CHAPTER 72A—CREATING HELPFUL INCENTIVES TO PRODUCE SEMICONDUCTORS FOR AMERICA

        

§4651. Definitions

In this chapter:

(1) The term "appropriate committees of Congress" means—

(A) the Select Committee on Intelligence, the Committee on Energy and Natural Resources, the Committee on Commerce, Science, and Transportation, the Committee on Foreign Relations, the Committee on Armed Services, the Committee on Appropriations, the Committee on Banking, Housing, and Urban Affairs, the Committee on Homeland Security and Governmental Affairs, and the Committee on Finance of the Senate; and

(B) the Permanent Select committee ¹ on Intelligence, the Committee on Energy and Commerce, the Committee on Foreign Affairs, the Committee on Armed Services, the Committee on Science, Space, and Technology, the Committee on Appropriations, the Committee on Financial Services, the Committee on Homeland Security, and the Committee on Ways and Means of the House of Representatives..²

(2) The term "covered entity" means a nonprofit entity, a private entity, a consortium of private entities, or a consortium of nonprofit, public, and private entities with a demonstrated ability to substantially finance, construct, expand, or modernize a facility relating to fabrication, assembly, testing, advanced packaging, production, or research and development of semiconductors, materials used to manufacture semiconductors, or semiconductor manufacturing equipment.

(3) The term "covered incentive":

(A) means an incentive offered by a governmental entity to a covered entity for the purposes of constructing within the jurisdiction of the governmental entity, or expanding or modernizing an existing facility within that jurisdiction, a facility described in paragraph (2); and

(B) a workforce-related incentive (including a grant agreement relating to workforce training or vocational education), any concession with respect to real property, funding for research and development with respect to semiconductors, and any other incentive determined appropriate by the Secretary, in consultation with the Secretary of State.

(4) The term "person" includes an individual, partnership, association, corporation, organization, or any other combination of individuals.

(5) The term "critical manufacturing industry"—

(A) means an industry, industry group, or a set of related industries or related industry groups—

(i) assigned a North American Industry Classification System code beginning with 31, 32, or 33; and

(ii) for which the applicable industry group or groups in the North American Industry Classification System code cumulatively—

(I) manufacture primary products and parts, the sum of which account for not less than 5 percent of the manufacturing value added by industry gross domestic product of the United States; and

(II) employ individuals for primary products and parts manufacturing activities that, combined, account for not less than 5 percent of manufacturing employment in the United States; and

(B) may include any other manufacturing industry designated by the Secretary based on the relevance of the manufacturing industry to the national and economic security of the United States, including the impacts of job losses.

(6) The term "foreign entity"—

(A) means—

(i) a government of a foreign country and a foreign political party;

(ii) a natural person who is not a lawful permanent resident of the United States, citizen of the United States, or any other protected individual (as such term is defined in section 1324b(a)(3) of title 8; or

(iii) a partnership, association, corporation, organization, or other combination of persons organized under the laws of or having its principal place of business in a foreign country; and

(B) includes—

(i) any person owned by, controlled by, or subject to the jurisdiction or direction of a an entity listed in subparagraph (A);

(ii) any person, wherever located, who acts as an agent, representative, or employee of an entity listed in subparagraph (A);

(iii) any person who acts in any other capacity at the order, request, or under the direction or control, of an entity listed in subparagraph (A), or of a person whose activities are directly or indirectly supervised, directed, controlled, financed, or subsidized in whole or in majority part by an entity listed in subparagraph (A);

(iv) any person who directly or indirectly through any contract, arrangement, understanding, relationship, or otherwise, owns 25 percent or more of the equity interests of an entity listed in subparagraph (A);

(v) any person with significant responsibility to control, manage, or direct an entity listed in subparagraph (A);

(vi) any person, wherever located, who is a citizen or resident of a country controlled by an entity listed in subparagraph (A); or

(vii) any corporation, partnership, association, or other organization organized under the laws of a country controlled by an entity listed in subparagraph (A).

(7) The term "foreign country of concern" means—

(A) a country that is a covered nation (as defined in section 4872(d) of title 10); and

(B) any country that the Secretary, in consultation with the Secretary of Defense, the Secretary of State, and the Director of National Intelligence, determines to be engaged in conduct that is detrimental to the national security or foreign policy of the United States.

(8) The term "foreign entity of concern" means any foreign entity that is—

(A) designated as a foreign terrorist organization by the Secretary of State under section 1189 of title 8;

(B) included on the list of specially designated nationals and blocked persons maintained by the Office of Foreign Assets Control of the Department of the Treasury;

(C) owned by, controlled by, or subject to the jurisdiction or direction of a government of a foreign country that is listed in section 2533c ³ of title 10; or

(D) alleged by the Attorney General to have been involved in activities for which a conviction was obtained under—

(i) chapter 37 of title 18 (commonly known as the "Espionage Act") (18 U.S.C. 792 [791] et seq.);

(ii) section 951 or 1030 of title 18;

(iii) chapter 90 of title 18 (commonly known as the "Economic Espionage Act of 1996");

(iv) the Arms Export Control Act (22 U.S.C. 2751 et seq.);

(v) sections 2274, 2275, 2276, 2277, or 2284 of title 42;

(vi) the Export Control Reform Act of 2018 (50 U.S.C. 4801 et seq.); or

(vii) the International Economic Emergency Powers Act ³ (50 U.S.C. 1701 et seq.); or

(E) determined by the Secretary, in consultation with the Secretary of Defense and the Director of National Intelligence, to be engaged in unauthorized conduct that is detrimental to the national security or foreign policy of the United States under this chapter.

(9) The term "governmental entity" means a State or local government.

(10) The term "mature technology node" has the meaning given the term by the Secretary.

(11) The term "nonprofit entity" means an entity described in section 501(c)(3) of title 26 and exempt from taxation under section 501(a) of title 26.

(12) The term "Secretary" means the Secretary of Commerce.

(13) The term "semiconductor" has the meaning given that term by the Secretary.

(Pub. L. 116–283, div. H, title XCIX, §9901, Jan. 1, 2021, 134 Stat. 4843; Pub. L. 117–167, div. A, §103(a), Aug. 9, 2022, 136 Stat. 1379.)

Editorial Notes

References in Text

Section 2533c of title 10, referred to par. (8)(C), was renumbered section 4872 of title 10 by Pub. L. 116–283, div. A, title XVIII, §1870(d)(2), Jan. 1, 2021, 134 Stat. 4286, as amended by Pub. L. 117–81, div. A, title XVII, §1701(t)(2)(B), (C), Dec. 27, 2021, 135 Stat. 2150.

The Arms Export Control Act, referred to in par. (8)(D)(iv), is Pub. L. 90–629, Oct. 22, 1968, 82 Stat. 1320, which is classified principally to chapter 39 (§2751 et seq.) of Title 22, Foreign Relations and Intercourse. For complete classification of this Act to the Code, see Short Title note set out under section 2751 of Title 22 and Tables.

