Expansion Clawback and one for the 

Technology Clawback. 

Response: In the proposed rule, CPO 

sought to align the applicable terms of 

the Expansion Clawback and 

Technology Clawback at ten years for 

consistency and ease of monitoring and 

compliance. However, CPO recognizes 

that there may be instances where the 

term of an award is shorter than the ten 

years articulated in the Expansion 

Clawback, and there may be instances 

where the term of the award exceeds the 

ten-year time period in the Expansion 

Clawback. As the term of the award will 

depend upon the particular award, CPO 

is removing the definition of applicable 

term from the rule and will instead 

articulate the applicable term of a 

particular award in the relevant award 

documents. 

231.103 Existing Facility 

Comment #1: Several comments were 

received regarding the meaning of 

‘‘existing facility,’’ specifically regarding 

the phrase ‘‘operating at the 

semiconductor manufacturing capacity 

level for which it was designed,’’ and 

the phrase ‘‘semiconductor 

manufacturing capacity at the time the 

required agreement is signed.’’ The 

comments noted that these phrases can 

capture two different measurements of 

‘‘manufacturing capacity,’’ as most 


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facilities do not always run at their full 

designed capacity. Specifically, due to 

market conditions, ramping up 

activities, and other factors, there could 

be a significant gap between the 

planned or designed capacity of a 

facility and its actual output at the time 

a funding agreement is signed. 

Production also fluctuates from one 

quarter to another based on market 

conditions and product demand. Other 

comments noted that facilities may be 

awaiting the installation of one or more 

pieces of new or replacement equipment 

which should be considered part of the 

semiconductor manufacturing capacity 

level for which the facility was 

designed. Commenters suggested 

revising the definition of ‘‘existing 

facility’’ to account for the full design 

capacity at the time the facility was 

planned. 

Response: CPO agrees that additional 

clarity is warranted. The final rule 

clarifies that certain facilities that are 

undergoing construction, expansion, or 

modernization may be considered 

existing facilities under specified 

conditions, and that the baseline 

manufacturing capacity of the existing 

facilities at the date of the award will be 

addressed in the covered entity’s 

required agreement. 

231.106 Foreign Entity of Concern 

Comment #1: Some commenters 

expressed concern that it would be 

difficult for them to determine whether 

a foreign entity falls into one of the 

categories considered ‘‘foreign entities 

of concern.’’ They prefer limiting the 

definition to specific lists of foreign 

entities of concern that they can readily 

check. Another commenter thought that 

using existing government lists is 

reasonable but will be gamed, because 

‘‘China can easily create small, not 

genuinely independent R&D entities 

that are challenging to track.’’ Further, 

the commenter notes, the ‘‘draft 

regulations effectively require the [U.S. 

government] to devote more resources 

than at present, to maintain these lists 

properly as new PRC entities appear.’’ 

Response: The criteria for ‘‘foreign 

entities of concern’’ were articulated in 

the Act. CPO recognizes that, for some 

of the criteria, in particular the criteria 

related to foreign entities that have been 

alleged by the Attorney General to have 

been involved in certain activities for 

which a conviction was obtained, there 

may not be a consolidated, readily 

available list. And there are other 

criteria that require the evaluation of 

standards to determine whether a 

particular entity is a foreign entity of 

concern. Nevertheless, CPO expects that 

covered entities can exercise 

appropriate diligence to determine 

whether a potential joint research or 

technology licensing partner would fall 

within the categories articulated in the 

Act and this rule. 

Comment #2: Several commenters 

consider the proposed definition of 

‘‘foreign entities of concern’’ too broad 

and noted that it would include many 

Chinese citizens and companies. They 

suggested excluding from this definition 

any foreign entity that is an affiliate or 

employee of a funding recipient or 

limiting it to entities included on 

certain U.S. Government lists, such as 

the Bureau of Industry and Security’s 

Entity List. 

Response: CPO declines to make this 

change. The Act articulates the criteria 

for a foreign entity of concern, and, as 

noted above, CPO expects that covered 

entities can exercise appropriate 

diligence to identify entities that fall 

within the criteria articulated in Act. 

CPO also notes that preventing all 

activities, including joint research and 

technology licensing, with related 

corporate entities operating in foreign 

countries of concern, would conflict 

with the current business practices of 

the semiconductor industry in a manner 

that is inconsistent with the goals of the 

Act to develop a viable supply of secure 

and trusted semiconductors for the 

United States. Rather than amending the 

definition of ‘‘foreign entity of concern,’’ 

the final rule includes exceptions in the 

definitions of ‘‘joint research’’ and 

‘‘technology licensing’’ that exempt 

employees of the covered entity and 

related entities from the scope of the 

Technology Clawback. 

231.108 Joint Research 

Numerous comments were received 

regarding the definition of ‘‘joint 

research.’’ In general, commenters noted 

that there were several types of 

activities that could be captured by the 

proposed definition, the restriction of 

which would disrupt normal business 

activities without a significant benefit to 

national security. 

Comment #1: Commenters noted that 

some entities that would meet the 

definition of ‘‘foreign entities of 

concern’’ are members of international 

standards development organizations. 

Commenters noted that failing to 

include an exception in the joint 

research prohibition for international 

collaborative efforts in standards 

organizations would weaken 

opportunities for U.S. leadership in the 

global semiconductor sector, which 

requires that U.S. entities have a seat at 

the table for standard setting 

discussions. 

Response: CPO agrees with the 

comments about international standards 

organizations, and the final rule 

includes an exception from the 

Technology Clawback for joint research 

related to standards. 

Comment #2: Multiple comments 

noted the need to clarify that intracompany research and development 

activities should not be considered joint 

research. 

Response: The final rule excludes 

from the definition of joint research any 

research and development conducted 

exclusively between employees of a 

covered entity or between entities that 

are related entities of the covered entity. 

Comment #3: Commenters requested 

an exemption for any joint research and 

development related to warranty, 

service, and customer support 

performed by a covered entity. 

Response: CPO agrees this type of 

activity does not pose a risk to national 

security, and the final rule now 

excludes from the definition of joint 

research warranty, service, and 

customer support performed by the 

covered entity or by any entity that is 

a related entity of the covered entity. 

Comment #4: Some comments noted 

that it is common business practice in 

the global semiconductor industry for 

companies to outsource fabrication and/ 

or packaging, which requires them to 

share design files and other technology 

related to specific products. 

Response: CPO understands that 

outsourced manufacturing, including 

packaging, is widely used and has 

therefore added an exception in the 

definition of joint research for research, 

development, or engineering involving 

drawings, designs, or related 

specifications for products to be 

purchased and sold between two or 

more persons. 

Comment #5: Some commenters 

requested an exemption for joint 

research, development, and engineering 

related to manufacturing processes for 

existing products. 

Response: The intent behind this rule 

is to prohibit investments that could 

threaten national security while not 

unduly disrupting existing supply 

chains. Some manufacturing processes 

for existing products are sensitive and 

would raise national security concerns 

if transferred to a foreign entity of 

concern. However, prohibiting other 

work would be disruptive to existing 

supply chains and would not reduce 

national security risks. Outsourced 

assembly, test, and packaging providers 

(OSATs) within foreign countries of 

concern are commonly used within the 

industry today, cannot easily be 

substituted, and present limited 


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national security risk because they 

operate on already fabricated 

semiconductors. Therefore, CPO has 

narrowed the requested exemption to 

work necessary solely to enable use of 

assembly, test, or packaging services for 

integrated circuits. 

Comment #6: Some commenters 

requested that the rule allow for 

collaborations between semiconductor 

equipment manufacturers and other 

upstream suppliers. Commenters argue 

that chemicals and materials necessary 

for manufacturing must be tested and 

evaluated for use on specific 

manufacturing equipment. 

Response: Noting that the Technology 

Clawback only applies to technologies 

or products that raise national security 

concerns and involve foreign entities of 

concern, CPO finds that the 

collaborations mentioned by these 

commenters may result in advancing the 

military capability of foreign countries 

of concern, including the ability to 

produce advanced semiconductors that 

are a force multiplier for military 

modernization. Therefore, CPO declines 

to allow for an exception for such 

collaborations. 

Comment #7: Some commenters 

requested that there be an exception for 

joint research involving fundamental 

research and publicly available or 

published information. 

Response: CPO believes that these 

types of activities between covered 

entities and foreign entities of concern 

pose risks through the potential transfer 

of technology that raises national 

security concerns. While the underlying 

technology or information is publicly 

available, additional advancements in 

the technology or its use may be made 

through joint research and development 

to the benefit of the foreign entity of 

concern. 

Comment #8: One commenter noted 

that, based on the definitions of ‘‘joint 

research’’ and ‘‘technology licensing,’’ 

the Technology Clawback prohibition 

would extend to items that are not 

subject to the jurisdiction of the Export 

Administration Regulations. They 

suggest limiting the technology subject 

to the joint research and technology 

licensing prohibition to that technology 

‘‘subject to the EAR,’’ as defined in 15 

CFR 734.3.’’ 

Response: The Technology Clawback 

is intended to be broader in reach than 

the Export Administration Regulations. 

The Act creates a financial assistance 

program the goal of which is to 

incentivize investment in facilities and 

equipment in the United States to 

provide a secure supply of 

semiconductors for national security 

and critical infrastructure, and to 

support the technology leadership of the 

United States. The goals of the Act are 

more expansive than just mitigating 

national security threats posed by the 

export of technology. Further, recipients 

of CHIPS funds may have operations 

outside the United States, which would 

not necessarily be subject to the 

restrictions of the Export 

Administration Regulations. It would be 

inconsistent with the goals of the Act for 

recipients of CHIPS funds to engage in 

joint research or technology licensing 

that was not in the national security 

interests of the United States, even if 

that activity was not prohibited by the 

Export Administration Regulations. 

Comment #9: One commenter 

representing multiple semiconductor 

companies indicated that it is common 

practice to ‘‘design-in’’ devices into the 

customers’ end products. They note that 

‘‘[t]hese discussions can involve 

technical matters; exchange of data 

including product features, product 

reliability, and product limitations; and 

consideration of alternative 

semiconductor products to optimize the 

end system’s performance and cost.’’ 

They believe these standard commercial 

exchanges could erroneously be 

captured under the definition of joint 

research, and request that there be an 

exception for ‘‘[d]isclosures of a process 

or assembly design kit, complex design 

intellectual property, foundational 

design intellectual property, or other 

technical information provided by a 

funding recipient or its affiliates to its 

customer solely for the design of 

integrated circuits to be manufactured 

by the funding recipient.’’ 

Response: CPO declines to allow for 

this exception to the definition of joint 

research. The prohibition is limited to 

semiconductor technologies and 

products that raise national security 

concerns and to interactions with 

foreign entities of concern. CPO believes 

this activity may result in advancing the 

military capability of foreign countries 

of concern, including the ability to 

produce advanced military products 

incorporating semiconductors. 

However, CPO is including an exception 

under Technology Licensing to allow for 

discloses of technical information to a 

customer solely for the design of 

integrated circuits to be manufactured 

by the funding recipient for that 

customer. 

231.110 Legacy Semiconductor 

Comment #1: Several commenters 

noted that the proposed definition of 

legacy semiconductor excluded all 

semiconductors packaged utilizing 3D 

integration. Commenters also stated that 

some types of 3D packaging, such as 

stacking two legacy dies on top of each 

other using wire bonds, flip-chip, and 

bump connections are decades old and 

should be considered legacy. They note 

that ‘‘these techniques do not create the 

high bandwidth or functional density 

needed for advanced computing, AI, or 

communication applications.’’ 

Response: CPO agrees. The final rule 

clarifies that only semiconductors 

utilizing advanced 3D integration 

packaging such as by directly attaching 

one or more die or wafer, through 

silicon vias (TSV), or through mold vias 

(TMV) are not considered to be legacy 

semiconductors. 

Comment #2: Two commenters 

suggested that the definition’s reference 

to 28-nanometer generation or older 

should be modified by deleting the 

reference to gate length and substituting 

a phrase regarding technologies using 

the planar transistor architecture that 

should be considered as the same 28nm 

generation technology. They asserted 

the statute and the proposed rule define 

legacy semiconductor to include ‘‘28- 

nanometer generation or older’’ 

technologies without further elaboration 

on the many derivative technologies of 

the same technology generation. 

Therefore, ‘‘legacy semiconductor’’ 

should cover all planar transistors of the 

same technology generation to be 

consistent with the essential policy 

objectives of the export control rules 

that became effective on October 7, 

2022. 

Response: CPO declines to make this 

change. The proposed rule adequately 

captured the meaning of the term ‘‘28- 

nanometer generation,’’ which is 

consistent with the language of the Act. 

CPO acknowledges that, for more recent 

generations of semiconductors, gate 

length can become disconnected from 

node size. However, the result of this 

disconnection is that gate length is 

longer than node size for some highly 

advanced nodes. By setting the gate 

length threshold at 28nm, CPO will 

accurately capture legacy 

semiconductors. In addition, allowing 

improvements to the base 28nm 

generation architecture to be considered 

as legacy semiconductors could 

undermine the policy purpose of the 

prohibition. For example, a company 

could use (or create) a derivation of 

their existing 28nm technology for use 

in a foreign country of concern, thereby 

enabling precisely the kind of material 

expansion of semiconductor 

manufacturing capacity the Act seeks to 

constrain. 

Comment #3: Commenters suggested 

that the definition of ‘‘legacy 

semiconductor’’ be expanded to include 

more advanced memory technology. 


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Response: CPO declines to make the 

suggested change and retains the 

existing definition in the final rule. The 

Act requires that the threshold for 

memory technology be set relative to the 

28nm generation for logic chips. CPO 

finds the inclusion of more advanced 

memory technology would be counter to 

this directive. Moreover, the parameters 

for legacy memory in the final rule are 

consistent with current export control 

levels for memory chips. CPO further 

notes that the Act requires the Secretary 

to reassess technology levels on a 

regular basis, and at least every two 

years. 

231.111 Material Expansion 

Comment #1: Multiple commenters 

noted that semiconductor fabrication 

facilities must regularly make 

equipment and efficiency upgrades and 

productivity improvements within 

existing cleanroom space to maintain 

competitiveness, and these should not 

be considered ‘‘material expansions’’ 

(even though they may increase capacity 

incrementally). They asserted that the 

definition of ‘‘material expansion’’ in 

the proposed rule would cause these 

ordinary efficiency and productivity 

improvements to existing production 

lines to violate the Expansion Clawback. 

They recommend deletion of references 

to ‘‘equipment’’ and adopting a more 

focused, clearer definition for ‘‘material 

expansion’’ as the ‘‘building new 

cleanroom space that does not exist on 

the date of the Federal financial 

assistance award which has the purpose 

or effect of increasing semiconductor 

manufacturing capacity of a facility by 

more than five percent.’’ They note that 

cleanroom space is a more accurate 

measure of ‘‘material expansion’’ 

because the size of cleanroom space is 

tailored to a certain range of planned 

production capacity. 

