National Institute of Standards and Technolog y | U.S. Departme nt of Commerce 1

CHIPS for America

Preventing the Improper Use of CHIPS Act Funding

Notice of Proposed Rulemaking

March 30, 2023
National Institute of Standards and Technolog y | U.S. Departme nt of Commerce 2

AGENDA

• Purpose of national security guardrails

• Key parts of CHIPS Act related to national security 

guardrails

• Proposed Rule deep dive

• How to submit public comment

• For any questions, please contact askchips@chips.gov
National Institute of Standards and Technolog y | U.S. Departme nt of Commerce 3

Morgan Dwyer

Chief Strategy Officer

Sam Marullo

Director of Policy

Jesse Stoneman

Public Engagement

Today’s CHIPS Program Office Speakers
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Economic 

Security

Future 

Innovation

National 

Security

The CHIPS Act will 

strengthen supply chain 

security and increase 

economic resilience in critical 

sectors.

The CHIPS Act will spur 

innovation, increase 

competitiveness, and 

ensure long-term U.S. 

leadership in the sector

The CHIPS Act will ensure 

that the U.S. can 

manufacture advanced 

technologies, including 

secure chips for the U.S. 

military.

CHIPS for America Vision
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Late Spring 2023

2

nd Notice of Funding 

Opportunity

For material suppliers and 

equipment manufacturers

Fall 2023

3

rd Notice of Funding 

Opportunity

To support the construction of 

semiconductor R&D 

facilities 

1

st Notice of Funding 

Opportunity

For commercial leadingedge, current, and mature 

node fabrication facilities

February 28, 2023

Proposed Guardrails apply to all funding opportunities in the CHIPS Incentives Program

Funding Opportunities
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March 21, 2023

• The Department 

released Notice of 

Proposed Rulemaking 

and began accepting 

public comment

Later this year

• Release final rule 

implementing the 

guardrails

60 day comment 

period

• Closes May 22, 

2023

We encourage public comment from industry, partners 

and allies, and other stakeholders

Proposed Rule Timeline
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• The national security guardrails are intended to ensure that funding provided through this 

program does not directly or indirectly benefit foreign countries of concern. 

• Strong national security guardrails will help protect the national security of America and our 

partners and allies.

• We will continue coordinating with allies and partners to ensure these guardrails advance shared 

goals, strengthen global supply chains, and enhance our collective security.

Preventing the Improper Use of CHIPS Act 

Funding
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• The Notice of Proposed Rulemaking contains two separate guardrails from the CHIPS Act: the 

expansion guardrail and the technology guardrail

• Both rules apply to CHIPS Incentive Program recipients for 10 years after an award is made 

and permit the Department to recover an award if violated.

• The proposed rule details how both guardrails will work and the process for evaluating and 

mitigating possible violations through clawbacks.

Proposed Rule Overview
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Establishes the scope of restrictions on expansion of semiconductor 

manufacturing capacity in foreign countries of concern

Defines the scope of exceptions, including for facilities producing legacy 

semiconductors

Details restrictions on joint research and technology licensing 

efforts

Expansion 

Guardrail

Technology 

Guardrail

The proposed rule... 
National Institute of Standards and Technolog y | U.S. Departme nt of Commerce 10

• Companies receiving CHIPS funding are subject to restrictions on building new facilities or 

expanding existing facilities in foreign countries of concern for 10 years.

• To allow existing facilities to continue ordinary operations (such as tool upgrades and 

replacements), they may upgrade manufacturing capacity by 5%. 

• Existing facilities manufacturing legacy semiconductors are excepted; however, such a facility 

may not increase capacity by 10% or more.

• Existing facilities may upgrade their technology, but export controls may still apply.

• The exception for new legacy facilities that predominantly serve the country of concern requires 

that the final products containing the chips be used or consumed in that country.

Expansion Guardrail Proposed Rule Overview
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CHIPS Act

A covered entity may not engage in any significant 

transaction involving the material expansion of 

semiconductor manufacturing capacity in a foreign 

country of concern for 10 years following an 

award. Violations of this prohibition may trigger 

full claw back of the CHIPS award.

Exceptions:

• Existing facilities for producing legacy 

semiconductors

• Facilities for producing legacy semiconductors 

that predominantly serve the domestic market of 

the foreign country of concern.

Foreign country of concern

China, Russia, North Korea, 

Iran.

The Secretary may add other 

countries she determines to 

be engaged in conduct that is 

detrimental to the national 

security or foreign policy of 

the United States.