The Export Control Reform Act of 2018, referred to in par. (8)(D)(vi), is subtitle B (§§1741–1781) of title XVII of div. A of Pub. L. 115–232, Aug. 13, 2018, 132 Stat. 2208, which is classified principally to chapter 58 (§4801 et seq.) of Title 50, War and National Defense. For complete classification of this Act to the Code, see Short Title note set out under section 4801 of Title 50 and Tables.

The International Economic Emergency Powers Act, referred to in par. (8)(D)(vii), probably should be the International Emergency Economic Powers Act, which is title II of Pub. L. 95–223, Dec. 28, 1977, 91 Stat. 1626 and is classified generally to chapter 35 (§1701 et seq.) of Title 50, War and National Defense. For complete classification of this Act to the Code, see Short Title note set out under section 1701 of Title 50 and Tables.

This chapter, referred to in par. (8)(E), was in the original "this Act" and was translated as reading "this title", meaning title XCIX of div. H of Pub. L. 116–283, to reflect the probable intent of Congress.

Amendments

2022—Par. (2). Pub. L. 117–167, §103(a)(1), substituted "a nonprofit entity, a private entity, a consortium of private entities, or a consortium of nonprofit, public, and private entities" for "a private entity, a consortium of private entities, or a consortium of public and private entities" and "of semiconductors, materials used to manufacture semiconductors, or semiconductor manufacturing equipment." for "of semiconductors." and inserted "production," before "or research and development".

Pars. (5), (6). Pub. L. 117–167, §103(a)(2), (3), added par. (5) and redesignated former par. (5) as (6). Former par. (6) redesignated (8).

Par. (7). Pub. L. 117–167, §103(a)(4), added par. (7). Former par. (7) redesignated (9).

Pars. (8), (9). Pub. L. 117–167, §103(a)(2), redesignated pars. (6) and (7) as (8) and (9), respectively. Former pars. (8) and (9) redesignated (12) and (13), respectively.

Pars. (10), (11). Pub. L. 117–167, §103(a)(5), added pars. (10) and (11).

Pars. (12), (13). Pub. L. 117–167, §103(a)(2), redesignated pars. (8) and (9) as (12) and (13), respectively.

Statutory Notes and Related Subsidiaries

Short Title of 2022 Amendment

Pub. L. 117–167, div. A, §101, Aug. 9, 2022, 136 Stat. 1372, provided that: "This division [enacting section 4659 of this title and section 48D of Title 26, Internal Revenue Code, amending this section, sections 4652 and 4656 of this title, section 905 of Title 2, The Congress, sections 46, 49, 50, and 1371 of Title 26, and section 906 of Title 47, Telecommunications, and enacting provisions set out as notes under section 4652 of this title and section 905 of Title 2] may be cited as the 'CHIPS Act of 2022'."

Executive Documents

Ex. Ord. No. 14080. Implementation of the CHIPS Act of 2022

Ex. Ord. No. 14080, Aug. 25, 2022, 87 F.R. 52847, provided:

By the authority vested in me as President by the Constitution and the laws of the United States of America, and in order to effectively implement the incentives for semiconductor research, development, and manufacturing provided by division A of H.R. 4346 (the "Act"), it is hereby ordered as follows:

Section 1. Background. The Act, known as the Creating Helpful Incentives to Produce Semiconductors (CHIPS) Act of 2022 [div. A of Pub. L. 117–167], will make transformative investments to restore and advance our Nation's leadership in the research, development, and manufacturing of semiconductors. These investments will strengthen our Nation's manufacturing and industrial base; create well-paying, high-skilled jobs in construction, manufacturing, and maintenance; catalyze regional economic development throughout the country; bolster United States technology leadership; and reduce our dependence on critical technologies from China and other vulnerable or overly concentrated foreign supply chains.

Meeting these objectives will require effective implementation of the Act by my Administration, in collaboration with State, local, Tribal, and territorial governments; the private sector; institutions of higher education; workforce development organizations; labor unions and other worker organizations; and allied and partner countries.

Sec. 2. Implementation Priorities. In implementing the Act, all agencies (as described in section 3502(1) of title 44, United States Code, except for the agencies described in section 3502(5) of title 44) shall, as appropriate and to the extent consistent with law, prioritize:

(a) protecting taxpayer resources, including by ensuring strong compliance and accountability measures for funding recipients;

(b) meeting economic, sustainability, and national security needs, including by building domestic manufacturing capacity that reduces reliance on vulnerable or overly concentrated foreign production for both leading-edge and mature microelectronics;

(c) ensuring long-term leadership in the microelectronics sector, including by establishing a dynamic, collaborative network for microelectronics research and innovation to enable long-term United States leadership in critical industries;

(d) catalyzing private-sector investment, including by reducing risk and maximizing large-scale private investment in production, breakthrough technologies, and worker and workforce development;

(e) generating benefits—such as well-paying, high-skilled union jobs and opportunities for startups; small businesses; and minority-owned, veteran-owned, and women-owned businesses—for a broad range of stakeholders and communities, including by investing in disadvantaged communities and by partnering with State, local, Tribal, and territorial governments and with institutions of higher education; and

(f) strengthening and expanding regional manufacturing and innovation ecosystems, including by investing in suppliers, manufacturers, workforce development, basic and translational research, and related infrastructure and cybersecurity throughout the microelectronics supply chain, and by facilitating the expansion, creation, and coordination of semiconductor clusters.

Sec. 3. CHIPS Implementation Steering Council. (a) There is established within the Executive Office of the President the CHIPS Implementation Steering Council (Steering Council). The function of the Steering Council is to coordinate policy development to ensure the effective implementation of the Act within the executive branch.

(b) The Assistant to the President for Economic Policy, the Assistant to the President for National Security Affairs, and the Director of the Office of Science and Technology Policy shall serve as Co-Chairs of the Steering Council.

(c) In addition to the Co-Chairs, the Steering Council shall consist of the following members:

(i) the Secretary of State;

(ii) the Secretary of the Treasury;

(iii) the Secretary of Defense;

(iv) the Secretary of Commerce;

(v) the Secretary of Labor;

(vi) the Secretary of Energy;

(vii) the Director of the Office of Management and Budget;

(viii) the Administrator of the Small Business Administration;

(ix) the Director of National Intelligence;

(x) the Assistant to the President for Domestic Policy;

(xi) the Chair of the Council of Economic Advisers;

(xii) the National Cyber Director;

(xiii) the Director of the National Science Foundation; and

(xiv) the heads of such other executive departments, agencies, and offices as the Co-Chairs may from time to time invite to participate.

(d) The Co-Chairs may create and coordinate subgroups consisting of Steering Council members or their designees, as appropriate.

(e) The Co-Chairs may consult with leaders from industry, labor unions and other worker organizations, institutions of higher education, research institutions, and civil society, as appropriate and consistent with law, to provide individual perspectives and advice to the Steering Council on the effective implementation of the Act.