Response: CPO agrees with these 

comments to the extent they reference 

improvements to technology and 

equipment instead of semiconductor 

manufacturing capacity. In the final 

rule, CPO has modified the definition of 

material expansion to refer to the 

addition of cleanroom or other physical 

space. Cleanroom space is indicative of 

a facility’s production capacity, and in 

contrast to wafer starts per month or a 

similar metric, does not ordinarily 

fluctuate over time or change with 

ordinary course of business equipment 

upgrades. Therefore, addition of 

cleanroom space as a metric better 

captures the concept of material 

expansion and is substantially easier to 

monitor, helping to prevent evasion of 

the restriction. 

Comment #2: Some commenters 

requested that the threshold for material 

expansion should be adjusted upwards 

to allow for continued necessary 

technological upgrades to existing 

facilities. They believe that the five 

percent threshold for material 

expansion will have the practical effect 

of capping a facility’s current capacity 

for 10 years. They suggest expanding 

thresholds to account for expected 

fluctuations in output and preexisting 

plans. 

Response: CPO declines to adjust the 

material expansion threshold. The Act 

requires that covered entities agree not 

to engage in any material expansions of 

semiconductor production capacity in 

foreign countries of concern. Raising the 

five percent threshold for allowable 

material expansions would undermine 

this objective. The existing five percent 

disregard is sufficient to allow for 

ordinary course-of-business upgrades to 

facilities and production lines. 

231.112 Owned by, Controlled by, or 

Subject to the Jurisdiction or Direction 

of 

Several commenters expressed 

concern that this definition could be 

interpreted to mean that a covered 

entity would be prohibited from sharing 

technology with all Chinese citizens in 

all parts of the world. They noted that 

because the term ‘‘foreign entity of 

concern’’ is used in the prohibition on 

certain joint research or technology 

licensing, even very routine and 

necessary business activity could be 

blocked. 

Additionally, one commenter argued 

that the 25 percent voting interest 

threshold inadequately addresses the 

methods of influence–beyond mere 

voting–that are employed by and 

available to foreign countries of concern 

against entities in the semiconductor 

industry. 

Finally, one commenter noted that the 

proposed regulations seek to include all 

Chinese citizens and companies 

‘‘subject to the jurisdiction’’ of the 

government of China to fall within the 

scope of a ‘‘foreign entity of concern.’’ 

Response: In the final rule, CPO has 

modified the definition to provide 

greater specificity and has incorporated 

a definition of ‘‘owned by, controlled 

by, or subject to the jurisdiction, or 

direction of’’ into the definition of 

‘‘foreign entity of concern’’ to clarify 

that the scope of the terms are limited 

to defining foreign entities of concern. 

As a consequence, the separate 

definition of ‘‘owned by, controlled by, 

or subject to the jurisdiction, or 

direction of’’ has been removed from the 

final rule. To address the concern of 

some commenters regarding the broad 

scope of the definition, CPO clarified 

that it is limited to countries that are 

listed in 10 U.S.C. 4872(d), and applies 

to citizens, nationals or residents of 

those countries while they are in any of 

the countries listed in 10 U.S.C. 4872(d). 

For example, the term would include an 

Iranian national working in Russia, but 

would not include a Chinese national 

lawfully working in the United States or 

the Republic of Korea. 

To address the concern that foreign 

entities of concern could circumvent the 

restrictions of the rule by establishing 

entities for which multiple foreign 

entities of concern each have ownership 

below the 25 percent threshold, the rule 

clarifies that, where at least 25 percent 

of the person’s outstanding voting 

interest is held directly or indirectly by 

any combination of persons who would 

otherwise be foreign entities of concern 

themselves, that person is also a foreign 

entity of concern. 

CPO also made modifications to the 

definitions of joint research and 

technology licensing to allow for those 

activities to continue among employees 

of the covered entity and among related 

entities, even if the definition of foreign 

entity of concern would be implicated. 

231.113 Person 

Comment: One submission suggested 

that the definition of ‘‘person’’ should 

only include owners or those who have 

control over or receive profits from 

semiconductor manufacturing in foreign 

countries of concern. They asserted that 

this flexibility should also apply to 

service agreements and suppliers to 

those agreements that have no 

ownership or control over the 

prohibited activity. 

Response: This final rule retains the 

definition of person that was established 

in the Act. CPO believes this definition 

best aligns with the national security 

goals of the Act. 

231.114 Predominately Serves the 

Market 

Comment #1: Several commenters 

disagreed with the proposed definition 

of ‘‘predominately serves the market’’ as 

meaning that at least 85 percent of the 

output by value must be used or 

consumed in the market of the foreign 

country of concern. Commenters argued 

that ‘‘predominately’’ implies a 50 

percent threshold or at most a 70 

percent threshold, and provided 

examples in which federal departments 

and agencies had interpreted 

‘‘predominately’’ to mean 50 percent or 

more. On the other hand, another 

commenter expressed support for the 85 

percent threshold: ‘‘85 percent of output 


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serving the host market is a somewhat 

arbitrary level but the idea is sound. On 

top of risks from China making 

advanced chips, a flood of low-end chip 

exports will eventually emerge, similar 

to steel, phones, and so on. This may be 

unavoidable but the US should not 

speed the outcome.’’ 

Response: CPO is maintaining the 85 

percent threshold in its consideration of 

whether certain production of legacy 

semiconductors ‘‘predominately serves 

the market’’ in a foreign country of 

concern. This percentage appropriately 

disincentivizes certain production of 

legacy semiconductors in foreign 

countries of concern by a covered entity 

unless that entity’s output will 

predominately serve those countries’ 

domestic markets. A lower threshold 

could result in U.S. financing indirectly 

supporting additional production of 

legacy semiconductors in foreign 

countries of concern, including in ways 

that would potentially destabilize global 

semiconductor markets. This could 

undermine the ability of the United 

States to develop commercially viable 

semiconductor industries, thereby 

forcing the U.S. military and critical 

infrastructure businesses to rely on 

semiconductors produced by foreign 

countries of concern. This is a key 

national security risk that the CHIPS Act 

was intended to address. 

The Act does not define 

‘‘predominantly’’ (or ‘‘predominantly 

serves the market’’). While there may be 

some instances where the term 

‘‘predominate’’ has been interpreted to 

mean 50 percent, that does not mean it 

can only be interpreted to mean 50 

percent. Indeed, in section 102 of the 

Dodd-Frank Act, Public Law 111–203, 

Congress defined the term 

‘‘predominantly engaged’’ to align with 

an 85 percent or more threshold. And 

while other agencies have construed 

‘‘predominantly’’ to mean 50 percent or 

more, that was in different contexts, and 

does not dictate that ‘‘predominantly’’ 

can only mean a bare majority. There is 

no indication that Congress used 

predominate here to imply a bare 

majority, and based upon CPO’s 

understanding of the semiconductor 

industry and the goals of the Act, CPO 

believes that an 85 percent threshold is 

appropriate for determining when a 

semiconductor manufacturing facility 

predominantly serves the market of a 

foreign country of concern. 

Comment #2: Commenters noted that 

semiconductor manufacturers often lack 

full visibility into the ultimate end users 

of their products. They noted that 

semiconductor companies ‘‘do not sell 

products directly to consumers but to 

companies such as original equipment 

manufacturers (OEMs) and other device 

integrators and are often sold and resold through a long chain of 

distributors. This makes it difficult, if 

not impossible, to follow each product 

to its ultimate user.’’ They requested 

that the regulations should adjust the 

tracking requirements for 

semiconductor manufacturers to reflect 

their practical limitations in 

determining the end-use of their 

products and limit tracking to 

documents obtained in the ordinary 

course of business, such as ‘‘ordered by’’ 

‘‘sold to’’ or ‘‘shipped to’’ information. 

One commenter suggested an 

alternative method to calculate the 85 

percent threshold. They suggested using 

a simpler metric based on the ratio of 

units an entity manufactures in a foreign 

country of concern to the units shipped 

into a foreign country of concern. They 

asserted that this ratio illustrates the 

extent to which a manufacturer is 

reliant on production in foreign 

countries of concern to supply 

customers elsewhere; manufacturers 

that ship an equal or greater number of 

units into foreign countries of concern 

than the number of units they produce 

in foreign countries of concern are not 

reliant on supply manufactured in 

foreign countries of concern. 

Another commenter requested that 

there be a safe harbor for the calculation 

of ‘‘predominately serves the market’’ so 

that companies that believe, in good 

faith, they meet the threshold would not 

be subject to the Expansion Clawback. 

Response: CPO declines to interpret 

‘‘serves the market’’ to refer to the 

location to which the semiconductors 

are first shipped or to create a safe 

harbor. Doing so would undermine the 

Act’s goals of ensuring that CHIPS Actfunded innovation does not fuel 

expansion of the semiconductor 

industries in foreign countries of 

concern. Semiconductors are often 

purchased by an initial customer and 

then integrated into technology that is 

sold in other products. Focusing solely 

on the initial sale would not address 

circumstances where that initial 

customer is then selling goods with 

those semiconductors in different 

markets. Because the goal of this prong 

of the exception to the Expansion 

Clawback is to allow the continued 

expansion of semiconductor 

manufacturing capacity by facilities in 

foreign countries of concern that 

produce products for use in foreign 

counties of concern, it is imperative that 

focus be on the country where the 

semiconductor is ultimately used, not 

just the location of the middleman 

purchasing the semiconductors in the 

first instance. 

CPO recognizes that this definition 

may require covered entities to 

implement new mechanisms to track 

where their products are ultimately 

incorporated and sold in final products. 

CPO believes that companies can 

develop those capabilities to meet the 

final rule’s requirements. 

231.115 Required Agreement 

Comment: Several commenters noted 

the need for flexibility in the required 

agreement to address unique 

circumstances such as the sale or 

transfer of a facility from one party to 

another, or for how to deal with 

facilities that are planned, under 

construction or otherwise not operating 

at the capacity for which they are 

designed at the time of the agreement. 

Response: CPO agrees that additional 

flexibility in the required agreement 

would support the policy goals of the 

CHIPS Program. The final rule amends 

the proposed definition of ‘‘required 

agreement’’ to allow for the Secretary 

and covered entity to amend the 

required agreement by mutual consent, 

consistent with law. In addition, the 

revised definition clarifies that the 

required agreement will memorialize 

the covered entity’s existing facilities 

(including capacity) in foreign countries 

of concern, as well as any ongoing joint 

research or technology licensing with a 

foreign entity of concern that relates to 

a technology or product that raises 

national security concerns. In addition, 

the required agreement will address any 

additional restrictions that are necessary 

to prevent circumvention of the 

Technology Clawback. 

231.118 Semiconductor Manufacturing 

Comment #1: Commenters suggested 

defining semiconductor manufacturing 

to include the earlier stages of the 

manufacturing process such as creating 

polysilicon ingots and making wafers. 

They note that polysilicon and related 

materials are the semiconductor in 

semiconductor chips and a very 

necessary part of a complete and 

resilient U.S. semiconductor supply 

chain and that ‘‘the proposed rule, 

however narrowly focused on 

enforcement, appears to broadly affect 

eligibility for the CHIPS § 48D credit.’’ 

Other commentors suggested clarifying 

that upstream suppliers are not 

considered to be semiconductor 

manufacturers (and therefore are not 

subject to the prohibition on expansions 

of semiconductor manufacturing 

capacity). 

Response: CPO agrees that additional 

clarity would be appropriate. The final 

rule clarifies that semiconductor wafer 

production is included within the 


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definition of semiconductor 

manufacturing, along with 

semiconductor device fabrication and 

packaging, and is therefore subject to 

the Expansion Clawback. 

Semiconductor wafer production 

includes the processes of wafer slicing, 

polishing, cleaning, epitaxial 

deposition, and metrology. Suppliers 

further upstream, such as those 

supplying polysilicon and other raw 

materials, are not included within the 

scope of semiconductor manufacturing 

for the purposes of this rule and are 

therefore also not subject to the 

Expansion Clawback. 

231.119 Semiconductor Manufacturing 

Capacity 

Comment #1: Multiple commenters 

suggested that for fabrication facilities 

that produce wafers designed for a 

wafer-to-wafer bonding structure, 

productive capacity should be measured 

in wafers stacked in order to align the 

metric with the facility’s actual output, 

and to account for the fact that the 

number of stacked wafers produced at 

these facilities is far smaller than the 

number of wafers started because wafers 

are stacked and combined during 

production. 

Response: CPO agrees with this 

suggestion and in the final rule notes 

that for semiconductor fabrication 

facilities for wafers designed for waferto-wafer bonding structure, 

semiconductor manufacturing capacity 

is measured in stacked wafers per year. 

The semiconductor manufacturing 

capacity of such facilities will be 

documented in the covered entity’s 

required agreement. 

Comment #2: Commenters suggested 

measuring semiconductor 

manufacturing capacity on an annual 

basis, rather than wafer starts per month 

to smooth the measurement of capacity 

and avoid undue focus on a single 

month where capacity may be higher or 

lower. 

Response: CPO agrees with this 

suggestion and has modified the 

definition in the final rule to measure 

semiconductor manufacturing capacity 

in wafers per year. 

231.120 Semiconductors Critical to 

National Security 

Comment #1: Multiple commenters 

argued that the list of semiconductors 

critical to national security in the 

proposed rule is overly broad and 

includes some products that are widely 

used in commercial applications (such 

as silicon carbide semiconductors and 

FD–SOI semiconductors). They noted 

that exports of some of these products 

are not controlled for national security 

or regional stability reasons under the 

Export Administration Regulations. 

They recommended that the list be fully 

harmonized with current export 

controls and not include general 

purpose commodities not designed for a 

particular application. They also 

asserted that such alignment with 

existing restrictions would ‘‘reduce 

administrative and compliance burdens 

and . . . achieve the objectives of 

regulatory harmonization as stated in 

the proposal’s preamble.’’ One 

commenter also suggested that the 

compound and wide-bandgap/ultrawide bandgap semiconductor categories 

on the list should be ‘‘narrowed to 

exclude products that reduce carbon 

emissions because they enhance rather 

than threaten U.S. national security’’ 

(specifically, SiC power 

semiconductors). 

Response: CPO acknowledges that 

there are commercial applications in 

which compound and fully depleted 

silicon on insulator (FD–SOI) 

semiconductors are increasingly used. 

However, the performance advantages 

offered by compound semiconductors 

over silicon semiconductors, such as 

wider bandgap, lower operating 

voltages, and higher electron mobility 

are vital to many sophisticated military 

applications. 

Moreover, the governments of some 

foreign countries of concern have 

identified compound semiconductors as 

a strategic emerging industry. They have 

set ambitious goals for acquisition and 

development of compound 

semiconductor technology and strive to 

become global leaders in the industry. 

CPO notes that while exports of certain 

semiconductors are not subject to 

national security or regional stability 

export controls, joint research or 

technology licensing involving these 

products with foreign entities of 

concern can nevertheless pose a 

significant risk to national security. 

Recipients of CHIPS Act funds should 

not further that risk. Therefore, CPO 

declines to remove compound and wide 

and ultra-wide bandgap semiconductors 

from the list of semiconductors critical 

to national security. 

Regarding FD–SOI semiconductors, 

based on public comments, CPO has 

removed from the list of semiconductors 

critical to national security those FD– 

SOI semiconductors that relate to 

semiconductor packaging operations 

with respect to semiconductors of a 28- 

nanometer generation or older. This is 

consistent with the definition of legacy 

semiconductors. 

