Chip EQUIP Act

The CHIPS Act of 2022, which became law in August 2022, appropriated funding for the Department of Commerce to carry out the CHIPS for America provisions enacted in the National Defense Authorization Act for Fiscal Year 2021. These provisions included appropriations for financial incentives to expand domestic manufacturing capacities across the semiconductor supply chain, as well as for research and development programs.

Under the bill, Commerce must include in the terms of each agreement with a covered entity (e.g., companies receiving CHIPS funds) prohibitions with respect to a project relating to the procurement, installation, or use of the specified semiconductor manufacturing equipment. The prohibitions must be effective for 10 years beginning on the date on which the agreement is signed.

The bill authorizes Commerce to waive these prohibitions under certain circumstances, such as if the specified semiconductor manufacturing equipment is not produced in the United States or an allied or partner country in sufficient and reasonably available quantities or of a satisfactory quality to support established or expected production capabilities.