(f) The Co-Chairs may consult with the President's Council of Advisors on Science and Technology, as appropriate and consistent with law, to provide advice to the Steering Council.

Sec. 4. Effective and Efficient Stewardship and Oversight of Taxpayer Resources. The Director of the Office of Management and Budget shall take appropriate actions to promote and monitor, with respect to execution of the Act, the effective and efficient stewardship and oversight of taxpayer resources, in collaboration with the Steering Council and the heads of agencies responsible for implementing the Act.

Sec. 5. General Provisions. (a) Nothing in this order shall be construed to impair or otherwise affect:

(i) the authority granted by law to an executive department or agency, or the head thereof; or

(ii) the functions of the Director of the Office of Management and Budget relating to budgetary, administrative, or legislative proposals.

(b) This order shall be implemented consistent with applicable law and subject to the availability of appropriations.

(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

J.R. Biden, Jr.      

¹ So in original. Probably should be "Committee".

² So in original.

³ See References in Text note below.

§4652. Semiconductor incentives

(a) Financial assistance program

(1) In general

The Secretary shall establish in the Department of Commerce a program that, in accordance with the requirements of this section and subject to the availability of appropriations for such purposes, provides Federal financial assistance to covered entities to incentivize investment in facilities and equipment in the United States for the fabrication, assembly, testing, advanced packaging, production, or research and development of semiconductors, materials used to manufacture semiconductors, or semiconductor manufacturing equipment.

(2) Procedure

(A) In general

A covered entity shall submit to the Secretary an application that describes the project for which the covered entity is seeking financial assistance under this section.

(B) Eligibility

In order for a covered entity to qualify for financial assistance under this section, the covered entity shall demonstrate to the Secretary, in the application submitted by the covered entity under subparagraph (A), that—

(i) the covered entity has a documented interest in constructing, expanding, or modernizing a facility described in paragraph (1) ¹

(ii) with respect to the project described in clause (i), the covered entity has—

(I) been offered a covered incentive;

(II) made commitments to worker and community investment, including through—

(aa) training and education benefits paid by the covered entity; and

(bb) programs to expand employment opportunity for economically disadvantaged individuals; and

(III) secured commitments from regional educational and training entities and institutions of higher education to provide workforce training, including programming for training and job placement of economically disadvantaged individuals;

(IV) an executable plan to sustain the facility described in clause (i) without additional Federal financial assistance under this subsection for facility support;

(V) determined—

(aa) the type of semiconductor technology, equipment, materials, or research and development the covered entity will produce at the facility described in clause (i); and

(bb) the customers, or categories of customers, to which the covered entity plans to sell the semiconductor technology, equipment, materials, or research and development described in item (aa); and

(VI) documented, to the extent practicable, workforce needs and developed a strategy to meet such workforce needs consistent with the commitments described in subclauses (II) and (III);

(iii) with respect to the project described in clause (i), the covered entity has an executable plan to identify and mitigate relevant semiconductor supply chain security risks, such as risks associated with access, availability, confidentiality, integrity, and a lack of geographic diversification in the covered entity's supply chain; and

(iv) with respect to any project for the production, assembly, or packaging of semiconductors, the covered entity has implemented policies and procedures to combat cloning, counterfeiting, and relabeling of semiconductors, as applicable.

(C) Considerations for review

With respect to the review by the Secretary of an application submitted by a covered entity under subparagraph (A)—

(i) the Secretary may not approve the application unless the Secretary—

(I) confirms that the covered entity has satisfied the eligibility criteria under subparagraph (B);

(II) determines that the project to which the application relates is in the economic and national security interests of the United States; and

(III) has notified the appropriate committees of Congress not later than 15 days before making any commitment to provide a grant to any covered entity that exceeds $10,000,000;

(ii) the Secretary may consider whether—

(I) the covered entity has previously received financial assistance made under this subsection;

(II) the governmental entity offering the applicable covered incentive has benefitted from financial assistance previously provided under this subsection;

(III) the covered entity has demonstrated that they are responsive to the national security needs or requirements established by the Intelligence Community (or an agency thereof), the National Nuclear Security Administration, or the Department of Defense; and

(IV) when practicable, a consortium that is considered a covered entity includes a small business concern, as defined under section 632 of this title, notwithstanding section 121.103 of title 13, Code of Federal Regulations;

(iii) the Secretary shall consider the type of semiconductor technology produced by the covered entity and whether that semiconductor technology advances the economic and national security interests of the United States;

(iv) the Secretary may not approve an application, unless the covered entity provides a plan that does not use Federal financial assistance to assist efforts to physically relocate existing facility infrastructure to another jurisdiction within the United States, unless the project is in the interest of the United States; and

(v) the Secretary may not approve an application if the Secretary determines that the covered entity is a foreign entity of concern.

(D) Priority

In awarding Federal financial assistance to covered entities under this subsection, the Secretary shall—

(i) give priority to ensuring that a covered entity receiving financial assistance will—

(I) manufacture semiconductors necessary to address gaps and vulnerabilities in the domestic supply chain across a diverse range of technology and process nodes; and

(II) provide a secure supply of semiconductors necessary for the national security, manufacturing, critical infrastructure, and technology leadership of the United States and other essential elements of the economy of the United States; and

(ii) ensure that the assistance is awarded to covered entities for both advanced and mature technology nodes to meet the priorities described in clause (i).

(E) Records

The Secretary may request records and information from the applicant to review the status of a covered entity. The applicant shall provide the records and information requested by the Secretary.

(3) Amount

(A) In general

The Secretary shall determine the appropriate amount and funding type for each financial assistance award made to a covered entity under this subsection.

(B) Larger investment

Federal investment in any individual project shall not exceed $3,000,000,000 unless the Secretary, in consultation with the Secretary of Defense and the Director of National Intelligence, recommends to the President, and the President certifies and reports to the appropriate committees of Congress, that a larger investment is necessary to—

(i) significantly increase the proportion of reliable domestic supply of semiconductors relevant for national security and economic competitiveness that can be met through domestic production; and

(ii) meet the needs of national security.

(4) Use of funds

A covered entity that receives a financial assistance award under this subsection may only use the financial assistance award amounts to—

(A) finance the construction, expansion, or modernization of a facility or equipment to be used for the purposes described in paragraph (1), as documented in the application submitted by the covered entity under paragraph (2)(B), as determined necessary by the Secretary for purposes relating to the national security and economic competitiveness of the United States;

(B) support workforce development for a facility described in subparagraph (A);

(C) support site development and modernization for a facility described in subparagraph (A); and

(D) pay reasonable costs related to the operating expenses for a facility described in subparagraph (A), including specialized workforce, essential materials, and complex equipment maintenance, as determined by the Secretary.

(5) Clawback

(A) Target dates

For all awards to covered entities, the Secretary shall—

(i) determine target dates by which a project shall commence and complete; and

(ii) set these dates by the time of award.