Comment #2: One comment was 

received regarding inclusion of 

radiation hardened semiconductors on 

the list of semiconductors critical to 

national security. The commenter 

thought that additional clarification was 

needed, because in some cases ‘‘the 

integrated circuits produced from the 

standard commercial process 

technology have become naturally more 

radiation resistant’’ and ‘‘radiation 

hardening can also occur during 

design.’’ The commenter suggests that 

Commerce work with industry to clarify 

the coverage for radiation hardened 

semiconductors. 

Response: As the commenter also 

noted, ‘‘Radiation-hardened by process’’ 

has ‘‘traditionally meant that special 

steps were taken in the process 

technology to enhance the radiation 

resilience of the products, such as 

introducing different substrate 

materials.’’ CPO clarifies that 

semiconductors that are specially 

designed or processed to be resistant to 

radiation are considered 

semiconductors critical to national 

security. 

231.121 Significant Transaction 

Comments: One commenter requested 

that there be flexibility in the definition 

of ‘‘significant transaction,’’ which it 

believes will ‘‘better comport with the 

actual language of the statute which 

requires a determination of the 

appropriate restriction on a case-by-case 

basis.’’ The commenter suggested 

including a statement that the 

Department will have flexibility on a 

case-by-case basis to deviate from the 

definition of ‘‘significant transaction’’ to 

accommodate the unique needs and 

investments of a funding recipient and 

its affiliates.’’ Other commenters argued 

the $100,000 threshold (in aggregate 

over the applicable term of the required 

agreement) for significant transactions 

was too low, given the high capital costs 

associated with semiconductor 

manufacturing. 

Response: After further evaluation, 

CPO is removing the proposed 

definition from the final rule. The Act 

contemplates that what constitutes a 

significant transaction will be defined in 

the required agreement. CPO 

acknowledges that different thresholds 

for significant transactions may be 

appropriate for different applicants. 

CPO anticipates issuing further 

guidance on this issue. 

231.122 Significant Renovations 

Comment #1: Commenters noted that 

the term ‘‘significant renovations’’ was 

not included in the CHIPS Act. 

Specifically, they object to inclusion of 

the phrase ‘‘a facility that undergoes 

significant renovations after the 

required agreement is entered into shall 


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no longer qualify as an ‘existing 

facility.’ ’’ Commenters noted that this 

phrase, when combined with the 

proposed rule’s definition of 

‘‘significant renovations’’ as ‘‘any set of 

changes to a facility that, in the 

aggregate during the applicable term of 

the required agreement, increase 

semiconductor manufacturing capacity 

. . . by adding an additional line or 

otherwise increase semiconductor 

manufacturing capacity by 10 percent or 

more,’’ limits the ability to expand 

capacity for legacy semiconductor 

manufacturing to ten percent above 

existing capacity. The comments assert 

that the proposed rule would 

substantially narrow the exemption for 

existing legacy facilities and would 

limit the ability of companies to protect 

and maintain past investments in these 

existing facilities. 

Response: CPO declines to remove the 

concept of significant renovations from 

the final rule. The concept of significant 

renovations clarifies how the two 

exceptions to the Expansion Clawback 

interact. Section 4652(a)(6)(C)(ii)(I) 

exempts ‘‘existing facilities or 

equipment of a covered entity for 

manufacturing semiconductors’’ and 

§ 4652(a)(6)(C)(ii)(II) exempts 

‘‘significant transactions involving the 

material expansion of semiconductor 

manufacturing capacity that produces 

legacy semiconductors [] and 

predominantly serves the market of a 

foreign county of concern.’’ Thus, 

subclause (I) provides a categorical 

exception for existing facilities while 

subclause (II) provides an exception 

regardless of whether the facility is 

existing or new, provided that it 

produces legacy semiconductors and 

predominantly serves the market of a 

foreign country of concern. Under this 

structure, the categorical exception in 

subclause (I) would not be available 

when the facility is no longer an 

‘‘existing facility’’ due to significant 

renovations, but a covered entity could 

still avail itself of the exception 

provided by subclause (II). Without the 

concept of significant renovations, 

covered entities could evade the 

expansion prohibition simply by 

significantly expanding an existing 

facility rather than constructing a new 

facility. 

CPO also believes that limiting 

capacity expansion for existing legacy 

facilities to ten percent is appropriate 

and upholds the national security goals 

of the Act. The final rule permits a five 

percent increase in semiconductor 

manufacturing capacity for ordinary 

course of business investments and 

facility improvements for all existing 

facilities. A larger exemption would 

undermine the national security goals of 

the Act by permitting the construction 

of additional legacy semiconductor 

manufacturing capacity in foreign 

countries of concern, potentially 

allowing for technology transfer or 

investments that could potentially 

destabilize global semiconductor 

markets, thus undermining the ability of 

the United States to develop 

commercially viable semiconductor 

industries. 

Comment #2: Commenters suggested 

revising the definition of ‘‘significant 

renovations’’ to limit it to new 

cleanroom construction or the addition 

of a manufacturing line that is not part 

of the legacy facility’s designed capacity 

level. Alternatively, they suggest 

significant renovations could be defined 

as an increase in the square footage of 

an existing facility by a specified 

percentage. 

Response: CPO agrees that 

‘‘significant renovations’’ can be better 

defined by reference to new cleanroom 

construction or the addition of a 

manufacturing line. The final rule 

defines significant renovations as 

building new cleanroom space, adding a 

production line, or other physical space 

to an existing facility that, in the 

aggregate during the applicable term of 

the required agreement, increases 

semiconductor manufacturing capacity 

by 10 percent or more. 

Comment #3: Some commenters 

suggested increasing the percentage 

threshold for capacity expansion 

upward from 10 percent to 15 percent 

or 25 percent, to maintain the 

Department’s objectives of only 

allowing modestly expanded capacity, 

while ensuring that existing facilities 

can be reasonably maintained over the 

course of the 10-year period. 

Response: CPO declines to raise the 

threshold for defining significant 

renovations beyond 10 percent. As 

explained above, greater expansion of 

legacy semiconductor manufacturing 

capacity in a foreign country of concern 

may lead to increased domestic 

dependencies and supply chain 

vulnerabilities, which could jeopardize 

national security. 

Comment #4: Commenters suggested 

that the final rule allow for a waiver for 

expansion of legacy facilities on a caseby-case basis. 

Response: As mentioned above in the 

discussion of the definition of ‘‘required 

agreement,’’ the final rule permits 

modifications to the required agreement 

between a covered entity and the 

Secretary upon mutual consent. The 

definition of ‘‘existing facility’’ in this 

final rule has been modified slightly to 

reflect this capability. 

231.123 Technology Licensing 

Broadly speaking, the comments on 

the definition of technology licensing 

were similar to or combined with those 

on the definition of joint research; both 

types of activities are subject to the 

Technology Clawback provision. One 

commenter summarized concerns by 

noting that ‘‘the emphasis should be on 

agreements involving the transfer of 

critical technology or know-how and 

make it clear that customary business 

discussions that may include general 

technical information are outside the 

reach of the rule.’’ 

Comment #1: Numerous commenters 

emphasized the need to exempt patentrelated activities from the definition of 

‘‘technology licensing.’’ They observed 

that by including patents alongside 

trade secrets and know-how, the 

proposed language made a wholesale 

change to the way American companies 

conduct patent licensing, patent 

litigation, standard essential patent 

licensing, and standards-setting 

activities in China. Patents are public 

documents and should not be 

considered alongside trade secrets and 

‘‘know-how. They asserted that not 

excluding patents would impede 

ordinary business transactions that are 

essential to the semiconductor 

ecosystem and the protection and 

monetization of intellectual property. 

Commenters noted that patents are 

published documents, and therefore, the 

invention in a patent is already 

available and could be known to foreign 

entities of concern. Commenters also 

recommended that the definition of 

‘‘technology licensing’’ exclude the 

affiliate transfers of patent agreements; 

not doing so may restrict funding 

recipients from entering into 

intracompany intellectual property 

license and transfer agreements with 

their affiliates, or vice versa. This has 

potentially wide-reaching impact for 

companies that utilize the well-accepted 

corporate practice of holding and 

managing intellectual property in a 

single entity to enable their global 

research and development efforts. 

Response: CPO agrees that patent 

licensing should not be subject to the 

Technology Clawback because patents 

are, by definition, already public 

documents. In the final rule, patents 

have been excluded from the scope of 

technology licensing. 

Comment #2: Numerous comments 

stressed the need to allow for 

participation in international 

collaborative efforts such as standards 

organizations. Many entities that would 

meet the definition of foreign entity of 

concern are members of international 


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standards setting organizations in the 

semiconductor space. Restricting which 

companies may participate in standards 

organizations puts U.S.-based standards 

development organizations at a 

disadvantage. 

Response: CPO agrees and has 

addressed this issue in the discussion 

related to the definitions of ‘‘joint 

research’’ and ‘‘technology licensing.’’ 

Comment #3: Some commenters 

thought that general sales of products 

may be captured under the proposed 

technology licensing definition. They 

say that the prohibition on technology 

licensing ‘‘with a foreign entity of 

concern that relates to a technology or 

product that raises national security 

concerns,’’ when combined with the 

definition of ‘‘technology licensing’’ 

could be interpreted to prohibit the sale 

of semiconductor products because each 

product is sold with an explicit or 

implied license to use the intellectual 

property underlying the product. 

Response: CPO clarifies that the 

prohibition on technology licensing is 

not intended to apply to sales of 

semiconductor products. The final rule 

includes an exception to the definition 

of technology licensing for intellectual 

property licenses relating to the use of 

a product that is sold by a covered 

entity or a related entity. 

Comment # 4: Commenters noted that 

some companies outsource fabrication 

and/or packaging operations to 

foundries and outsourced 

semiconductor and test companies 

(OSATs), and in doing so they may 

make available intellectual property 

(such as a design file) to manufacturing 

partners. The commenter believes, 

based on the proposed rule, such 

activities could be construed as 

transferring know-how to a foreign 

entity of concern. They request that the 

rule be clarified to specify that 

information, such as design files for 

fabrication and packaging as part of an 

outsourced manufacturing agreement, is 

not covered by the Technology 

Clawback. 

Response: CPO clarifies that the 

Technology Clawback is not meant to 

prevent the outsourcing of 

manufacturing or packaging of 

semiconductors, and the final rule 

allows for an exception in the 

‘‘technology licensing’’ definition. 

Comment #5: Some commenters 

thought that the proposed technology 

licensing definition could restrict 

funding recipients from entering into 

intracompany intellectual property 

license and transfer agreements with 

their affiliates. They noted that ‘‘this has 

potentially wide-reaching impact for 

companies that utilize the well-accepted 

corporate practice of holding and 

managing intellectual property in a 

single entity to enable their global R&D 

efforts.’’ 

Response: CPO agrees that the 

technology licensing definition should 

not capture transactions conducted 

exclusively between employees of a 

covered entity or among entities that are 

related entities of the covered entity. 

The definition in the final rule has been 

modified to include this exception. 

B. Comments Related to Subpart B— 

General 

231.202 Prohibition on Certain 

Expansion Transactions 

Comment #1: One commenter noted 

that the period subject to this 

prohibition (a ten-year period beginning 

with the date of the incentive award) 

and the analogous prohibition in 

Treasury’s Advanced Manufacturing 

Investment Tax Credit rule (ten years 

from when eligible property is placed 

into service) can differ and may result 

in the combined restrictive period 

lasting longer than ten years; they 

suggest that the terms be harmonized to 

the ten year period of the award. 

Response: CPO declines to make this 

change. The applicable term of the 

Expansion Clawback is articulated in 

the Act. 

Comment #2: Several commenters 

noted that the definition of ‘‘affiliate’’ in 

the proposed rule differed from the 

definition of ‘‘affiliated group’’ included 

in the Expansion Clawback, resulting in 

a different threshold percentage for 

affiliates based on voting interest (50 

percent in the proposed rule versus 80 

percent in the Expansion Clawback). 

Response: As noted above, CPO has 

removed the definition of ‘‘affiliate’’ 

from the proposed rule. However, CPO 

remains focused on ensuring that 

beneficiaries of CHIPS funds do not act 

in a manner that would be contrary to 

the national security goals of the Act. 

The Expansion Clawback in the Act 

refers to the term ‘‘affiliated group,’’ as 

is defined in 26 U.S.C. 1504, which 

generally establishes an 80 percent 

ownership of stock or voting power 

threshold. The Act further provides that 

if any member of a covered entity’s 

affiliated group engages in an 

impermissible significant transaction 

that results in the material expansion of 

semiconductor capacity, the Secretary 

may require an appropriate mitigation 

agreement or recoup the full amount of 

the Federal financial assistance award. 

CPO believes that applying the 

Expansion Clawback to members of a 

covered entity’s affiliated group, would 

adequately avoid circumvention of the 

Clawback and meet the national security 

goals of the Act. 

CPO, notes, however, that entities 

related to a covered entity but outside 

the scope of the affiliated group, as 

defined in the Act, may nonetheless be 

relevant to application of the Expansion 

Clawback. First, transactions between 

the covered entity and the related 

entities remain subject to the Expansion 

Clawback. Second, under applicable 

legal principles, such as the law of 

agency or single enterprise liability, the 

actions of such a related entity may be 

imputed to the covered entity or a 

member of its affiliated group for 

purposes of determining whether the 

covered entity or its affiliated group 

member engaged in a prohibited 

transaction. 

231.203 Prohibition on Certain Joint 

Research or Technology Licensing 

Comments: Several commenters 

indicated that the Technology Clawback 

should apply prospectively only. They 

argue this approach is consistent with 

the statutory language of the Act, which 

states that the Technology Clawback 

only becomes operative if national 

security concerns with specific joint 

research or a technology license are 

‘‘communicated to the covered entity 

before engaging in such joint research or 

technology licensing.’’ One commenter 

suggested that the rule should clarify 

that companies holding a U.S. export 

license would not be prohibited or 

disqualified from applying for or 

receiving CHIPS Act funding, and 

would not be subject to the Technology 

Clawback provision, for engaging in 

technology licensing transactions that 

would be otherwise permitted by the 

export license. 

However, another commenter noted 

that while the prohibition should not be 

applied retroactively, ‘‘there may be 

attempts by funding recipients to escape 

CHIPS restrictions with quick new 

investments, claiming plans and 

activities that predate implementing 

regulations. The final rules should 

discourage this as sharply as possible. 

The same applies to any rush of lateappearing joint research.’’ 

Response: The final rule clarifies that 

the Technology Clawback does not 

apply to joint research and technology 

licensing activities with a foreign entity 

of concern related to technology or 

products that raise national security 

concerns that are ongoing prior to the 

Secretary communicating that such 

technology or products raise national 

security concerns. Through this final 

rule, the Secretary is communicating to 

all covered entities those technologies 

and products that raise national security 


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concerns. To ensure that this safe harbor 

is not used to circumvent the 

prohibitions in the rule, covered entities 

will be required to document those 

grandfathered joint research and 

technology licensing activities in the 

required agreement, and only those 

activities will fall within the safe 

harbor. The safe harbor does not 

preclude the Secretary from requiring 

the cessation of joint research or 

technology licensing with a foreign 

entity of concern as a condition of 

receiving Federal financial assistance. 