Expansion Guardrail
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CHIPS Act Proposed Rule

A covered entity may not engage in any significant 

transaction involving the material expansion of 

semiconductor manufacturing capacity in a foreign 

country of concern for 10 years following an 

award. Violations of this prohibition may trigger 

full claw back of the CHIPS award.

• Significant transaction: Any investment (or series of 

investments) valued at $100,000 or more.

• Material expansion: Addition of physical space or 

equipment that increases semiconductor manufacturing 

capacity by more than 5%.

• Semiconductor manufacturing capacity: 

Semiconductor fabrication (i.e., fabs) or packaging.

Exceptions:

• Existing facilities for producing legacy 

semiconductors

• Facilities for producing legacy semiconductors 

that predominantly serve the domestic market of 

the foreign country of concern.

• Existing facilities: A facility that was built, equipped, and 

operating prior to an award. A facility that has undergone a 

significant renovation increasing capacity by 10% or more is no 

longer an existing facility.

• Legacy semiconductor: For logic, 28nm or older (from statute). 

For DRAM, half-pitch >18nm. For NAND, <128 layers. However, 

does not include any semiconductor packaged with 3D integration, 

post-FinFET chip, or semiconductor critical to national security.

• Predominantly serves the market: At least 85% of a facility’s 

output is incorporated into final products that are used or 

consumed within the market.

Expansion Guardrail Proposed Rule
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Companies may not generally undertake joint research or enter into technology licensing 

agreements related to products that raise national security concerns (i.e., certain exportcontrolled semiconductors or semiconductors critical to national security) with foreign 

entities of concern for 10 years.

Technology Guardrail Proposed Rule Overview
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CHIPS Act

A covered entity may not knowingly engage 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. Violations of this prohibition may 

trigger full claw back of the CHIPS award.

Technology Guardrail
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CHIPS Act Proposed Rule

A covered entity may not knowingly engage 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. Violations of this prohibition may 

trigger full claw back of the CHIPS award.

• Applicable term: The prohibition applies for 10 years, mirroring 

the expansion clawback.

• Joint research: Any R&D jointly undertaken by two or more 

people, including R&D undertaken as part of a joint venture.

• Technology licensing: An agreement to make patents, trade 

secrets, or know-how available to another party.

• Foreign entity of concern: Includes entities on sanctions lists and 

adds BIS’s Entity List, Treasury’s Chinese Military-Industrial 

Complex Companies (NS-CMIC) list, and FCC’s Secure Networks 

Act covered list. The term also includes companies organized or 

with a principal place of business in a foreign country of concern as 

well as individuals resident in those countries.

• Technology or product that raises national security concerns:

A semiconductor critical to national security or electronics which 

are export controlled for national security or regional stability 

reasons (including items controlled as part of the October 7 rules).

• Semiconductor critical to national security: Includes chips 

used for quantum computing, in radiation-intensive 

environments, and for other specialized military capabilities. 

The list was developed with input from DOD and the IC.

Technology Guardrail Proposed Rule
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• The Department of Commerce has appreciated input from partners and allies while developing these proposed 

guardrails, and we look forward to further public comment.

• We will continue coordinating with allies and partners to support a healthy global semiconductor ecosystem that 

drives innovation and is resilient to cybersecurity threats, natural disasters, pandemics, geopolitical conflict, and 

more.

• As semiconductors and technologies continue to evolve, the U.S. will work with allies and partners to ensure the 

latest technology cannot be used by malign actors to undermine our collective economic and national security.

• We will continue coordinating closely with U.S. partners and allies to advance these shared goals, advance our 

collective security, and strengthen global supply chains.

Coordinating with Allies and Partners
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The public comment period closes on May 22, 2023.

• Federal eRulemaking Portal: https://www.regulations.gov. Search for regulations.gov docket number NIST-2023-

0001

• Email: guardrails@chips.gov with RIN 0693-AB70 in the subject line

• The Department will consider all comments received before the close of the comment period. Filers should name 

their files using the name of the person or entity submitting the comments except where comments are intended 

to be anonymous.

• The Department will accept anonymous comments or comments containing business confidential information 

(BCI). Anyone submitting business confidential information should clearly identify the business confidential portion 

at the time of submission.

• Further details available on the Federal Register.

How to Submit Comments
National Institute of Standards and Technolog y | U.S. Departme nt of Commerce 18

Next Steps

• Review Proposed Rule in detail

• Consider submitting a comment

• Visit CHIPS.gov for additional resources, 

including:

• Applicant guides and templates

• FAQs and fact sheets

• Future webinars

• Join our mailing list

• Contact us

• askchips@chips.gov – general inquiries

• apply@chips.gov – application-related inquiries
National Institute of Standards and Technolog y | U.S. Departme nt of Commerce 19

Thank you