US tech companies that receive federal funding will be barred from building “advanced technology” facilities in China for 10 years, the Biden administration has said.
The guidelines were unveiled as part of a $50bn (£43bn) plan aimed at building up the local semiconductor industry.
It comes as business groups have pushed for more government support in an effort to reduce reliance on China.
They are faced with a global microchip shortage which has slowed production.
“We’re going to be implementing the guardrails to ensure those who receive CHIPS funds cannot compromise national security… they’re not allowed to use this money to invest in China, they can’t develop leading-edge technologies in China… for a period of ten years,” according to US Commerce Secretary Gina Raimondo., explaining the US Chips and Science Act.
“Companies who receive the money can only expand their mature node factories in China to serve the Chinese market.”