Any such terms will be memorialized in 

the required agreement. 

Comment #2: Several commenters 

believed that use of the term ‘‘relates to’’ 

in the prohibition of certain joint 

research or technology licensing in the 

proposed rule lacks clarity and should 

be defined. Another commenter 

suggested defining ‘‘relates to’’ as 

‘‘required for development of 

production’’ (as defined in the Export 

Administration Regulations) of items 

that raise national security concerns. 

Response: The term ‘‘relates to’’ is in 

the Act, and although CPO is not 

specifically defining it in the rule, a 

reasonable interpretation is any joint 

research or technology licensing that 

would require an export license or 

involves the items included on the list 

of semiconductors critical to national 

security. 

Comment #3: Some commenters 

objected to the proposed rule’s 

inclusion of a covered entity’s affiliates 

within the scope of the Technology 

Clawback because the covered entity’s 

affiliates are not mentioned in the Act’s 

Technology Clawback provision. Some 

commenters noted that the Secretary 

was constrained from applying the 

Technology Clawback to affiliates 

because only the Expansion Clawback 

included reference to the affiliated 

group. 

Response: As noted above, CPO has 

removed the term ‘‘affiliates’’ as a 

defined term in the final rule. This 

change clarifies that Technology 

Clawback as articulated in the proposed 

rule applies to the covered entity, and 

not to affiliates of the covered entity. 

However, CPO remains concerned 

that the joint research and technology 

licensing conditions of the Technology 

Clawback could be circumvented by 

relatively commonplace corporate 

arrangements. If the Secretary could 

recoup funds only if the distinct legal 

entity that is a party to a CHIPS 

incentives award engaged in a 

prohibited joint research or licensing 

transaction, a corporation could capture 

the benefit of the CHIPS award by 

having a subsidiary receive the award, 

while it engages in prohibited joint 

research or licensing itself or through 

another subsidiary. That concern is 

particularly acute because, as some 

commenters highlighted, complex 

corporate structures and intracompany 

licensing arrangements are common in 

the semiconductor industry. Thus CPO 

believes that merely restricting the 

activities of the covered entity is not 

sufficient to prevent, for example, a 

parent company—which could be the 

ultimate beneficiary of the CHIPS Act 

funds—from engaging in joint research 

and technology licensing that would be 

prohibited under the Technology 

Clawback. 

At the same time, CPO is cognizant of 

the complex corporate relationships and 

ongoing business activities of the 

semiconductor industry. CPO is also 

mindful that a number of commenters 

requested flexibility in the application 

of the Technology Clawback, such as the 

ability to enter into mitigation 

agreements or other mitigation measures 

that would stop short of recouping the 

entire Federal financial award. The Act, 

however, directs that where a covered 

entity engages in prohibited joint 

research or technology licensing activity 

such that the Technology Clawback is 

triggered, the Secretary ‘‘shall recover 

the full amount of an award.’’ 

To address the risk of circumvention 

while accommodating further flexibility, 

CPO is clarifying in the final rule that 

it may impose additional conditions in 

the funding agreement that are in 

addition to the Technology Clawback. 

The final rule provides that if any entity 

related to the covered entity engages in 

joint research or technology licensing 

that would violate the Technology 

Clawback if engaged in by the covered 

entity, the Secretary may take 

appropriate remedial measures, 

including requiring mitigation 

agreements or recovering up to the full 

amount of the Federal financial 

assistance provided to a covered entity. 

The Secretary has discretion to impose 

lesser remedial measures, as 

appropriate. For purposes of this final 

rule, a related entity is any entity that 

directly, or indirectly through one or 

more intermediaries, controls or is 

controlled by, or is under common 

control with, the covered entity. This 

approach is necessary to prevent 

enterprises from circumventing the 

conditions that Congress required to 

avoid semiconductor technology 

transfer to foreign entities of concern. 

CPO notes that the Secretary will 

impose further requirements, as 

appropriate, in the individual funding 

agreements, including additional 

conditions on certain joint research or 

technology licensing, to ensure that the 

prohibitions in the Act are achieved. 

This is consistent with the Act, which 

authorizes the Secretary to enter into 

agreements under the statute ‘‘on such 

terms as the Secretary considers 

appropriate.’’ 

231.204 Retention of Records 

Comment: Public comments noted 

that the proposed rule’s record retention 

requirements for all ‘‘significant 

transactions’’ is overly broad and 

burdensome, due in part to the $100,000 

threshold for ‘‘significant transactions.’’ 

Most comments suggest a revision to 

limit record retention to transactions 

involving the ‘‘material expansion’’ of 

semiconductor manufacturing capacity 

in a foreign country of concern, instead 

of all transactions. 

Response: CPO agrees that the records 

retention requirement should only 

apply to transactions that involve the 

material expansion of semiconductor 

manufacturing capacity in a foreign 

country of concern, and has modified 

the record retention requirement 

accordingly in the final rule. 

C. Comments Related to Subpart C— 

Notification, Review, and Recovery 

231.304 Initiation of Review 

Comment: One commenter suggested 

that there be a 10-day time limit for the 

Secretary to review a notification for 

completeness and to request additional 

information from the covered entity. 

Response: CPO declines to make this 

change. The amount of material 

produced in response to a notification 

may be substantial. The Secretary may 

need more than 10 days to adequately 

review it for completeness. To provide 

additional clarity and to reduce 

uncertainty, CPO has included 

additional details in the final rule about 

the process for initiating, conducting, 

and completing a review under the 

Expansion Clawback. The final rule now 

more clearly sets out the process by 

which the covered entity must notify 

the Secretary of a potentially prohibited 

activity, the Secretary’s ability to 

request additional information to 

complete a review of a potentially 

prohibited activity, the Secretary’s 

timeline for issuing an initial 

determination, the covered entity’s 

ability and timeline to seek 

reconsideration of the initial 

determination, and the Secretary’s 

timeline for making a final 

determination. The final rule clarifies 

that the Secretary can initiate a review 

based upon any information available to 

the Secretary, without first needing to 

be notified by the covered entity. 


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231.307 Review of Actions That May 

Violate the Prohibition on Certain Joint 

Research or Technology Licensing 

Comment: One commenter suggested 

that there be a mitigation process for 

possible violations of the prohibition on 

joint research technology licensing that 

would allow for the Secretary to take 

measures to mitigate the risk to national 

security, comparable to the mitigation 

process for violations of the material 

expansion prohibition. 

Response: CPO declines to develop a 

mitigation process for violations of the 

prohibition on joint research and 

technology licensing, as the Act 

compels the Secretary to recover the full 

amount of the Federal financial 

assistance if the Technology Clawback 

is triggered. However, the final rule 

contemplates additional conditions that 

will be imposed, as appropriate, on the 

covered entity, as well as related 

entities, to avoid circumvention of the 

Technology Clawback. The final rule 

provides that the Secretary has 

discretion to adopt appropriate 

measures in response to violations of 

the additional conditions, which could 

include a mitigation agreement, 

recovery of some of the Federal 

financial award or recovery of the entire 

Federal financial award. 

D. Other Comments 

In addition to comments that 

addressed specific definitions and 

provisions in the proposed rule, some 

comments were submitted that relate to 

broader issues, such as enforcement of 

the rule and its relationship to the 

Treasury Department’s rule authorizing 

the Advanced Manufacturing 

Investment Tax Credit, which includes 

a similar prohibition on significant 

transactions involving the material 

expansion of semiconductor 

manufacturing capacity in a foreign 

country of concern for those entities 

claiming the credit. 

Comment #1: Commerce and Treasury 

should work together closely to create 

rules and processes for Expansion 

Clawback and Recapture that apply the 

same definitions, criteria, review 

process, and enforcement protocol. 

Response: Commerce and Treasury 

worked closely together and 

harmonized definitions to the maximum 

extent possible and will continue to do 

so after the final rules take effect. 

Comment #2: Commerce and Treasury 

should create one, jointly staffed, fully 

empowered interagency tribunal to 

review and redress potentially improper 

uses of CHIPS Act benefits as this would 

be an extremely efficient and consistent 

way to ensure compliance. This 

mechanism would conserve the 

resources of both agencies, would 

ensure consistency of statutory 

application, and would provide greater 

predictability for the affected 

companies. 

Response: CPO will take this 

comment into consideration as it 

develops mechanisms to enforce 

compliance and redress improper use of 

CHIPS Act benefits. 

Comment #3: Commerce and Treasury 

should recognize differences between 

the statutory provisions governing the 

Funding Program and the Investment 

Tax Credit. The regulatory scheme 

implementing the different provisions of 

the Act should allow for differences 

between the Legacy Exception and the 

Investment Tax Credit Legacy Exception 

in light of the differences in the 

statutory provisions for each program. 

Response: CPO recognizes that there 

are differences in statutory requirements 

for the Advanced Manufacturing 

Investment Credit and the 

semiconductor incentives program, and 

that any implementing rules and 

guidance will reflect those differences. 

While the two regimes are aligned, there 

may be differences in how specific 

objectives are pursued. 

Changes From the Proposed Rule 

Sections have been renumbered 

throughout to reflect modifications to 

the proposed rule. 

Changes in Subpart A (Definitions) 

The final rule does not include the 

term ‘‘Affiliate,’’ which appeared in 

proposed § 231.101. 

The final rule does not include the 

term ‘‘Applicable Term,’’ which 

appeared in proposed § 231.102. 

In § 231.101 of the final rule, the 

definition of ‘‘Existing Facility’’ has 

been changed to specify that only 

facilities built, equipped, and operating 

prior to entering into the required 

agreement will be considered existing 

facilities; at the discretion of the 

Secretary, a facility that is undergoing 

construction, expansion, or 

modernization at the time of entering 

into the required agreement may be 

memorialized in the required agreement 

at the semiconductor manufacturing 

capacity for which it is designed or any 

lower capacity. 

In § 231.102 of the final rule, minor 

modifications were made to the 

definition of ‘‘Foreign Country of 

Concern.’’ 

In § 231.103 of the final rule, minor 

modifications were made to the 

definition of ‘‘Foreign Entity.’’ 

In § 231.104 of the final rule, the 

definition of ‘‘Foreign Entity of 

Concern’’ was modified; the prior 

definition of ‘‘owned by, controlled by, 

or subject to the jurisdiction or 

direction’’ was modified and directly 

incorporated into the definition of 

foreign entity of concern. In addition, 

proposed § 231.106(g) is deleted 

because, after further evaluation, CPO 

was concerned that there may be bases 

by which the Federal Communications 

Commission may (or can be compelled) 

to add entities to the list of equipment 

and services required by the Secure and 

Trusted Communications Networks Act 

of 2019, not all of which may align with 

the national security goals of the Act. 

Minor technical corrections were also 

made. 

The final rule does not include the 

term ‘‘Funding Recipient,’’ which 

appeared in proposed § 231.107. The 

term was omitted to better reflect the 

Act’s use of the term covered entity. 

In § 231.105 of the final rule, the term 

‘‘Joint Research’’ was modified to clarify 

that the following types of activities are 

not considered joint research: standardsrelated activities; research and 

development conducted exclusively 

between employees of a covered entity 

or between entities that are related 

entities of the covered entity; research, 

development, or engineering related to a 

manufacturing process for an existing 

product solely to enable use of foundry, 

assembly, test, or packaging services for 

integrated circuits; research, 

development, or engineering involving 

two or more entities to establish or 

apply a drawing, design, or related 

specification for a product to be 

purchased and sold between or among 

such entities; and warranty, service, and 

customer support performed by a 

covered entity or an entity that is a 

related entity of a covered entity. 

Research and development is also 

defined separately in the final rule. 

In § 231.110 of the final rule, the 

definition of ‘‘Legacy Semiconductor’’ 

was modified to include additional 

categories. For the purposes of a 

semiconductor wafer facility, the 

definition includes a silicon wafer 

measuring 8 inches (or 200 millimeters) 

or smaller in diameter and a compound 

wafer measuring 6 inches (or 150 

millimeters) or smaller in diameter. For 

the purposes of a semiconductor 

fabrication facility, the definition 

includes a digital or analog logic 

semiconductor that is of the 28- 

nanometer generation or older (i.e., has 

a gate length of 28 nanometers or more 

for a planar transistor); a memory 

semiconductor with a half-pitch greater 

than 18 nanometers for Dynamic 

Random Access Memory (DRAM) or less 

than 128 layers for Not AND (NAND) 


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flash that does not utilize emerging 

memory technologies, such as transition 

metal oxides, phase-change memory, 

perovskites, or ferromagnetics relevant 

to advanced memory fabrication; and a 

semiconductor identified by the 

Secretary in a public notice issued 

under 15 U.S.C. 4652(a)(6)(A)(ii). For 

the purposes of a semiconductor 

packaging facility, the definition 

includes a semiconductor that does not 

utilize advanced three-dimensional (3D) 

integration packaging. The definition in 

the final rule excludes semiconductors 

critical to national security, as defined 

in § 231.118; a semiconductor with a 

post-planar transistor architecture (such 

as fin-shaped field-effect transistor 

(FinFET) or gate all around field-effect 

transistor); and a semiconductor 

utilizing advanced three-dimensional 

(3D) integration packaging, such as by 

directly attaching one or more die or 

wafer, through silicon vias, through 

mold vias, or other advanced methods. 

In § 231.108 in the final rule, minor 

modifications were made to the 

definition of ‘‘Material Expansion.’’ 

In § 231.109 of the final rule, the 

definition of ‘‘Members of the Affiliated 

Group’’ is added. 

The final rule does not separately 

define ‘‘Owned by, controlled by, or 

subject to the jurisdiction or direction 

of,’’ which was in proposed § 231.112. 

In the final rule, the definition has been 

directly incorporated into the definition 

of foreign entity of concern, and now 

clarifies that it applies to persons who 

are citizens, nationals, or residents of a 

foreign country listed in 10 U.S.C. 

4872(d) and who are located in a foreign 

country listed in 10 U.S.C. 4872(d). It 

has also been modified to include as a 

foreign entity of concern, any person 

whose outstanding voting interest is at 

least 25 percent held directly or 

indirectly by persons that fall within 

subsection (i)-(iii) of the definition. This 

change was to ensure that foreign 

entities of concern could not circumvent 

the ownership threshold by 

coordinating with other foreign entities 

of concern to each have less than the 25 

percent threshold. 

In § 231.112 of the final rule, the 

definition of ‘‘Required Agreement’’ was 

modified to require that it memorialize 

the covered entity’s existing facilities in 

foreign countries of concern and the 

covered entity’s existing joint research 

and technology licensing activities 

related to technology or products that 

raise national security issues with 

foreign entities of concern; that it 

include additional terms to mitigate 

national security risks, including as 

contemplated in § 231.204; and that the 

agreement may be amended by mutual 

consent to address changes in the status 

or ownership of an existing facility or 

any other circumstances that may arise. 

In § 231.113 of the final rule, a 

definition of ‘‘Research and 

Development’’ is added. To ensure 

appropriate scope, the definition is 

more general than how the term was 

used in the proposed definition of joint 

research. 