(B) Progressive recovery for delays

If the project does not commence and complete by the set target dates in (A), the Secretary shall progressively recover up to the full amount of an award provided to a covered entity under this subsection.

(C) Technology clawback

The Secretary shall recover the full amount of an award provided to a covered entity under this subsection if, during the applicable term with respect to the award, the covered entity knowingly engages in any joint research or technology licensing effort—

(i) with a foreign entity of concern; and

(ii) that relates to a technology or product that raises national security concerns, as determined by the Secretary and communicated to the covered entity before engaging in such joint research or technology licensing.

(D) Waiver

In the case of delayed projects, the Secretary may waive elements of the clawback provisions incorporated in each award after—

(i) making a formal determination that circumstances beyond the ability of the covered entity to foresee or control are responsible for delays; and

(ii) submitting congressional notification.

(E) Congressional notification

The Secretary shall notify appropriate committees of Congress—

(i) of the clawback provisions attending each such award; and

(ii) of any waivers provided, not later than 15 days after the date on which such a waiver was provided.

(6) Expansion clawback

(A) Definition of legacy semiconductor

(i) In general

In this paragraph, the term "legacy semiconductor"—

(I) includes—

(aa) a semiconductor technology that is of the 28 nanometer generation or older for logic;

(bb) with respect to memory technology, analog technology, packaging technology, and any other relevant technology, any legacy generation of semiconductor technology relative to the generation described in item (aa), as determined by the Secretary, in consultation with the Secretary of Defense and the Director of National Intelligence; and

(cc) any additional semiconductor technology identified by the Secretary in a public notice issued under clause (ii); and

(II) does not include a semiconductor that is critical to national security, as determined by the Secretary, in consultation with the Secretary of Defense and the Director of National Intelligence.

(ii) Updates

Not later than 2 years after August 9, 2022, and not less frequently than once every 2 years thereafter for the 8-year period after the last award under this section is made, the Secretary, after public notice and an opportunity for comment and if applicable and necessary, shall issue a public notice identifying any additional semiconductor technology included in the meaning of the term "legacy semiconductor" under clause (i).

(iii) Functions of the Secretary

The functions of the Secretary under this paragraph shall not be subject to sections 551, 553 through 559, and 701 through 706 of title 5.

(iv) Consultation

In carrying out clause (ii), the Secretary shall consult with the Director of National Intelligence and the Secretary of Defense.

(v) Considerations

In carrying out clause (ii), the Secretary shall consider—

(I) state-of-the-art semiconductor technologies in the United States and internationally, including in foreign countries of concern; and

(II) consistency with export controls relating to semiconductors.

(B) Definition of semiconductor manufacturing

In this paragraph, the term "semiconductor manufacturing"—

(i) has the meaning given the term by the Secretary, in consultation with the Secretary of Defense and the Director of National Intelligence; and

(ii) includes front-end semiconductor fabrication.

(C) Required agreement

(i) In general

On or before the date on which the Secretary awards Federal financial assistance to a covered entity under this section, the covered entity shall enter into an agreement with the Secretary specifying that, during the 10-year period beginning on the date of the award, subject to clause (ii), the covered entity may not engage in any significant transaction, as defined in the agreement, involving the material expansion of semiconductor manufacturing capacity in the People's Republic of China or any other foreign country of concern.

(ii) Exceptions

The prohibition in the agreement required under clause (i) shall not apply to—

(I) existing facilities or equipment of a covered entity for manufacturing legacy semiconductors; or

(II) significant transactions involving the material expansion of semiconductor manufacturing capacity that—

(aa) produces legacy semiconductors; and

(bb) predominately serves the market of a foreign country of concern.

(iii) Affiliated group

For the purpose of applying the requirements in an agreement required under clause (i), a covered entity shall include the covered entity receiving financial assistance under this section, as well as any member of the covered entity's affiliated group under section 1504(a) of title 26, without regard to section 1504(b)(3) of title 26.

(D) Notification requirements

During the applicable term of the agreement of a covered entity required under subparagraph (C)(i), the covered entity shall notify the Secretary of any planned significant transactions of the covered entity involving the material expansion of semiconductor manufacturing capacity in the People's Republic of China or any other foreign country of concern.

(E) Violation of agreement

(i) Notification to covered entities

Not later than 90 days after the date of receipt of a notification described in subparagraph (D) from a covered entity, the Secretary, in consultation with the Secretary of Defense and the Director of National Intelligence, shall—

(I) determine whether the significant transaction described in the notification would be a violation of the agreement of the covered entity required under subparagraph (C)(i); and

(II) notify the covered entity of the Secretary's decision under subclause (I).

(ii) Opportunity to remedy

Upon a notification under clause (i)(II) that a planned significant transaction of a covered entity is a violation of the agreement of the covered entity required under subparagraph (C)(i), the Secretary shall—

(I) immediately request from the covered entity tangible proof that the planned significant transaction has ceased or been abandoned; and

(II) provide the covered entity 45 days to produce and provide to the Secretary the tangible proof described in subclause (I).

(iii) Failure by the covered entity to cease or remedy the activity

Subject to clause (iv), if a covered entity fails to remedy a violation as set forth under clause (ii), the Secretary shall recover the full amount of the Federal financial assistance provided to the covered entity under this section.

(iv) Mitigation

If the Secretary, in consultation with the Secretary of Defense and the Director of National Intelligence, determines that a covered entity planning a significant transaction that would violate the agreement required under subparagraph (C)(i) could take measures in connection with the transaction to mitigate any risk to national security, the Secretary—

(I) may negotiate, enter into, and enforce any agreement or condition for the mitigation; and,

(II) waive the recovery requirement under clause (iii).

(F) Submission of records

(i) In general

The Secretary may request from a covered entity records and other necessary information to review the compliance of the covered entity with the agreement required under subparagraph (C)(i).

(ii) Eligibility

In order to be eligible for Federal financial assistance under this section, a covered entity shall agree to provide records and other necessary information requested by the Secretary under clause (i).

(G) Confidentiality of records

(i) In general

Subject to clause (ii), any information derived from records or necessary information disclosed by a covered entity to the Secretary under this section—

(I) shall be exempt from disclosure under section 552(b)(3) of title 5; and

(II) shall not be made public.

(ii) Exceptions

Clause (i) shall not prevent the disclosure of any of the following by the Secretary:

(I) Information relevant to any administrative or judicial action or proceeding.

(II) Information that a covered entity has consented to be disclosed to third parties.

(III) Information necessary to fulfill the requirement of the congressional notification under subparagraph (H).

(H) Congressional notification

Not later than 60 days after the date on which the Secretary finds a violation by a covered entity of an agreement required under subparagraph (C)(i), and after providing the covered entity with an opportunity to provide information in response to that finding, the Secretary shall provide to the appropriate Committees of Congress—

(i) a notification of the violation;

(ii) a brief description of how the Secretary determined the covered entity to be in violation; and

(iii) a summary of any actions or planned actions by the Secretary in response to the violation.

