Overview
Title
To prohibit covered entities that receive financial assistance relating to semiconductors from purchasing certain semiconductor manufacturing equipment from foreign entities of concern or subsidiaries of foreign entities of concern, and for other purposes.
ELI5 AI
The Chip EQUIP Act is like a rule that says companies in the U.S. who get help with money for making computer chips can't buy certain tools from countries we don't trust. If they really need those tools and can't get them from safer places, they might get special permission to buy them anyway.
Summary AI
S. 5002, also known as the "Chip EQUIP Act," aims to prevent entities in the U.S. that receive federal financial assistance for semiconductor-related activities from purchasing certain types of semiconductor manufacturing equipment from foreign entities deemed concerning. The bill outlines what constitutes "ineligible equipment," including a list of specific manufacturing tools, and prohibits their purchase unless certain conditions are met, such as the equipment not being available from the U.S. or allied countries in sufficient quantities or quality. The Secretary of Commerce may waive these prohibitions if certain national security criteria are satisfied.
Published
Keywords AI
Sources
Bill Statistics
Size
Language
Complexity
AnalysisAI
The proposed legislation, introduced in the 118th Congress, known as the Chip Equipment Quality, Usefulness, and Integrity Protection Act of 2024 (Chip EQUIP Act), seeks to regulate the procurement of semiconductor manufacturing equipment. Its primary aim is to prohibit entities that receive federal financial assistance aimed at semiconductor-related activities from purchasing certain types of semiconductor equipment from foreign entities deemed to be of concern to the United States or from their subsidiaries. The bill also offers a framework for exceptions to this prohibition via a waiver process.
General Summary of the Bill
The Chip EQUIP Act introduces measures to restrict the acquisition of specific semiconductor manufacturing equipment from foreign sources identified as concerns. This restriction targets equipment such as deposition equipment, etching equipment, lithography equipment, among others used in various stages of semiconductor production. The bill champions national integrity and security of the U.S. semiconductor supply chain by attempting to lessen dependency on potentially risky foreign suppliers.
Summary of Significant Issues
One significant issue highlighted in the bill is its provision for exceptions. Section 2(b)(2) allows waivers to the equipment prohibition if domestic or allied sources cannot supply the necessary equipment in sufficient quantity or quality. This provision has raised concerns about potential loopholes that could undermine the bill's intent, posing strategic and national security risks.
The definition of "completed, fully assembled" equipment is another point of contention. Its broad scope might lead to different interpretations, complicating enforcement and compliance. Additionally, the specificity in listing "ineligible equipment" fails to account for future technological advancements, which might necessitate frequent legislative updates.
The bill also outlines a role for the Director of National Intelligence and the Secretary of Defense in waiver decisions but lacks clarity on the criteria they should employ, possibly leading to inconsistent application.
Impact on the Public
On a broad scale, the bill seeks to strengthen national security and integrity in the U.S. semiconductor industry. By limiting reliance on foreign entities of concern, it aims to protect sensitive technology sectors and ensure a more resilient supply chain. This effort, if successful, could lead to increased domestic job opportunities and technological advancements by stimulating growth in the U.S. semiconductor equipment manufacturing industry.
Impact on Specific Stakeholders
For U.S. semiconductor manufacturers and recipients of federal assistance, the bill imposes stricter procurement rules. While potentially burdensome due to limited equipment options, it incentivizes domestic innovation and production capability. Allied and partner nations in equipment manufacturing could experience increased demand as U.S. entities seek alternative sources.
Foreign entities labeled as concerns might face significant business losses, as the legislation would effectively block them from a portion of the U.S. market. This could escalate diplomatic tensions, especially if these entities are substantial players in the global semiconductor industry.
Overall, while the Chip EQUIP Act intends to protect U.S. semiconductor interests, stakeholders must navigate carefully drafted provisions and potential uncertainties, especially regarding waiver processes and future technological considerations.
Issues
The waiver provision in Section 2(b)(2) allows exceptions to the prohibition on purchasing ineligible equipment if the equipment is not available domestically or from allied countries. This could create loopholes that might undermine the bill's intent to restrict foreign influence on semiconductor manufacturing. This provision poses a significant national security and strategic risk due to potential vulnerability to foreign entities of concern.
The definition of 'completed, fully assembled' in Section 2(a)(14) is broad and may lead to differing interpretations in what qualifies as 'ready-to-use or ready-to-install'. This ambiguity could hinder effective enforcement and compliance, as companies might push the limits of this definition to accommodate their procurement interests.
The list of 'ineligible equipment' in Section 2(a)(15)(B) is specific and may not account for future technological advancements or changes. This could necessitate frequent amendments to accommodate new categories of equipment, leading to potential legislative and regulatory challenges.
The consultation process for waiver decisions in Section 2(b)(2)(B)(ii) requires input from the Director of National Intelligence or the Secretary of Defense. However, the lack of clarity on the specific criteria they are to consider for national security interests may lead to inconsistent application of the waiver provision, impacting the effectiveness of the bill.
The bill's reference to other sections and acts, such as the Export Control Reform Act of 2018 and section 9907, without providing context within the document, necessitates external cross-referencing for a full understanding. This could result in inefficiencies and misunderstandings within the regulatory and enforcement processes.
Sections
Sections are presented as they are annotated in the original legislative text. Any missing headers, numbers, or non-consecutive order is due to the original text.
1. Short title Read Opens in new tab
Summary AI
In Section 1 of this bill, it is stated that the official short title of the legislation is the “Chip Equipment Quality, Usefulness, and Integrity Protection Act of 2024,” or simply the “Chip EQUIP Act.”
2. Purchases of semiconductor manufacturing equipment Read Opens in new tab
Summary AI
The section outlines definitions and conditions related to semiconductor manufacturing equipment, specifying that certain equipment made by foreign entities of concern is "ineligible" for purchase with federal funds. It also allows for waivers under specific circumstances, such as when equipment is not available from the U.S. or allies, or when its use aligns with export regulations and national security interests.