In § 231.116 of the final rule, the 

definition of ‘‘Semiconductor 

Manufacturing’’ is clarified to specify 

that it includes semiconductor wafer 

production, including the processes of 

wafer slicing, polishing, cleaning, 

epitaxial deposition, and metrology. 

In § 231.117 of the final rule, the 

definition of ‘‘Semiconductor 

Manufacturing Capacity’’ is modified to 

address wafer production facilities, 

includes a capacity metric for 

semiconductor fabrication facility for 

wafers designed for wafer-to-wafer 

bonding structure, and is now measured 

on a yearly basis. 

In § 231.118 of the final rule, the 

definition of ‘‘Semiconductors Critical 

to National Security’’ is modified to 

make a minor change to the description 

of FD–SOI semiconductors. The 

definition was also changed to clarify 

that the Secretary can designate 

additional categories of semiconductors 

critical to national security. 

In the final rule, the term ‘‘Significant 

transaction,’’ which was proposed 

§ 231.121 has been removed. 

In § 231.119 of the final rule, the 

definition of ‘‘Significant Renovations’’ 

has been modified to emphasize that it 

is tied to the building of new cleanroom 

space or adding a production line or 

other physical space to an existing 

facility. 

In § 231.120 of the final rule, the 

definition of ‘‘Technology Licensing’’ 

has been modified to clarify that it 

means an express or implied contractual 

agreement in which the rights owned 

by, licensed to or otherwise lawfully 

available to one party in any trade 

secrets or knowhow are sold, licensed or 

otherwise made available to another 

party. The definition also excludes 

licensing of patents, including licenses 

related to standard essential patents or 

cross licensing activities; licensing or 

transfer agreements conducted 

exclusively between a covered entity 

and related entities, or between or 

among entities that are related entities 

to the covered entity; removes reference 

to patents; standards-related activity (as 

such term is defined in 15 CFR part 

772); agreements that grant patent rights 

only with respect to ‘‘published 

information’’ and no proprietary 

information is shared; implied or 

general intellectual property licenses 

relating to the use of a product that is 

sold by a covered entity or related 

entities; technology licensing related to 

a manufacturing process for an existing 

product solely to enable use of 

assembly, test, or packaging services for 

integrated circuits; technology licensing 

involving two or more entities to 

establish or apply a drawing, design, or 

related specification for a product to be 

purchased and sold between or among 

such entities; warranty, service, and 

customer support performed by a 

covered entity or an entity that is a 

related entity of a covered entity; and 

disclosures of technical information to a 

customer solely for the design of 

integrated circuits to be manufactured 

by the funding recipient for that 

customer. 

In § 231.121 of the final rule, the 

definition of ‘‘Technology or Product 

That Raises National Security 

Concerns’’ is modified to clarify that the 

Secretary can designate additional 

technologies or products that raise 

national security concerns. Minor 

technical corrections were also made. 

Changes in Subpart B—General 

In § 231.201 of the final rule, minor 

modifications were made to reflect 

changes to other parts of subpart B. 

In § 231.202 of the final rule, the 

prohibition on certain expansion 

transactions was modified to conform 

with changes to definitions in the final 

rule, and to make other minor changes. 

In § 231.203 of the final rule, the 

prohibition on certain joint research or 

technology licensing was modified to 

clarify that it only applies to the covered 

entity, and that the prohibition does not 

apply to joint research or technology 

licensing activities that relate to 

products or technology that raise 

national security concerns that were 

ongoing prior to the Secretary 

determining such products or 

technology raised national security 

concerns. It also requires that such joint 

research or licensing arrangements be 

memorialized in the required 

agreement. 

In § 231.204 of the final rule, a new 

provision is added: ‘‘Additional 

conditions on certain joint research or 

technology licensing.’’ This new 

provision establishes that the Secretary 

is empowered to impose appropriate 

conditions on the covered entity to 

mitigate the risk of circumvention of the 

Technology Clawback. Such provisions 

would allow the Secretary to recover the 

entire Federal financial award or impose 

lesser consequences, such as requiring a 

mitigation agreement, if any related 

entity engages in joint research or 


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1SEMI, World Fab Forecast (2022). These firms 

refer to those with productive capacity in countries 

of concern, are headquartered outside of countries 

of concern. 

2 Gartner, Semiconductor Revenue Forecast 

(January 2023); McKinsey & Company, The 

Semiconductor Decade: A Trillion-Dollar Industry 

(April 2022), available at https://

www.mckinsey.com/industries/semiconductors/ourinsights/the-semiconductor-decade-a-trillion-dollarindustry. 

technology licensing that would violate 

the Technology Clawback if engaged in 

by the covered entity. For purposes of 

this condition, a related entity is any 

entity that directly, or indirectly 

through one or more intermediaries, 

controls or is controlled by, or is under 

common control with, the covered 

entity. 

§ 231.205 of the final rule, ‘‘Retention 

of Records,’’ is modified to clarify that 

the retention of records requirement 

applies to records related to significant 

transactions involving the material 

expansion of semiconductor 

manufacturing capacity in a foreign 

country of concern, as well any records 

that relate to a transaction that is being 

reviewed by the Secretary that are 

maintained by the covered entity, a 

member of the affiliated group of the 

covered entity or by a related entity. 

Changes in Subpart C—Notification, 

Review, and Recovery 

In § 231.301 Procedures for notifying 

the Secretary of significant transactions: 

was modified to clarify that notification 

period aligns with the 10-year term of 

the Expansion Clawback. Minor 

technical corrections were also made. 

In § 231.302 Contents of notifications; 

certifications: minor technical 

corrections were made. 

In § 231.303 Response to notifications: 

changes were made to clarify that the 

Secretary can request additional 

information if a notice is deficient. 

In § 231.304 Initiation of review: 

significant changes were made to clarify 

the process, standards, and timing of 

initiating a review. 

In § 231.305 Procedures for review: 

significant changes were made to clarify 

the process, standards, and timing of a 

review, including the ability of a 

covered entity to seek reconsideration of 

an initial determination. 

In § 231.306 Mitigation of national 

security risks: changes were made to 

clarify that the Secretary has discretion 

to waive the recovery of funds for 

violation of § 231.302 in circumstances 

where an appropriate mitigation 

agreement has been entered into and 

complied with by the covered entity. 

In § 231.307 Review of actions that 

may violate the prohibition on certain 

joint research or technology licensing: 

the section was revised substantially to 

clarify the process, standards, and 

timing for the Secretary’s review of 

possible violations of the prohibitions 

on certain joint research or technology 

licensing. 

In § 231.308 Recovery and other 

remedies: minor technical corrections 

were made. 

Changes in Subpart D—Other Provisions 

In § 231.401 Amendment: minor 

technical corrections were made. 

In § 231.402 Submission of false 

information: minor technical changes 

are made. 

A new section, § 231.403, was added 

to include a severability clause. 

Classification 

Executive Order 13132 

This proposed rule does not contain 

policies with federalism implications as 

that term is defined in section 1(a) of 

Executive Order 13132, dated August 4, 

1999 (64 FR 43255 (August 10, 1999)). 

Executive Order 12866 

The Office of Management and Budget 

(OMB) has determined that this rule is 

significant as defined by Section 3(f)(1) 

for purposes of Executive Order 12866. 

A detailed regulatory impact assessment 

was published in the proposed rule and 

is not repeated in its entirety here. No 

public comments were received 

regarding the impact assessment, 

substantive portions of which are 

included below. 

This rule limits the ability of covered 

entities to invest in new semiconductor 

manufacturing capacity in foreign 

countries of concern. This limitation is 

intended to ensure that federal funding 

is used consistent with the goals of the 

CHIPS Act to incentivize investment in 

semiconductor facilities and equipment 

in the United States. At this time, it is 

unknown how the investments in 

foreign countries of concern by those 

that are not covered entities will be 

affected. 

Although the provisions in this rule 

prohibit covered entities from 

establishing most new manufacturing 

capacity in foreign countries of concern, 

covered entities with existing facilities 

in foreign countries of concern would be 

able to continue current operations. The 

rule also allows them to upgrade 

facilities and production lines at 

existing foreign facilities (in compliance 

with export controls) if overall 

production capacity is not increased. In 

addition, covered entities could 

modestly expand capacity at existing 

facilities producing mature (legacy) 

technology. Finally, this rule allows 

covered entities to make new 

investments in manufacturing capacity 

in foreign countries of concerns in the 

limited circumstance in which such 

production of legacy-level 

semiconductors would ‘‘predominately 

serve the market of the foreign country 

of concern.’’ These provisions ensure 

minimal disruptions to revenues, for the 

foreseeable future, to firms that 

currently have productive capacity in 

foreign countries of concern. It is 

estimated that less than ten firms may 

be impacted.1

This regulatory impact analysis does 

not consider the private costs to covered 

entities of limiting their investments in 

foreign countries of concern. In 

pursuing program funding, applicants 

are expected to weigh the private costs 

and benefits of the conditions for 

funding outlined by the provisions in 

this proposed rule. CHIPS Incentives 

Program funding is intended to 

complement, not replace, private 

investment and other sources of 

funding. Using $39 billion in financial 

assistance, the CHIPS Incentives 

Program is designed to restore U.S. 

leadership in semiconductor 

manufacturing and innovation. Through 

the first funding opportunity, released 

February 28, 2023, the CHIPS Incentives 

Program aims to (1) to build at least two 

new large-scale cluster of leading-edge 

logic fabs, (2) to be home to multiple 

high-volume advanced packaging 

facilities, (3) to produce high-volume 

leading-edge dynamic random-access 

memory (DRAM) chips on economically 

competitive terms, and (4) to increase its 

production capacity for the currentgeneration and mature node chips that 

are most vital to U.S. economic and 

national security. To achieve these aims, 

the CHIPS Incentives Program funding 

awards are designed to catalyze private 

investment in the United States. 

By restricting the ability of covered 

entities to invest in new semiconductor 

manufacturing capacity in foreign 

countries of concern, the proposed rule 

would also likely catalyze investment 

outside foreign countries of concern. 

In particular, the demand for leadingedge, current, and mature 

semiconductors are estimated to 

increase significantly in the next 

decade, from approximately $600 

billion per year in 2022 to 

approximately $1 trillion revenue per 

year within the next 10 years.2 An 

increase in global productive capacity 

for a wide variety of semiconductors 

will be needed to supply the increased 

chip demand. The restriction on 

expanding manufacturing capacity in 

foreign countries of concern is likely to 

increase the need for additional capacity 


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3This value takes the 2022 hourly wage rate 

$68.55 for GS–14 step 5 employees in the 

Washington, DC region and multiplies by two to 

account for overhead and benefits. Wage 

information is available at https://www.opm.gov/ 

policy-data-oversight/pay-leave/salaries-wages/ 

salary-tables/pdf/2022/DCB.pdf. 

4The White House, ‘‘Building Resilient Supply 

Chains, Revitalizing American Manufacturing, and 

Fostering Broad-Based Growth: 100-Day Reviews 

under Executive Order 14017,’’ June 2021, 9, 

Continued 

to be built outside foreign countries of 

concern. 

Anticipated Transfers of Funds 

Where the conditions in this final rule 

are violated, covered entities face the 

potential ‘‘clawback’’ of federal funding. 

For purposes of this analysis, the 

recovery of federal funding is 

considered to be a transfer of funds and 

could be of an equal amount of the 

funding award (plus interest) back to the 

government. This recovery of funds 

could have negative implications for the 

award recipients’ financial condition 

and, for public companies, could affect 

their stock valuation. The recovery of 

funds might also affect award recipients’ 

willingness or ability to continue 

constructing semiconductor facilities 

and equipment in the United States. 

The potential clawback of funds is 

intended to serve as a significant 

deterrent to violating the conditions of 

an award. The Department, therefore, 

expects that few, if any, covered entities 

will violate the prohibitions laid out in 

this proposed rule. Damage to corporate 

reputation resulting from violating an 

agreement with the U.S. government, 

while not readily quantifiable, would 

also be a significant deterrent to 

violations. Thus, the likelihood of 

violations that result in a recovery of 

funding is small and the impact of the 

transfer is expected to be minimal 

across all incentives program 

participants. Furthermore, even in the 

unlikely event that a violation occurs 

and clawbacks become necessary, the 

impacted chipmakers are highly 

unlikely to abandon their finished or 

ongoing investments in the United 

States. 

Two reasons make this outcome 

unlikely: First, because of the high fixed 

costs associated with chip production, 

companies are likely to either continue 

producing in facilities that are already 

built or finish building ongoing 

investment projects. Second, 

semiconductor production capacity is 

only likely to be built with a high degree 

of confidence of customer demand, 

usually with advanced purchases of 

wafer capacity prior to completion of 

the facility construction. Abandoning a 

finished or ongoing project could 

jeopardize customer relationships and 

ongoing revenue. The incentives 

associated with CHIPS are expected to 

incentivize applicants to locate their 

productive capacity within the United 

States. Once those decisions are made, 

and projects are underway, there would 

likely be significant costs to reverse 

such decisions. 

Anticipated Reporting and 

Recordkeeping Costs 

This rule establishes a notification 

requirement for covered entities that are 

planning certain transactions in foreign 

countries of concern. This notification 

requirement applies to recipients 

pursuing transactions that would: (1) 

expand existing capacity for 

manufacture of legacy semiconductors; 

or (2) provide new capacity for legacy 

semiconductors that primarily serve the 

market of the foreign country of 

concern. 

The Department estimates that there 

are not more than a handful of potential 

CHIPS Incentives Program applicants 

with existing facilities in foreign 

countries of concern that may seek to 

expand manufacturing capacity under 

the provisions of this rule, and therefore 

expects few notifications. However, for 

purposes of this analysis, the 

Department has conservatively assumed 

a maximum of 10 notifications per year. 

The notifications would require general 

information about planned transaction, 

such as the names, location and 

ownership of the parties involved; 

information about the manufacturing 

facility such as current and proposed 

semiconductor production technology 

to determine if it meets the ‘‘legacy’’ 

requirement; current and proposed 

manufacturing capacity to determine if 

the ‘‘existing facility’’ definition is met; 

and information about the markets or 

end users for the semiconductors to be 

manufactured in the case of new 

capacity. Because the covered entities 

would have initiated and planned these 

transactions, the basic information 

required in the notification would be 

known and readily available, and the 

notification process itself is not 

expected to be burdensome. The 

Department estimates that it would take 

recipients two hours to provide each 

notification, or a total of 20 hours per 

year for all recipients. 

Anticipated Administrative 

(Government) Costs 

Once received, notifications will be 

evaluated by the Department as to 

whether the transactions meet one of the 

permissible criteria. This analysis will 

be performed by Department staff, 

including an anticipated initial review 

and, if necessary, consultation with 

industry and technology experts, as well 

as with the funding recipient. As the 

number of notifications that will be 

submitted each year is expected to be 

small, the staffing requirements for 

review and analysis of the notifications 

is also expected to be small. Assuming 

conservatively 10 notifications per year, 

two senior analysts and two licensing 

officers/electronics engineers could 

handle notifications with a fraction of 

their annual time. The total estimated 

cost would be approximately $110,000 

per year (10 notifications * 4 staff at a 

GS–14 salary ($137/hr) 3 * 20 hours each 

to review for each notification). 