(I) Regulations

The Secretary may issue regulations implementing this paragraph.

(b) Coordination required

In carrying out the program established under subsection (a), the Secretary shall coordinate with the Secretary of State, the Secretary of Defense, the Secretary of Homeland Security, the Secretary of Energy, and the Director of National Intelligence.

(c) GAO reviews

The Comptroller General of the United States shall—

(1) not later than 2 years after the date of disbursement of the first financial award under subsection (a), and biennially thereafter for 10 years, conduct a review of the program established under subsection (a), which shall include, at a minimum—

(A) a determination of the number of instances in which financial assistance awards were provided under that subsection during the period covered by the review;

(B) an evaluation of how—

(i) the program is being carried out, including how recipients of financial assistance awards are being selected under the program;

(ii) other Federal programs are leveraged for manufacturing, research, and training to complement the financial assistance awards awarded under the program; and

(iii) the Federal Government could take specific actions to address shortages in the semiconductor supply chain, including—

(I) demand-side incentives, including incentives related to the information and communications technology supply chain; and

(II) additional incentives, at national and global scales, to accelerate utilization of leading-edge semiconductor nodes to address shortages in mature semiconductor nodes; and

(C) a description of the outcomes of projects supported by awards made under the program, including a description of—

(i) facilities described in subsection (a)(1) that were constructed, expanded, or modernized as a result of awards made under the program;

(ii) research and development carried out with awards made under the program;

(iii) workforce training programs carried out with awards made under the program, including efforts to hire individuals from disadvantaged populations; and

(iv) the impact of projects on the United States share of global microelectronics production;

(v) how projects are supporting the semiconductor needs of critical infrastructure industries in the United States, including those industries designated by the Cybersecurity and Infrastructure Security Agency as essential infrastructure industries; and

(D) drawing on data made available by the Department of Labor or other sources, to the extent practicable, an analysis of—

(i) semiconductor industry data regarding businesses that are—

(I) majority owned and controlled by minority individuals;

(II) majority owned and controlled by women; or

(III) majority owned and controlled by both women and minority individuals;

(ii) the number and amount of contracts and subcontracts awarded by each covered entity using funds made available under subsection (a) disaggregated by recipients of each such contract or subcontracts that are majority owned and controlled by minority individuals and majority owned and controlled by women; and

(iii) aggregated workforce data, including data by race or ethnicity, sex, and job categories.²

(2) submit to the appropriate committees of Congress the results of each review conducted under paragraph (1).

(d) Sense of Congress

It is the sense of Congress that, in carrying out subsection (a), the Secretary should allocate funds in a manner that—

(1) strengthens the security and resilience of the semiconductor supply chain, including by mitigating gaps and vulnerabilities;

(2) provides a supply of secure semiconductors relevant for national security;

(3) strengthens the leadership of the United States in semiconductor technology;

(4) grows the economy of the United States and supports job creation in the United States;

(5) bolsters the semiconductor and skilled technical workforces in the United States;

(6) promotes the inclusion of economically disadvantaged individuals and small businesses; and

(7) improves the resiliency of the semiconductor supply chains of critical manufacturing industries.

(e) Additional assistance for mature technology nodes

(1) In general

The Secretary shall establish within the program established under subsection (a) an additional program that provides Federal financial assistance to covered entities to incentivize investment in facilities and equipment in the United States for the fabrication, assembly, testing, or packaging of semiconductors at mature technology nodes.

(2) Eligibility and requirements

In order for an entity to qualify to receive Federal financial assistance under this subsection, the covered entity shall agree to—

(A) submit an application under subsection (a)(2)(A);

(B) meet the eligibility requirements under subsection (a)(2)(B);

(C)(i) provide equipment or materials for the fabrication, assembly, testing, or packaging of semiconductors at mature technology nodes in the United States; or

(ii) fabricate, assemble using packaging, or test semiconductors at mature technology nodes in the United States;

(D) commit to using any Federal financial assistance received under this section to increase the production of semiconductors at mature technology nodes; and

(E) be subject to the considerations described in subsection (a)(2)(C).

(3) Procedures

In granting Federal financial assistance to covered entities under this subsection, the Secretary may use the procedures established under subsection (a).

(4) Considerations

In addition to the considerations described in subsection (a)(2)(C), in granting Federal financial assistance under this subsection, the Secretary may consider whether a covered entity produces or supplies equipment or materials used in the fabrication, assembly, testing, or packaging of semiconductors at mature technology nodes that are necessary to support a critical manufacturing industry.

(5) Priority

In awarding Federal financial assistance to covered entities under this subsection, the Secretary shall give priority to covered entities that support the resiliency of semiconductor supply chains for critical manufacturing industries in the United States.

(6) Authorization of appropriations

There are authorized to be appropriated to the Secretary to carry out this subsection $2,000,000,000, which shall remain available until expended.

(f) Construction projects

Section 3212 of title 42 shall apply to a construction project that receives financial assistance from the Secretary under this section.

(g) Loans and loan guarantees

(1) In general

Subject to the requirements of subsection (a) and this subsection, the Secretary may make or guarantee loans to covered entities as financial assistance under this section.

(2) Conditions

The Secretary may select eligible projects to receive loans or loan guarantees under this subsection if the Secretary determines that—

(A) the covered entity—

(i) has a reasonable prospect of repaying the principal and interest on the loan; and

(ii) has met such other criteria as may be established and published by the Secretary; and

(B) the amount of the loan (when combined with amounts available to the loan recipient from other sources) will be sufficient to carry out the project.

(3) Reasonable prospect of repayment

The Secretary shall base a determination of whether there is a reasonable prospect of repayment of the principal and interest on a loan under paragraph (2)(A)(i) on a comprehensive evaluation of whether the covered entity has a reasonable prospect of repaying the principal and interest, including, as applicable, an evaluation of—

(A) the strength of the contractual terms of the project the covered entity plans to perform (if commercially reasonably available);

(B) the forecast of noncontractual cash flows supported by market projections from reputable sources, as determined by the Secretary;

(C) cash sweeps and other structure enhancements;

(D) the projected financial strength of the covered entity—

(i) at the time of loan close; and

(ii) throughout the loan term after the project is completed;

(E) the financial strength of the investors and strategic partners of the covered entity, if applicable;

(F) other financial metrics and analyses that the private lending community and nationally recognized credit rating agencies rely on, as determined appropriate by the Secretary; and

(G) such other criteria the Secretary may determine relevant.

(4) Rates, terms, and repayments of loans

A loan provided under this subsection—

(A) shall have an interest rate that does not exceed a level that the Secretary determines appropriate, taking into account, as of the date on which the loan is made, the cost of funds to the Department of the Treasury for obligations of comparable maturity; and

(B) shall have a term of not more than 25 years.

