US lawmakers have introduced a bipartisan bill to bar companies who have received CHIPS and Science Act funding from buying chipmaking equipment from companies owned or controlled by China, Russia, North Korea, and Iran.

According to a report from Bloomberg, the ban would only apply to US-based facilities in receipt of government money and not their overseas operations.

The bill has been sponsored by Republican Senator, Marsha Blackburn, from Tennessee and Senator Mark Kelly, an Arizona Democrat. In a statement, Kelly said: “As the United States revitalizes its domestic semiconductor manufacturing industry, we must do everything in our power to stop China and other foreign entities of concern from compromising our microchip manufacturing facilities.”

The $280bn CHIPS and Science Act was approved by Congress in July 2022, with $52bn of the overall funding package designated as subsidies for US semiconductor manufacturers. Funding from the Act has also been earmarked for semiconductor R&D, growing a skilled semiconductor workforce, and incentives for the manufacturing of semiconductors and specialized tooling equipment.

To date, the US government has allocated more than $35bn in direct funding from the Act to companies including GlobalFoundries, Intel, TSMC, Samsung Electronics, and Micron. In April, Commerce Secretary Gina Raimondo said she expected all the grant money under the CHIPS Act to be allocated by the end of 2024.

In May 2024, the Chinese government established a third state-backed fund to boost its domestic semiconductor industry.

Totaling 344 billion yuan ($47.5 billion), the funding announcement represents the third phase of the Chinese government’s Integrated Circuit Industry Investment Fund – otherwise known as the ‘Big Fund’ – and will reportedly be used to manage venture capital, assist investment companies, and support the production of chip manufacturing equipment.