The federal government may also 

incur costs for monitoring and 

enforcement efforts. Because the 

program is designed to deter violations, 

we expect that enforcement actions will 

rarely be needed. In those cases where 

the federal government will ultimately 

need to take enforcement action, the 

government will incur additional costs; 

however, the extent of those costs is 

currently unknown. Moreover, 

investments in semiconductor 

manufacturing are widely monitored 

and reported in the trade press. New or 

expanded semiconductor manufacturing 

capacity requires installation of 

expensive capital equipment and 

several years to bring into operation. It 

is unlikely that such expansions would 

go unnoticed. Therefore, to the extent 

that monitoring is required, we would 

expect that the government would incur 

limited costs. 

Anticipated Benefits 

The provisions in this proposed rule 

reinforce the benefits of the CHIPS 

Incentives Program by ensuring that 

funding goes toward increasing 

domestic manufacturing capacity and by 

discouraging investments in foreign 

countries of concern that would raise 

national security concerns. The 

domestic investments will advance U.S. 

economic and national security, 

enhance global supply chain resilience, 

and promote U.S. leadership in 

designing and building important 

semiconductor technologies. In 

particular, these investments will help 

address areas where the United States 

has fallen behind in semiconductor 

manufacturing. For example, although 

the United States remains a global 

leader in chip design and research and 

development, it has fallen behind in 

manufacturing and today accounts for 

only roughly 10 percent of commercial 

global production.4


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https://www.whitehouse.gov/wp-content/uploads/ 

2021/06/100-day-supply-chain-review-report.pdf. 

The CHIPS Incentives Program is 

expected to catalyze long-term 

economically sustainable growth in the 

domestic semiconductor industry in 

support of U.S. economic and national 

security. The Program is also expected 

to facilitate private investments in largescale U.S.-based production and 

research and development, as well as 

throughout the supply chain, attracting 

both existing and new private investors 

to the U.S. semiconductor ecosystem 

and encouraging innovative approaches 

to funding industry growth. These are 

investments in facilities and equipment 

in the United States that would not 

occur otherwise. 

The $39 billion of federal funding is 

intended to serve as a catalyst to 

galvanize private, state, and local 

investment in the semiconductor 

industry. It is expected that this funding 

will lay the groundwork for long-term 

growth and economic sustainability in 

the domestic semiconductor industry 

and promote the secure and resilient 

supply chains on which the sector 

relies. The industry, it is anticipated, 

will then produce, at scale, leading-edge 

logic and memory chips critical to the 

national security and U.S. economic 

competitiveness. The funding is further 

expected to support current-generation 

and mature-node technologies essential 

for economic and national security. The 

funding is also expected to lead to 

development of a robust and skilled 

workforce and a diverse base of 

suppliers for semiconductor production. 

The funding will support research and 

development that is expected to drive 

innovation in design, materials, and 

processes that will accelerate the 

industries of the future. Further, it is 

anticipated that the funding will 

support the broader U.S. economy, 

creating good jobs accessible to all, and 

supporting and growing local economies 

and communities. 

Regulatory Flexibility Act 

The Chief Counsel for Regulation of 

the Department of Commerce certified 

to the Chief Counsel for Advocacy of the 

Small Business Administration during 

the proposed rule stage that this rule 

would not have a significant economic 

impact on a substantial number of small 

entities. The factual basis for this 

determination was published in the 

proposed rule and is not repeated here. 

No comments were received regarding 

the certification, and NIST has not 

received any new information that 

would affect its determination. As a 

result, a final regulatory flexibility 

analysis was not required, and none was 

prepared. 

Paperwork Reduction Act 

Notwithstanding any other provision 

of law, no person is required to respond 

to, nor is subject to a penalty for failure 

to comply with, a collection of 

information, subject to the requirements 

of the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501 et seq.) (PRA), unless 

that collection of information displays a 

currently valid OMB Control Number. 

The proposed rule published on 

March 23, 2023 (88 FR 17439) discussed 

new requirements subject to the 

Paperwork Reduction Act. With this 

rule, NIST is establishing a notification 

requirement for covered entities 

planning to engage in any significant 

transaction involving the material 

expansion of semiconductor 

manufacturing capacity in a foreign 

country of concern that may be 

permitted if certain conditions are met. 

In the proposed rule, NIST estimated 

the burden to the public for this 

notification will average 20 hours (10 

respondents * 2 hours per response), 

including the time for reviewing 

instructions, searching existing data 

sources, gathering the data needed, and 

completing and reviewing the collection 

of information with an estimated total 

cost is $110,000. No comments were 

received regarding this this information 

collection with the proposed rule. 

With the publication of the final rule, 

NIST will be submitting a request to 

OMB for new OMB control number 

0693–0096, Information Required from 

CHIPS Act Covered Entities Regarding 

Proposed Expansions of Semiconductor 

Manufacturing Capacity in Foreign 

Countries of Concern. The public may 

access this NIST request, including all 

supporting materials, at 

www.reginfo.gov/public/do/PRAMain 

and inserting the proposed OMB control 

number or the name of the collection. 

List of Subjects in 15 CFR Part 231 

Business and industry, Computer 

technology, Exports, Foreign trade, 

Grant programs, Investments (U.S. 

investments abroad), National defense, 

Government contracts, Research, 

Science & Technology, and 

Semiconductor chip products. 

■ Under the authority of 15 U.S.C. 4651, 

et seq., the National Institute of 

Standards and Technology adds part 

231, subchapter C, to 15 CFR chapter II 

to read as follows: 

SUBCHAPTER C—CHIPS PROGRAM 

PART 231—CLAWBACKS OF CHIPS 

FUNDING 

Sec. 

Subpart A—Definitions 

231.101 Existing facility. 

231.102 Foreign country of concern. 

231.103 Foreign entity. 

231.104 Foreign entity of concern. 

231.105 Joint research. 

231.106 Knowingly. 

231.107 Legacy semiconductor. 

231.108 Material expansion. 

231.109 Members of the affiliated group. 

231.110 Person. 

231.111 Predominately serves the market. 

231.112 Required agreement. 

231.113 Research and development. 

231.114 Secretary. 

231.115 Semiconductor. 

231.116 Semiconductor manufacturing. 

231.117 Semiconductor manufacturing 

capacity. 

231.118 Semiconductors critical to national 

security. 

231.119 Significant renovations. 

231.120 Technology licensing. 

231.121 Technology or product that raises 

national security concerns. 

Subpart B—General 

231.201 Scope. 

231.202 Prohibition on certain expansion 

transactions. (Expansion Clawback) 

231.203 Prohibition on certain joint 

research or technology licensing. 

(Technology Clawback) 

231.204 Additional conditions on certain 

joint research or technology licensing. 

231.205 Retention of records. 

Subpart C—Notification, Review, and 

Recovery 

231.301 Procedures for notifying the 

Secretary of significant transactions. 

231.302 Contents of notifications; 

certifications. 

231.303 Response to notifications. 

231.304 Initiation of review. 

231.305 Procedures for review. 

231.306 Mitigation of national security 

risks. 

231.307 Review of actions that may violate 

the prohibition on certain joint research 

or technology licensing. 

231.308 Recovery and other remedies. 

Subpart D—Other Provisions 

231.401 Amendment. 

231.402 Submission of false information. 

231.403 Severability. 

Authority: 15 U.S.C. 4651, et seq. 

PART 231—CLAWBACKS OF CHIPS 

FUNDING 

Subpart A—Definitions 

§ 231.101 Existing facility. 

Existing facility means: 

(a) Any facility, the current status of 

which, including its semiconductor 

manufacturing capacity, is 


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memorialized in the required agreement 

entered into by the covered entity and 

the Secretary pursuant to 15 U.S.C. 

4652(a)(6)(C) and based on the 

Secretary’s assessments of historical 

capacity measurements. Only facilities 

built, equipped, and operating prior to 

entering into the required agreement are 

considered to be existing facilities. A 

facility that undergoes significant 

renovations not memorialized in the 

required agreement shall no longer 

qualify as an existing facility. 

(b) Notwithstanding paragraph (a) of 

this section, in the case of a facility that 

is being equipped, expanded, or 

modernized at the time of entering into 

the required agreement, the Secretary 

may, at their discretion, memorialize the 

planned semiconductor manufacturing 

capacity of that facility or any 

appropriate lower semiconductor 

manufacturing capacity in the required 

agreement and deem such facility an 

existing facility. 

§ 231.102 Foreign country of concern. 

The term foreign country of concern 

means: 

(a) A country that is a covered nation 

(as defined in 10 U.S.C. 4872(d)); and 

(b) Any country that the Secretary, in 

consultation with the Secretary of 

Defense, the Secretary of State, and the 

Director of National Intelligence, 

determines to be engaged in conduct 

that is detrimental to the national 

security or foreign policy of the United 

States. 

§ 231.103 Foreign entity. 

Foreign entity, as used in this part: 

(a) Means— 

(1) A government of a foreign country 

or a foreign political party; 

(2) A natural person who is not a 

lawful permanent resident of the United 

States, citizen of the United States, or 

any other protected individual (as such 

term is defined in section 8 U.S.C. 

1324b(a)(3)); or 

(3) A partnership, association, 

corporation, organization, or other 

combination of persons organized under 

the laws of or having its principal place 

of business in a foreign country; and 

(b) Includes— 

(1) Any person owned by, controlled 

by, or subject to the jurisdiction or 

direction of an entity listed in paragraph 

(a) of this section; 

(2) Any person, wherever located, 

who acts as an agent, representative, or 

employee of an entity listed in 

paragraph (a) of this section; 

(3) Any person who acts in any other 

capacity at the order, request, or under 

the direction or control of an entity 

listed in paragraph (a) of this section, or 

of a person whose activities are directly 

or indirectly supervised, directed, 

controlled, financed, or subsidized in 

whole or in majority part by an entity 

listed in paragraph (a) of this section; 

(4) Any person who directly or 

indirectly through any contract, 

arrangement, understanding, 

relationship, or otherwise, owns 25 

percent or more of the equity interests 

of an entity listed in paragraph (a) of 

this section; 

(5) Any person with significant 

responsibility to control, manage, or 

direct an entity listed in paragraph (a) 

of this section; 

(6) Any person, wherever located, 

who is a citizen or resident of a country 

controlled by an entity listed in 

paragraph (a) of this section; or 

(7) Any corporation, partnership, 

association, or other organization 

organized under the laws of a country 

controlled by an entity listed in 

paragraph (a) of this section. 

§ 231.104 Foreign entity of concern. 

Foreign entity of concern means any 

foreign entity that is— 

(a) Designated as a foreign terrorist 

organization by the Secretary of State 

under 8 U.S.C. 1189; 

(b) Included on the Department of 

Treasury’s list of Specially Designated 

Nationals and Blocked Persons (SDN 

List), or for which one or more 

individuals or entities included on the 

SDN list, individually or in the 

aggregate, directly or indirectly, hold at 

least 50 percent of the outstanding 

voting interest; 

(c) Owned by, controlled by, or 

subject to the jurisdiction or direction of 

a government of a foreign country that 

is a covered nation (as defined in 10 

U.S.C. 4872(d)); 

(1) A person is owned by, controlled 

by, or subject to the jurisdiction or 

direction of a government of a foreign 

country listed in 10 U.S.C. 4872(d) 

where: 

(i) The person is: 

(A) a citizen, national, or resident of 

a foreign country listed in 10 U.S.C. 

4872(d); and 

(B) located in a foreign country listed 

in 10 U.S.C. 4872(d); 

(ii) The person is organized under the 

laws of or has its principal place of 

business in a foreign country listed in 

10 U.S.C. 4872(d); 

(iii) 25 percent or more of the person’s 

outstanding voting interest, board seats, 

or equity interest is held directly or 

indirectly by the government of a 

foreign country listed in 10 U.S.C. 

4872(d); or 

(iv) 25 percent or more of the person’s 

outstanding voting interest, board seats, 

or equity interest is held directly or 

indirectly by any combination of the 

persons who fall within subsections (i)– 

(iii); 

(d) Alleged by the Attorney General to 

have been involved in activities for 

which a conviction was obtained 

under— 

(1) The Espionage Act, 18 U.S.C. 792 

et seq.; 

(2) 18 U.S.C. 951; 

(3) The Economic Espionage Act of 

1996, 18 U.S.C. 1831 et seq.; 

(4) The Arms Export Control Act, 22 

U.S.C. 2751 et seq.; 

(5) The Atomic Energy Act, 42 U.S.C. 

2274, 2275, 2276, 2277, or 2284; 

(6) The Export Control Reform Act of 

2018, 50 U.S.C. 4801 et seq.; 

(7) The International Economic 

Emergency Powers Act, 50 U.S.C. 1701 

et seq.; or 

(8) 18 U.S.C. 1030. 

(e) Included on the Bureau of Industry 

and Security’s Entity List (15 CFR part 

744, supplement no. 4); 

(f) Included on the Department of the 

Treasury’s list of Non-SDN Chinese 

Military-Industrial Complex Companies 

(NS–CMIC List), or for which one or 

more individuals or entities included on 

the NS–CMIC list, individually or in the 

aggregate, directly or indirectly, hold at 

least 50 percent of the outstanding 

voting interest; or 

(g) Determined by the Secretary, in 

consultation with the Secretary of 

Defense and the Director of National 

Intelligence, to be engaged in 

unauthorized conduct that is 

detrimental to the national security or 

foreign policy of the United States 

under this chapter. 

§ 231.105 Joint research. 

(a) Joint research means any research 

and development activity that is jointly 

undertaken by two or more parties, 

including any research and 

development activities undertaken as 

part of a joint venture as defined at 15 

U.S.C. 4301(a)(6). 

(b) Notwithstanding paragraph (a) of 

this section, the following is not joint 

research: 

(1) A standards-related activity (as 

such term is defined in 15 CFR part 

772); 

(2) Research and development 

conducted exclusively between and 

among employees of a covered entity or 

between and among entities that are 

related entities to the covered entity; 

(3) Research, development, or 

engineering related to a manufacturing 

process for an existing product solely to 

enable use of foundry, assembly, test, or 

packaging services for integrated 

circuits; 


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(4) Research, development, or 

engineering involving two or more 

entities to establish or apply a drawing, 

design, or related specification for a 

product to be purchased and sold 

between or among such entities; and 

(5) Warranty, service, and customer 

support performed by a covered entity 

or an entity that is a related entity of a 

covered entity. 

§ 231.106 Knowingly. 

Knowingly means acting with 

knowledge that a circumstance exists or 

is substantially certain to occur, or with 

an awareness of a high probability of its 

existence or future occurrence. Such 

awareness can be inferred from 

evidence of the conscious disregard of 

facts known to a person or of a person’s 

willful avoidance of facts. 

§ 231.107 Legacy semiconductor. 

(a) Legacy semiconductor means: 

(1) For the purposes of a 

semiconductor wafer facility: 

(i) A silicon wafer measuring 8 inches 

(or 200 millimeters) or smaller in 

diameter; or 

(ii) A compound wafer measuring 6 

inches (or 150 millimeters) or smaller in 

diameter. 