(5) Additional terms

A loan or guarantee provided under this subsection may include any other terms and conditions that the Secretary determines to be appropriate.

(6) Responsible lender

No loan may be guaranteed under this subsection, unless the Secretary determines that—

(A) the lender is responsible; and

(B) adequate provision is made for servicing the loan on reasonable terms and protecting the financial interest of the United States.

(7) Advanced budget authority

New loans may not be obligated and new loan guarantees may not be committed to under this subsection, unless appropriations of budget authority to cover the costs of such loans and loan guarantees are made in advance in accordance with section 661c(b) of title 2.

(8) Continued oversight

The loan agreement for a loan guaranteed under this subsection shall provide that no provision of the loan agreement may be amended of ³ waived without the consent of the Secretary.

(h) Oversight

Not later than 4 years after disbursement of the first financial award under subsection (a), the Inspector General of the Department of Commerce shall audit the program under this section to assess—

(1) whether the eligibility requirements for covered entities receiving financial assistance under the program are met;

(2) whether eligible entities use the financial assistance received under the program in accordance with the requirements of this section;

(3) whether the covered entities receiving financial assistance under this program have carried out the commitments made to worker and community investment under subsection (a)(2)(B)(ii)(II) by the target date for completion set by the Secretary under subsection (a)(5)(A);

(4) whether the required agreement entered into by covered entities and the Secretary under subsection (a)(6)(C)(i), including the notification process, has been carried out to provide covered entities sufficient guidance about a violation of the required agreement;

(5) whether the Secretary has provided timely Congressional notification about violations of the required agreement under subsection (a)(6)(C)(i), including the required information on how the Secretary reached a determination of whether a covered entity was in violation under subsection (a)(6)(E); and

(6) whether the Secretary has sufficiently reviewed any covered entity engaging in a listed exception under subsection (a)(6)(C)(ii).

(i) Prohibition on use of funds

No funds made available under this section may be used to construct, modify, or improve a facility outside of the United States.

(Pub. L. 116–283, div. H, title XCIX, §9902, Jan. 1, 2021, 134 Stat. 4846; Pub. L. 117–167, div. A, §§103(b), 105(a), Aug. 9, 2022, 136 Stat. 1380, 1391.)

Editorial Notes

Amendments

2022—Subsec. (a)(1). Pub. L. 117–167, §103(b)(1), substituted "for the fabrication" for "for semiconductor fabrication" and "of semiconductors, materials used to manufacture semiconductors, or semiconductor manufacturing equipment." for period at end and inserted "production," before "or research and development".

Subsec. (a)(2)(B)(ii)(V), (VI). Pub. L. 117–167, §103(b)(2)(B), added subcls. (V) and (VI).

Subsec. (a)(2)(B)(iii), (iv). Pub. L. 117–167, §103(b)(2)(A), (C), added cls. (iii) and (iv).

Subsec. (a)(2)(C)(i)(II). Pub. L. 117–167, §103(b)(2)(D)(i)(I), substituted "is in the economic and national security interests of the United States" for "is in the interest of the United States".

Subsec. (a)(2)(C)(i)(III). Pub. L. 117–167, §103(b)(2)(D)(i)(II), struck out "and" at end.

Subsec. (a)(2)(C)(iii) to (v). Pub. L. 117–167, §103(b)(2)(D)(ii)–(iv), added cls. (iii) and (iv) and redesignated former cl. (iii) as (v).

Subsec. (a)(2)(D), (E). Pub. L. 117–167, §103(b)(2)(E), (F), added subpar. (D) and redesignated former subpar. (D) as (E).

Subsec. (a)(4)(A). Pub. L. 117–167, §103(b)(3), substituted "used for the purposes" for "used for semiconductors".

Subsec. (a)(5)(A). Pub. L. 117–167, §103(b)(4)(A), struck out "major" before "awards" in introductory provisions.

Subsec. (a)(5)(D). Pub. L. 117–167, §103(b)(4)(B), struck out "major" before "award" in introductory provisions.

Subsec. (a)(5)(E)(i). Pub. L. 117–167, §103(b)(4)(C), struck out "major" before "award".

Subsec. (a)(6). Pub. L. 117–167, §103(b)(5), added par. (6).

Subsec. (c)(1)(B)(iii). Pub. L. 117–167, §105(a)(1)(A), added cl. (iii).

Subsec. (c)(1)(C)(v). Pub. L. 117–167, §105(a)(1)(B), added cl. (v).

Subsec. (c)(1)(D). Pub. L. 117–167, §105(a)(2), which directed amendment of subsec. (c) by adding subpar. (D) after par. (1)(C)(iv), was executed by making the addition after par. (1)(C)(v), to reflect the probable intent of Congress and the addition of cl. (v) by Pub. L. 117–167, §105(a)(1)(B). See above.

Subsecs. (d) to (i). Pub. L. 117–167, §103(b)(6), added subsecs. (d) to (i).

Statutory Notes and Related Subsidiaries

Opportunity and Inclusion

Pub. L. 117–167, div. A, §104, Aug. 9, 2022, 136 Stat. 1390, provided that:

"(a) Establishment.—Not later than 180 days after the date of enactment of this Act [Aug. 9, 2022], the Secretary of Commerce shall establish activities in the Department of Commerce, within the program established under section 9902 of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (15 U.S.C. 4652), to carry out this section using funds appropriated under this Act [div. A of Pub. L. 117–167, see Tables for classification].

"(b) In General.—The Secretary of Commerce shall assign personnel to lead and support the activities carried out under this section, including coordination with other workforce development activities of the Department of Commerce or of Federal agencies, as defined in section 551 of title 5, United States Code, as appropriate.

"(c) Activities.—Personnel assigned by the Secretary to carry out the activities under this section shall—

"(1) assess the eligibility of a covered entity, as defined in section 9901 of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (15 U.S.C. 4651), for financial assistance for a project with respect to the requirements under subclauses (II) and (III) of section 9902(a)(2)(B)(ii) of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (15 U.S.C. 4652(a)(2)(B)(ii)(II) and (III));

"(2) ensure that each covered entity, as defined in section 9901 of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (15 U.S.C. 4651), that is awarded financial assistance under section 9902 of that Act (15 U.S.C. 4652) is carrying out the commitments of the covered entity to economically disadvantaged individuals as described in the application of the covered entity under that section by the target dates for completion established by the Secretary of Commerce under subsection(a)(5)(A) of that section; and

"(3) increase participation of and outreach to economically disadvantaged individuals, minority-owned businesses, veteran-owned businesses, and women-owned businesses, as defined by the Secretary of Commerce, respectively, in the geographic area of a project under section 9902 of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (15 U.S.C. 4652) and serve as a resource for those individuals, businesses, and covered entities.

"(d) Staff.—The activities under this section shall be staffed at the appropriate levels to carry out the functions and responsibilities under this section until 95 percent of the amounts of funds made available for the program established under section 9902 of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (15 U.S.C. 4652) have been expended.

"(e) Report.—Beginning on the date that is 1 year after the date on which the Secretary of Commerce establishes the activities described in subsection (c), the Secretary of Commerce shall submit to the appropriate committees of Congress, as defined in section 9901(1) of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (15 U.S.C. 4651), and make publicly available on the website of the Department of Commerce an annual report regarding the actions taken by the Department of Commerce under this section."

References in Pub. L. 117–167

Pub. L. 117–167, §2, Aug. 9, 2022, 136 Stat. 1371, provided that: "Except as expressly provided otherwise, any reference to 'this Act' contained in any division of this Act [see Tables for classification] shall be treated as referring only to the provisions of that division."

¹ So in original. Probably should be followed by a semicolon.

² So in original. The period probably should be "; and".

³ So in original. Probably should be "or".

§4653. Department of Defense

(a) Department of Defense efforts

(1) In general

Subject to the availability of appropriations for such purposes, the Secretary of Defense, in consultation with the Secretary of Commerce, the Secretary of Energy, the Secretary of Homeland Security, and the Director of National Intelligence, shall establish a public-private partnership through which the Secretary shall work to incentivize the formation of one or more consortia of companies (or other such partnerships of private-sector entities, as appropriate) to ensure the development and production of measurably secure microelectronics, including integrated circuits, logic devices, memory, and the packaging and testing practices that support these microelectronic components by the Department of Defense, the intelligence community, critical infrastructure sectors, and other national security applications. Such incentives may include the use of grants under section 4652 of this title, and providing incentives for the creation, expansion, or modernization of one or more commercially competitive and sustainable microelectronics manufacturing or advanced research and development facilities in the United States.

(2) Risk mitigation requirements

A participant in a consortium formed with incentives under paragraph (1)—

(A) shall have the potential to enable design, perform fabrication, assembly, package, or test functions for microelectronics deemed critical to national security as defined by the National Security Advisor and the Secretary of Defense;

(B) may be a fabless company migrating its designs to the facility envisioned in paragraph (1) or migrating to an existing facility onshore;

(C) may be companies, including fabless companies and companies that procure large quantities of microelectronics, willing to co-invest to achieve the objectives set forth in paragraph (1);

(D) shall include management processes to identify and mitigate supply chain security risks; and

(E) shall be capable of providing microelectronic components that are consistent with applicable measurably secure supply chain and operational security standards established under section 224(b) of the National Defense Authorization Act for Fiscal Year 2020 (Public Law 116–92).

(3) National security considerations

The Secretary of Defense and the Director of National Intelligence shall select participants for each consortium and or ¹ partnership formed with incentives under paragraph (1). In selecting such participants, the Secretary and the Director may jointly consider whether the companies—

(A) have participated in previous programs and projects of the Department of Defense, Department of Energy, or the intelligence community, including—

(i) the Trusted Integrated Circuit program of the Intelligence Advanced Research Projects Activity;

(ii) trusted and assured microelectronics projects, as administered by the Department of Defense;

(iii) the Electronics Resurgence Initiative program of the Defense Advanced Research Projects Agency; or

(iv) relevant semiconductor research programs of the Advanced Research Projects Agency–Energy;

(B) have demonstrated an ongoing commitment to performing contracts for the Department of Defense and the intelligence community;

(C) are approved by the Defense Counterintelligence and Security Agency or the Office of the Director of National Intelligence as presenting an acceptable security risk, taking into account supply chain assurance vulnerabilities, counterintelligence risks, and any risks presented by companies whose beneficial owners are located outside the United States; and

(D) are evaluated periodically for foreign ownership, control, or influence by a foreign entity of concern.

(4) Nontraditional defense contractors and commercial entities

Arrangements entered into to carry out paragraph (1) shall be in such form as the Secretary of Defense determines appropriate to encourage industry participation of nontraditional defense contractors or commercial entities and may include a contract, a grant, a cooperative agreement, a commercial agreement, the use of other transaction authority under section 2371 ² of title 10 or another such arrangement.

(5) Implementation

Subject to the availability of appropriations for such purposes, the Secretary of Defense—

(A) shall carry out paragraph (1) jointly through the Office of the Under Secretary of Defense for Research and Engineering and the Office of the Under Secretary of Defense for Acquisition and Sustainment; and

(B) may carry out paragraph (1) in collaboration with any such other component of the Department of Defense as the Secretary of Defense considers appropriate.

(6) Other initiatives

(A) Required initiatives

Subject to the availability of appropriations for such purposes, the Secretary of Defense, in consultation with the Secretary of Energy and the Administrator of the National Nuclear Security Administration, as appropriate, may dedicate initiatives within the Department of Defense to carry out activities to advance radio frequency, mixed signal, radiation tolerant, and radiation hardened microelectronics that support national security and dual-use applications.

(B) Support plan required

The Secretary of Defense, in consultation with the heads of appropriate departments and agencies of the Federal Government, shall develop a plan, including assessment of resource requirements and designation of responsible officials, for the maintenance of capabilities to produce trusted and assured microelectronics to support current and legacy defense systems, other government systems essential for national security, and critical infrastructure of the United States, especially for items with otherwise limited commercial demand.

(C) Assessment of public private partnerships and activities

In conjunction with the activities carried out under this section, the Secretary of Defense shall enter into an agreement with the National Academies of Science, Engineering, and Medicine to undertake a study to make recommendations and provide policy options for optimal public-private partnerships and partnership activities, including an analysis of establishing a semiconductor manufacturing corporation to leverage private sector technical, managerial, and investment expertise, and private capital, as well as an assessment of and response to the industrial policies of other nations to support industries in similar critical technology sectors, and deliver such study to the congressional defense committees not later than October 1, 2022.

(7) Reports

(A) Report by Secretary of Defense

Not later than 90 days after January 1, 2021, the Secretary of Defense shall submit to Congress a report on the plans of the Secretary to carry out paragraphs (1) and (6).

(B) Biennial reports by Comptroller General of the United States

Not later than one year after the date on which the Secretary submits the report required by subparagraph (A) and not less frequently than once every two years thereafter for a period of 10 years, the Comptroller General of the United States shall submit to Congress a report on the activities carried out under this subsection.

(b) National network for microelectronics research and development

(1) In general

Subject to the availability of appropriations for such purposes, the Secretary of Defense shall establish a national network for microelectronics research and development—

(A) to enable the laboratory to fabrication transition of microelectronics innovations in the United States; and

(B) to expand the global leadership in microelectronics of the United States.

(2) Activities

The national network for microelectronics research and development shall—

(A) enable cost effective exploration of new materials, devices, and architectures, and prototyping in domestic facilities to safeguard domestic intellectual property;

(B) accelerate the transition of new technologies to domestic microelectronics manufacturers; and

(C) conduct other relevant activities deemed necessary by the Secretary of Defense for accomplishing the purposes of the national network for microelectronics research and development.