(2) For the purposes of a 

semiconductor fabrication facility: 

(i) A digital or analog logic 

semiconductor that is of the 28- 

nanometer generation or older (i.e., has 

a gate length of 28 nanometers or more 

for a planar transistor); 

(ii) A memory semiconductor with a 

half-pitch greater than 18 nanometers 

for Dynamic Random Access Memory 

(DRAM) or less than 128 layers for Not 

AND (NAND) flash that does not utilize 

emerging memory technologies, such as 

transition metal oxides, phase-change 

memory, perovskites, or ferromagnetics 

relevant to advanced memory 

fabrication; or 

(iii) A semiconductor identified by 

the Secretary in a public notice issued 

under 15 U.S.C. 4652(a)(6)(A)(ii). 

(3) For the purposes of a 

semiconductor packaging facility, a 

semiconductor that does not utilize 

advanced three-dimensional (3D) 

integration packaging, under paragraph 

(b)(3) of this section. 

(b) Notwithstanding paragraph (a) of 

this section, the following are not legacy 

semiconductors: 

(1) Semiconductors critical to national 

security, as defined in § 231.118; 

(2) A semiconductor with a postplanar transistor architecture (such as 

fin-shaped field field-effect transistor 

(FinFET) or gate all around field-effect 

transistor); and 

(3) A semiconductor utilizing 

advanced three-dimensional (3D) 

integration packaging, such as by 

directly attaching one or more die or 

wafer, through silicon vias, through 

mold vias, or other advanced methods. 

§ 231.108 Material expansion. 

Material expansion means the 

increase of the semiconductor 

manufacturing capacity of an existing 

facility by more than five percent of the 

capacity memorialized in the required 

agreement due to the addition of a 

cleanroom, production line or other 

physical space, or a series of such 

additions. 

§ 231.109 Members of the affiliated group. 

Members of the affiliated group 

includes any entity that is a member of 

the covered entity’s ‘‘affiliated group,’’ 

as that term is defined under 26 U.S.C. 

1504(a), without regard to 26 U.S.C. 

1504(b)(3). 

§ 231.110 Person. 

The term person includes an 

individual, partnership, association, 

corporation, organization, or any other 

combination of individuals. 

§ 231.111 Predominately serves the 

market. 

Predominately serves the market 

means that at least 85 percent of the 

output of the semiconductor 

manufacturing facility (e.g., wafers, 

semiconductor devices, or packages) by 

value is incorporated into final products 

(i.e., not an intermediate product that is 

used as factor inputs for producing 

other goods) that are used or consumed 

in that market. 

§ 231.112 Required agreement. 

(a) Required agreement means the 

agreement that is entered into by a 

covered entity and the Secretary on or 

before the date on which the Secretary 

awards Federal financial assistance 

under 15 U.S.C. 4652. The required 

agreement shall include, inter alia, 

provisions describing the prohibitions 

on certain expansion transactions and 

on certain joint research or technology 

licensing. 

(b) The required agreement shall 

memorialize: 

(1) The covered entity’s existing 

facilities in foreign countries of concern; 

and 

(2) Any ongoing joint research or 

technology licensing activities with 

foreign entities of concern that relate to 

technology or products that raise 

national security concerns as identified 

by the Secretary. 

(c) The required agreement may 

include additional terms to mitigate 

national security risks, including as 

contemplated in § 231.204. 

(d) To the extent consistent with the 

requirements of 15 U.S.C. 4652 and 

these regulations, the Secretary and the 

covered entity may amend the required 

agreement by mutual consent. 

§ 231.113 Research and development. 

Research and development means 

theoretical analysis, exploration, or 

experimentation; or the extension of 

investigative findings and theories of a 

scientific or technical nature into 

practical application, including the 

experimental production and testing of 

models, devices, equipment, materials, 

and processes. 

§ 231.114 Secretary. 

Secretary means the Secretary of 

Commerce or the Secretary’s designees. 

§ 231.115 Semiconductor. 

Semiconductor means an integrated 

electronic device or system most 

commonly manufactured using 

materials such as, but not limited to, 

silicon, silicon carbide, or III–V 

compounds, and processes such as, but 

not limited to, lithography, deposition, 

and etching. Such devices and systems 

include but are not limited to analog 

and digital electronics, power 

electronics, and photonics, for memory, 

processing, sensing, actuation, and 

communications applications. 

§ 231.116 Semiconductor manufacturing. 

Semiconductor manufacturing means 

semiconductor wafer production, 

semiconductor fabrication or 

semiconductor packaging. 

Semiconductor wafer production 

includes the processes of wafer slicing, 

polishing, cleaning, epitaxial 

deposition, and metrology. 

Semiconductor fabrication includes the 

process of forming devices such as 

transistors, poly capacitors, non-metal 

resistors, and diodes on a wafer of 

semiconductor material. Semiconductor 

packaging means the process of 

enclosing a semiconductor in a 

protective container (package) and 

providing external power and signal 

connectivity for the assembled 

integrated circuit. 

§ 231.117 Semiconductor manufacturing 

capacity. 

Semiconductor manufacturing 

capacity means the productive capacity 

of a facility for semiconductor 

manufacturing. In the case of a wafer 

production facility, semiconductor 

manufacturing capacity is measured in 

wafers per year. In the case of a 

semiconductor fabrication facility, 

semiconductor manufacturing capacity 

is measured in wafer starts per year. In 

the case of a semiconductor fabrication 


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facility for wafers designed for wafer-towafer bonding structure, semiconductor 

manufacturing capacity is measured in 

stacked wafers per year. In the case of 

a packaging facility, semiconductor 

manufacturing capacity is measured in 

packages per year. 

§ 231.118 Semiconductors critical to 

national security. 

Semiconductors critical to national 

security means: 

(a) Semiconductors utilizing 

nanomaterials, including 1D and 2D 

carbon allotropes such as graphene and 

carbon nanotubes; 

(b) Compound and wide- and ultrawide bandgap semiconductors; 

(c) Radiation-hardened by process 

(RHBP) semiconductors; 

(d) Fully depleted silicon on insulator 

(FD–SOI) semiconductors, other than 

with regard to semiconductor packaging 

operations with respect to such 

semiconductors of a 28-nonometerer 

generation or older; 

(e) Silicon photonic semiconductors; 

(f) Semiconductors designed for 

quantum information systems; 

(g) Semiconductors designed for 

operation in cryogenic environments (at 

or below 77 Kelvin); and 

(h) Any other semiconductors that the 

Secretary, in consultation with the 

Secretary of Defense and the Director of 

National Intelligence, determines is 

critical to national security and issues a 

public notice of that determination. 

§ 231.119 Significant renovations. 

Significant renovations means 

building new cleanroom space or 

adding a production line or other 

physical space to an existing facility 

that, in the aggregate during the 

applicable term of the required 

agreement, increases semiconductor 

manufacturing capacity by 10 percent or 

more of the capacity memorialized in 

the required agreement. 

231.120 Technology licensing. 

Technology licensing means: 

(a) An express or implied contractual 

agreement in which the rights owned 

by, licensed to or otherwise lawfully 

available to one party in any trade 

secrets or knowhow are sold, licensed or 

otherwise made available to another 

party. 

(b) Notwithstanding paragraph (a) of 

this section, the following is not 

technology licensing: 

(1) Licensing of patents, including 

licenses related to standard essential 

patents or cross licensing activities; 

(2) Licensing or transfer agreements 

conducted exclusively between a 

covered entity and related entities, or 

between or among related entities of the 

covered entity; 

(3) A standards-related activity (as 

such term is defined in 15 CFR part 

772); 

(4) Agreements that grant patent rights 

only with respect to ‘‘published 

information’’ and no proprietary 

information is shared; 

(5) An implied or general intellectual 

property license relating to the use of a 

product that is sold by a covered entity 

or related entities; 

(6) Technology licensing related to a 

manufacturing process for an existing 

product solely to enable use of 

assembly, test, or packaging services for 

integrated circuits; 

(7) Technology licensing involving 

two or more entities to establish or 

apply a drawing, design, or related 

specification for a product to be 

purchased and sold between or among 

such entities; 

(8) Warranty, service, and customer 

support performed by a covered entity 

or an entity that is a related entity of a 

covered entity; and 

(9) Disclosures of technical 

information to a customer solely for the 

design of integrated circuits to be 

manufactured by the funding recipient 

for that customer. 

§ 231.121 Technology or product that 

raises national security concerns. 

A technology or product that raises 

national security concerns means: 

(a) Any semiconductor critical to 

national security; 

(b) Any item listed in Category 3 of 

the Commerce Control List (supplement 

no. 1 to part 774 of the Export 

Administration Regulations, 15 CFR 

part 774) that is controlled for National 

Security (‘‘NS’’) reasons, as described in 

15 CFR 742.4, or Regional Stability 

(‘‘RS’’) reasons, as described in 15 CFR 

742.6; and 

(c) Any other technology or product 

that the Secretary determines raises 

national security concerns. 

Subpart B—General 

§ 231.201 Scope. 

This subpart sets forth the 

prohibitions to be implemented in the 

required agreements, as well as record 

retention requirements related to those 

prohibitions. 

§ 231.202 Prohibition on certain expansion 

transactions. (Expansion Clawback) 

(a) During the 10-year period 

beginning on the date of the award of 

Federal financial assistance under 15 

U.S.C. 4652, the covered entity and 

members of the affiliated group may not 

engage in any significant transaction 

involving the material expansion of 

semiconductor manufacturing capacity 

in a foreign country of concern; 

provided that this prohibition will not 

apply to— 

(1) Existing facilities or equipment of 

a covered entity or any member of the 

affiliated group for manufacturing 

legacy semiconductors; or 

(2) Significant transactions involving 

material expansion of semiconductor 

manufacturing capacity that— 

(i) Produces legacy semiconductors; 

and 

(ii) Predominately serves the market 

of a foreign country of concern. 

(b) No later than the date of the award 

of Federal financial assistance award 

under 15 U.S.C. 4652, the covered entity 

shall enter into a required agreement 

that contains this prohibition and 

otherwise implements the requirements 

of this part. 

§ 231.203 Prohibition on certain joint 

research or technology licensing. 

(Technology Clawback) 

(a) During the applicable term of a 

Federal financial assistance award 

under 15 U.S.C. 4652, a covered entity 

may not knowingly engage in any joint 

research or technology licensing with a 

foreign entity of concern that relates to 

a technology or product that raises 

national security concerns. 

(b) Notwithstanding paragraph (a) of 

this section, this prohibition will not 

apply to joint research or technology 

licensing that relate to technology or 

products that raise national security 

concerns that were ongoing prior to the 

Secretary’s determination that such 

technology or products raised national 

security concerns. Any such ongoing 

joint research or technology licensing 

shall be memorialized in the required 

agreement. 

§ 231.204 Additional conditions on certain 

joint research or technology licensing. 

(a) In addition to the conditions of the 

Technology Clawback (§ 231.203), the 

Secretary will specify, in the required 

agreement with the covered entity, any 

additional measures that covered 

entities must take to mitigate the risk of 

circumvention of the Technology 

Clawback, including measures that will 

allow the Secretary to recover up to the 

full amount of the Federal financial 

assistance provided to the covered 

entity, if, during the term applicable to 

the award, any related entity engages in 

joint research or technology licensing 

that would violate the Technology 

Clawback if engaged in by the covered 

entity. 

(b) For purposes of this rule, a related 

entity is any entity that directly, or 


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65618 Federal Register / Vol. 88, No. 184 / Monday, September 25, 2023 / Rules and Regulations 

indirectly through one or more 

intermediaries, controls or is controlled 

by, or is under common control with, 

the covered entity. 

§ 231.205 Retention of records. 

(a) During the 10-year period 

beginning on the date of the Federal 

financial assistance award under 15 

U.S.C. 4652 and for a period of seven 

years following any significant 

transaction involving the material 

expansion of semiconductor 

manufacturing capacity in a foreign 

country of concern, a covered entity or 

member of the affiliated group planning 

or engaging in any such significant 

transaction involving the material 

expansion of semiconductor 

manufacturing capacity in a foreign 

country of concern shall maintain 

records related to the significant 

transaction in a manner consistent with 

the recordkeeping practices used in 

their ordinary course of business for 

such transactions. 

(b) A covered entity that is notified 

that a transaction is being reviewed by 

the Secretary shall immediately take 

steps to retain all records relating to 

such transaction, including if those 

records are maintained by a member of 

the affiliated group or by related 

entities. 

Subpart C—Notification, Review, and 

Recovery 

§ 231.301 Procedures for notifying the 

Secretary of significant transactions. 

During the 10-year period beginning 

on the date of the Federal financial 

assistance award under 15 U.S.C. 4652, 

the covered entity shall submit a 

notification to the Secretary regarding 

any planned significant transactions of 

the covered entity or members of the 

affiliated group that may involve the 

material expansion of semiconductor 

manufacturing capacity in a foreign 

country of concern, regardless of 

whether the covered entity believes the 

transaction falls within an exception in 

15 U.S.C. 4652(a)(6)(C)(ii). A 

notification must include the 

information set forth in § 231.302 and be 

submitted to notifications@chips.gov. 

§ 231.302 Contents of notifications; 

certifications. 

The notification required by § 231.301 

shall be certified by the covered entity’s 

chief executive officer, president, or 

equivalent corporate officer, and shall 

contain the following information about 

the parties and the transaction, which 

must be accurate and complete: 

(a) The covered entity and any 

member of the affiliated group that is 

party to the transaction, including for 

each a primary point of contact, 

telephone number, and email address. 

(b) The identity and location(s) of all 

other parties to the transaction. 

(c) Information, including 

organizational chart(s), on the 

ownership structure of parties to the 

transactions. 

(d) A description of any other 

significant foreign involvement, e.g., 

through financing, in the transaction. 

(e) The name(s) and location(s) of any 

entity in a foreign country of concern 

where or at which semiconductor 

manufacturing capacity may be 

materially expanded by the transaction. 

(f) A description of the transaction, 

including the specific types of 

semiconductors currently produced at 

the facility planned for expansion, the 

current production technology node (or 

equivalent information) and 

semiconductor manufacturing capacity, 

as well as the specific types of 

semiconductors planned for 

manufacture, the planned production 

technology node, and planned 

semiconductor manufacturing capacity. 

(g) If the covered entity asserts that 

the transaction involves the material 

expansion of semiconductor 

manufacturing capacity that produces 

legacy semiconductors that will 

predominately serve the market of a 

foreign country of concern, 

documentation as to where the final 

products incorporating the legacy 

semiconductors are to be used or 

consumed, including the percent of 

semiconductor manufacturing capacity 

or percent of sales revenue that will be 

accounted for by use or consumption of 

the final goods in the foreign country of 

concern. 

(h) If applicable, an explanation of 

how the transaction meets the 

requirements, set forth in 15 U.S.C. 

4652(a)(6)(C)(ii), for an exception to the 

prohibition on significant transactions 

that involve the material expansion of 

semiconductor manufacturing capacity, 

including details on the calculations for 

semiconductor manufacturing capacity 

and/or sales revenue by the market in 

which the final goods will be consumed. 

§ 231.303 Response to notifications. 

The Secretary will review the 

notification provided pursuant to 

§ 231.301 for completeness, and may: 

(a) Reject the notification, and, if so, 

inform the covered entity promptly in 

writing, if: 

(1) The notification does not meet the 

requirements of § 231.302; or 

(2) The notification contains 

apparently false or misleading 

information; 

(b) Request additional information 

from the covered entity to complete the 

notification; or 

(c) Accept the notification and initiate 

a review under § 231.304, and, if so, 

inform the covered entity promptly in 

writing. 

§ 231.304 Initiation of review. 

(a) The Secretary may initiate a 

review of a transaction: 

(1) After accepting a notification 

pursuant to § 231.303(c); or 

(2) Upon the Secretary’s own 

initiative, where the Secretary believes 

that a transaction may be prohibited. In 

determining whether to initiate a 

review, the Secretary may consider all 

available information, including 

information submitted by persons other 

than the covered entity to notifications@

chips.gov. 

(b) Where the Secretary initiates 

review of a transaction under paragraph 

(a)(2) of this section, the Secretary will 

notify the covered entity promptly in 

writing. 

(c) The Secretary will consult with the 

Secretary of Defense and the Director of 

National Intelligence upon the initiation 

of a review of any transaction. 

§ 231.305 Procedures for review. 

(a) During the review, the Secretary 

may request additional information 

from the covered entity. The covered 

entity shall promptly provide any 

additional information. The Secretary 

will determine whether the additional 

information is sufficient for the 

Secretary to complete the review, and 

may seek additional information from 

the covered entity if necessary. Where 

the Secretary has determined that the 

additional information is sufficient to 

allow the Secretary to complete the 

review, the Secretary will inform the 

covered entity in writing. The time 

periods for any determinations by the 

Secretary under this section will be 

tolled from the date on which the 

request for additional information is 

sent to the covered entity until the 

Secretary determines that the response 

is sufficient to complete the review. 

(b) Not later than 90 days after a 

notification is accepted by the Secretary, 

or after the Secretary initiates a review 

under § 231.304(a)(2), and subject to any 

tolling pursuant to § paragraph (a) of 

this section, the Secretary will provide 

the covered entity an initial 

determination in writing as to whether 

the transaction would violate § 231.202. 

The initial determination may include a 

finding that the covered entity or a 

member of the affiliated group has 

violated § 231.202. 


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Federal Register / Vol. 88, No. 184 / Monday, September 25, 2023 / Rules and Regulations 65619 

(c) If the Secretary’s initial 

determination is that the transaction 

would violate § 231.202 or that the 

covered entity or a member of the 

affiliated group has violated § 231.202 

by engaging in a prohibited significant 

transaction, then: 

(1) The covered entity may within 14 

days of receipt of the initial 

determination request that the Secretary 

reevaluate the initial determination, 

including by submitting additional 

information. 

(2) If the covered entity does not make 

such a request within 14 days of receipt 

of the initial determination, the initial 

determination will become final. If the 

covered entity recipient does request a 

reconsideration of the initial 

determination, the Secretary will issue 

the final determination within 60 days 

after the receipt by the Secretary of the 

request for reconsideration. 

(3) Upon the issuance of a final 

determination that a transaction would 

violate § 231.202 or that the covered 

entity or a member of the affiliated 

group has violated § 231.202 by 

engaging in a prohibited significant 

transaction, the covered entity must 

cease or abandon the transaction (or, if 

applicable, ensure that the member of 

the affiliated group ceases or abandons 

the transaction), and the covered 

entity’s chief executive officer, 

president, or equivalent corporate 

official, must provide a signed letter 

electronically to notifications@chips.gov 

within 45 days of the final 

determination certifying that the 

transaction has ceased or been 

abandoned. Such letter must certify, 

under the penalties provided in the 

False Statements Accountability Act of 

1996, as amended (18 U.S.C. 1001), that 

the information in the letter is accurate 

and complete. 

(d) Unless recovery is waived 

pursuant to § 231.306, a violation of 

§ 231.202 for engaging in a prohibited 

significant transaction or failing to cease 

or abandon a planned significant 

transaction that the Secretary has 

determined would be in violation of 

§ 231.202 will result in the recovery of 

the full amount of the Federal financial 

assistance provided to the covered 

entity, which amount will be a debt 

owed to the U.S. Government. 

(e) The running of any deadline or 

time limitation for the Secretary will be 

suspended during a lapse in 

appropriations. 

§ 231.306 Mitigation of national security 

risks. 

If the Secretary, in consultation with 

the Secretary of Defense and the 

Director of National Intelligence, 

determines that a covered entity or 

member of the affiliated group is 

planning to undertake or has 

undertaken a significant transaction that 

violates or would violate § 231.202, the 

Secretary may seek to take measures in 

connection with the transaction to 

mitigate the risk to national security. 

Such measures may include the 

negotiation of an amendment to the 

required agreement (a ‘‘mitigation 

agreement’’) with the covered entity to 

mitigate the risk to national security in 

connection with the transaction. The 

Secretary has discretion to waive, in 

whole or part, recovery of the Federal 

financial assistance provided to the 

covered entity for violation of 

§ 231.305(d) in circumstances where an 

appropriate mitigation agreement has 

been entered into and complied with by 

the covered entity. If a covered entity 

fails to comply with the mitigation 

agreement or if other conditions in the 

mitigation agreement are violated, the 

Secretary may recover the full amount 

of the Federal financial assistance 

provided to the covered entity. 

§ 231.307 Review of actions that may 

violate the prohibition on certain joint 

research or technology licensing. 

(a) The Secretary may initiate a 

review of any joint research or 

technology licensing the Secretary 

believes may be prohibited by § 231.203. 

In determining whether to initiate a 

review, the Secretary may consider all 

available information, including 

information submitted by persons other 

than a covered entity to notifications@

chips.gov. 

(b) If the Secretary opens an initial 

review, the Secretary will notify the 

covered entity in writing and may 

request additional information from the 

covered entity. The covered entity shall 

provide the additional information to 

the Secretary within three business 

days, or within a longer time frame if 

the covered entity requests in writing 

and the Secretary grants that request in 

writing. 

(c) The Secretary may make an initial 

determination as to whether the covered 

entity violated § 231.203. 

(d) If the Secretary’s initial 

determination is that the covered entity 

did not violate § 231.203, the Secretary 

shall inform the covered entity in 

writing and close the review. 

(e) If the Secretary’s initial 

determination is that the covered entity 

violated § 231.203, the Secretary will 

provide that initial determination to the 

covered entity in writing. 

(1) The covered entity may within 14 

days of receipt of the initial 

determination request that the Secretary 

reevaluate the initial determination, 

including by submitting additional 

information. 

(2) If the covered entity does not make 

such a request within 14 days of receipt 

of the initial determination, the initial 

determination will become final. If the 

covered entity does request a 

reconsideration of the initial 

determination, the Secretary will issue 

the final determination within 45 days 

of the initial determination. 

If the Secretary makes a final 

determination that an action violated 

§ 231.203, the Secretary will recover the 

full amount of the Federal financial 

assistance provided to the covered 

entity, which will be a debt owed to the 

U.S. Government. 

§ 231.308 Recovery and other remedies. 

(a) Interest on a debt under § 231.305 

or § 231.307 will be calculated from the 

date on which the Secretary provides a 

final notification that an action violated 

§ 231.202 or § 231.203. 

(b) The Secretary may take action to 

collect a debt under § 231.305 or 

§ 231.307 if such debt is not paid within 

the time prescribed by the Secretary in 

the required agreement or mitigation 

agreement. In addition or instead, the 

matter may be referred to the 

Department of Justice for appropriate 

action. 

(c) If the Secretary makes an initial 

determination that § 231.202 or 

§ 231.203 have been violated, the 

Secretary may suspend Federal financial 

assistance. 

(d) The recoveries and remedies 

available under this section are without 

prejudice to other available remedies, 

including remedies articulated in the 

required agreement or civil or criminal 

penalties. 

Subpart D—Other Provisions 

§ 231.401 Amendment. 

Not later than August 9, 2024, and not 

less frequently than once every two 

years thereafter for the eight-year period 

after the last award of Federal financial 

assistance under 15 U.S.C. 4652 is 

made, the Secretary, after public notice 

and an opportunity for comment, if 

applicable and necessary, will issue a 

public notice identifying any additional 

semiconductors included in the 

meaning of the term ‘‘legacy 

semiconductor.’’ 

§ 231.402 Submission of false information. 

Section 1001 of 18 U.S.C., as 

amended, shall apply to all information 

provided to the Secretary under 15 

U.S.C. 4652 or under the regulations 

found in this part. 


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65620 Federal Register / Vol. 88, No. 184 / Monday, September 25, 2023 / Rules and Regulations 

§ 231.403 Severability. 

If any provision of this part or its 

application to any person, act, or 

practice is held invalid, the remainder 

of the part or the application of its 

provisions to any person, act, or practice 

shall not be affected thereby. 

Alicia Chambers, 

NIST Executive Secretariat. 

[FR Doc. 2023–20471 Filed 9–22–23; 8:45 am] 

BILLING CODE 3510–13–P 

DEPARTMENT OF THE TREASURY 

Office of Foreign Assets Control 

31 CFR Part 525 

Publication of Determination Pursuant 

to Section 1(a)(i) of Executive Order 

14014 

AGENCY: Office of Foreign Assets 

Control, Treasury. 

ACTION: Publication of determination. 

SUMMARY: The Department of the 

Treasury’s Office of Foreign Assets 

Control (OFAC) is publishing a sector 

determination issued pursuant to a 

February 10, 2021 Executive order. The 

determination was previously issued on 

OFAC’s website. 

DATES: The determination pursuant to 

section (1)(a)(i) of Executive Order 

14014 was issued on, and took effect on, 

August 23, 2023. 

FOR FURTHER INFORMATION CONTACT: 

OFAC: Assistant Director for Licensing, 

202–622–2480; Assistant Director for 

Regulatory Affairs, 202–622–4855; or 

Assistant Director for Compliance, 202– 

622–2490. 

SUPPLEMENTARY INFORMATION: 

Electronic Availability 

This document and additional 

information concerning OFAC are 

available on OFAC’s website: 

www.treas.gov/ofac. 

Background 

On February 10, 2021, the President, 

invoking the authority of, inter alia, the 

International Emergency Economic 

Powers Act (50 U.S.C. 1701 et seq.), 

issued Executive Order (E.O.) 14014 (86 

FR 9429, February 12, 2021). Among 

other prohibitions, section 1(a) of E.O. 

14014 blocks, with certain exceptions, 

all property and interests in property 

that are in the United States, that come 

within the United States, or that are or 

come within the possession or control of 

any U.S. person of, any foreign person 

determined by the Secretary of the 

Treasury, in consultation with the 

Secretary of State, to operate in the 

defense sector of the Burmese economy 

or any other sector of the Burmese 

economy as may be determined by the 

Secretary of the Treasury, in 

consultation with the Secretary of State. 

On June 1, 2021, OFAC issued the 

Burma Sanctions Regulations to 

implement E.O. 14014 (86 FR 29197). 

On August 23, 2023, pursuant to 

delegated authority, the Director of 

OFAC, in consultation with the 

Department of State, determined that 

the prohibitions in section 1(a)(i) of E.O. 

14014 shall apply to the jet fuel sector 

of the Burmese economy. This 

determination took effect on August 23, 

2023. The text of the determination is 

below. 

OFFICE OF FOREIGN ASSETS CONTROL 

Determination Pursuant to Section 1(a)(i) of 

Executive Order 14014 

Jet Fuel Sector of the Burmese Economy 

Section 1(a)(i) of Executive Order (E.O.) 

14014 of February 10, 2021 (‘‘Blocking 

Property With Respect to the Situation in 

Burma’’) imposes economic sanctions on any 

person determined by the Secretary of the 

Treasury, in consultation with the Secretary 

of State, to operate in such sectors of the 

Burmese economy as may be determined by 

the Secretary of the Treasury, in consultation 

with the Secretary of State. 

To further address the unusual and 

extraordinary threat to the national security 

and foreign policy of the United States 

described in E.O. 14014, and in consultation 

with the Department of State and pursuant to 

31 CFR 525.802, I hereby determine that 

section 1(a)(i) of E.O. 14014 shall apply to the 

jet fuel sector of the Burmese economy. Any 

person determined, pursuant to section 

1(a)(i) of E.O. 14014, to operate in the jet fuel 

sector of the Burmese economy shall be 

subject to sanctions pursuant to section 

1(a)(i). 

This determination shall take effect on 

August 23, 2023. 

Bradley T. Smith 

Deputy Director 

Office of Foreign Assets Control 

August 23, 2023 

Bradley T. Smith, 

Director, Office of Foreign Assets Control. 

[FR Doc. 2023–20713 Filed 9–22–23; 8:45 am] 

BILLING CODE 4810–AL–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52 

[EPA–R06–OAR–2022–0307; FRL–10892– 

03–R6] 

Air Plan Approval; Texas; Updates to 

Public Notice and Procedural Rules 

and Removal of Obsolete Provisions 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Final rule; correction. 

SUMMARY: The Environmental Protection 

Agency (EPA) is correcting a final rule 

that appeared in the Federal Register on 

August 24, 2023. The document issued 

a final rule approving portions of three 

revisions to the Texas State 

Implementation Plan (SIP) submitted by 

the Texas Commission on 

Environmental Quality (TCEQ) on July 

9, 2021, and January 21, 2022, that 

update the air permitting program by 

removing obsolete provisions and 

enhancing public notice requirements of 

the air permitting program. This 

correction addresses errors in the 

amendatory language instructions 

published on August 24, 2023. 

DATES: This rule is effective on 

September 25, 2023. 

FOR FURTHER INFORMATION CONTACT: 

Adina Wiley, EPA Region 6 Office, Air 

Permits Section, 214–665–2115, 

wiley.adina@epa.gov. Please call or 

email the contact listed above if you 

need alternative access to material 

indexed but not provided in the docket. 

SUPPLEMENTARY INFORMATION: In FR Doc. 

2023–17945 appearing in the Federal 

Register on Thursday, August 24, 2023, 

the following corrections are made: 

§ 52.2270 [Corrected] 

■ 1. On page 57884, in the third column, 

in amendment 2, the instruction (i) is 

corrected to read ‘‘Revising the entries 

for Sections 39.405, 39.411, 39.412, 

39.418, 39.419, 39.420, 39.601, 39.602, 

39.603, 39.604, 55.154, 55.156, 101.306, 

116.111, 116.112, 116.164, 116.196, 

116.198, 116.310, 116.611, 116.615, 

116.910, 116.911, 116.912, 116.916, 

116.917, 116.918, 116.920, 116.930, and 

116.1530. 

■ 2. On page 57885, in the third column, 

in amendment 2, instruction (iii) is 

added to read ‘‘iii. Adding an entry for 

section 39.426’’ in numeric order under 

the headings Chapter 39—Public Notice; 

Subchapter H—Applicability and 

General Provisions. 


ddrumheller on DSK120RN23PROD with RULES1