(3) Selection of entities

(A) In general

In carrying out paragraph (1), the Secretary shall, through a competitive process, select two or more entities to carry out the activities described in paragraph (2) as part of the network established under paragraph (1).

(B) Geographic diversity

The Secretary shall, to the extent practicable, ensure that the entities selected under subparagraph (A) collectively represent the geographic diversity of the United States.

(Pub. L. 116–283, div. H, title XCIX, §9903, Jan. 1, 2021, 134 Stat. 4849; Pub. L. 117–81, div. A, title II, §217, Dec. 27, 2021, 135 Stat. 1596.)

Editorial Notes

References in Text

Section 224 of the National Defense Authorization Act for Fiscal Year 2020, referred to in subsec. (a)(2)(E), is section 224 of Pub. L. 116–92, which is set out as a note preceding section 4501 of Title 10, Armed Forces.

Section 2371 of title 10, referred to in subsec. (a)(4), was renumbered section 4021 of Title 10, Armed Forces, by Pub. L. 116–283, §1841(b)(1), as amended by Pub. L. 117–81, §1701(u)(2)(B), Dec. 27, 2021, 135 Stat. 2151.

Amendments

2021—Subsec. (b)(1). Pub. L. 117–81, §217(1), substituted "shall" for "may" in introductory provisions.

Subsec. (b)(3). Pub. L. 117–81, §217(2), added par. (3).

Statutory Notes and Related Subsidiaries

"Congressional Defense Committees" Defined

For definition of "congressional defense committees" as the Committees on Armed Services and Appropriations of the Senate and the House of Representatives, see section 101 of Title 10, Armed Forces, as made applicable by section 3 of Pub. L. 116–283, which is listed in a table under section 101 of Title 10.

¹ So in original.

² See References in Text note below.

§4654. Department of Commerce study on status of microelectronics technologies in the United States industrial base

(a) In general

Beginning not later than 180 days after January 1, 2021, the Secretary, in consultation with the heads of other Federal departments and agencies, as appropriate, including the Secretary of Defense, Secretary of Homeland Security, and the Secretary of Energy, shall undertake a review, which shall include a survey, using authorities in section 4555 of title 50, to assess the capabilities of the United States industrial base to support the national defense in light of the global nature of the supply chain and significant interdependencies between the United States industrial base and the industrial bases of foreign countries with respect to the manufacture, design, and end use of microelectronics.

(b) Response to survey

To the extent authorized by section 4555 of title 50 and section ¹ 702 of title 15, Code of Federal Regulations, the Secretary shall ensure all relevant potential respondents reply to the survey, including the following:

(1) Corporations, partnerships, associations, or any other organized groups domiciled and with substantial operations in the United States.

(2) Corporations, partnerships, associations, or any other organized groups with a physical presence of any kind in the United States.

(3) Foreign domiciled corporations, partnerships, associations, or any other organized groups with a physical presence of any kind in the United States.

(c) Information requested

To the extent authorized by section 4555 of title 50 and section ¹ 702 of title 15, Code of Federal Regulations, the information sought from a responding entity specified in subsection (b) shall include, at minimum, information on the following with respect to the manufacture, design, or end use of microelectronics by such entity:

(1) An identification of the geographic scope of operations.

(2) Information on relevant cost structures.

(3) An identification of types of microelectronics development, manufacture, assembly, test, and packaging equipment in operation at such an entity.

(4) An identification of all relevant intellectual property, raw materials, and semi-finished goods and components sourced domestically and abroad by such an entity.

(5) Specifications of the microelectronics manufactured or designed by such an entity, descriptions of the end-uses of such microelectronics, and a description of any technical support provided to end-users of such microelectronics by such an entity.

(6) Information on domestic and export market sales by such an entity.

(7) Information on the financial performance, including income and expenditures, of such an entity.

(8) A list of all foreign and domestic subsidies, and any other financial incentives, received by such an entity in each market in which such entity operates.

(9) A list of regulatory or other informational requests about the respondents' operations, sales, or other proprietary information by the People's Republic of China entities under its direction or officials of the Chinese Communist Party, a description of the nature of each request, and the type of information provided.

(10) Information on any joint ventures, technology licensing agreements, and cooperative research or production arrangements of such an entity.

(11) A description of efforts by such an entity to evaluate and control supply chain risks.

(12) A list and description of any sales, licensing agreements, or partnerships between such an entity and the People's Liberation Army or People's Armed Police, including any business relationships with entities through which such sales, licensing agreements, or partnerships may occur.

(d) Report

(1) In general

The Secretary shall, in consultation with the heads of other appropriate Federal departments and agencies, as appropriate, including the Secretary of Defense, Secretary of Homeland Security, and Secretary of Energy, submit to Congress a report on the results of the review required by subsection (a). The report shall include the following:

(A) An assessment of the results of the review.

(B) A list of critical technology areas impacted by potential disruptions in production of microelectronics, and a detailed description and assessment of the impact of such potential disruptions on such areas.

(C) A description and assessment of gaps and vulnerabilities in the microelectronics supply chain and the national industrial supply base.

(2) Form

The report required by paragraph (1) may be submitted in classified form.

(Pub. L. 116–283, div. H, title XCIX, §9904, Jan. 1, 2021, 134 Stat. 4852.)

¹ So in original. Probably should be "part".

§4655. Funding for development and adoption of measurably secure semiconductors and measurably secure semiconductors supply chains

(a) Multilateral Semiconductors Security Fund

(1) Establishment of fund

The Secretary of the Treasury is authorized to establish a trust fund, to be known as the "Multilateral Semiconductors Security Fund" (in this section referred to as the "Fund"), consisting of any appropriated funds credited to the Fund for such purpose.

(2) Reporting requirement

If the Fund authorized under subsection (a)(1) is not established, 180 days after January 1, 2021, and annually thereafter until such Fund is established, the Secretary of the Treasury, in coordination with the Secretary of State, shall provide, in writing, to the appropriate committees of Congress a rationale for not establishing the Fund.

(3) Investment of amounts

(A) Investment of amounts

If the Fund authorized under subsection (a)(1) is established, the Secretary of the Treasury shall invest such portion of the Fund as is not required to meet current withdrawals in interest-bearing obligations of the United States or in obligations guaranteed as to both principal and interest by the United States.

(B) Interest and proceeds

The interest on, and the proceeds from the sale or redemption of, any obligations held in the Fund shall be credited to and form a part of the Fund.

(4) Use of Fund

(A) In general

Subject to subparagraph (B), amounts in the Fund shall be available, as provided in advance in an appropriations Act, to the Secretary of State—

(i) to provide funding through the common funding mechanism described in subsection (b)(1) to support the development and adoption of measurably secure semiconductors and measurably secure semiconductors supply chains; and

(ii) to otherwise carry out this section.

(B) Availability contingent on international arrangement or agreement

(i) In general

Amounts in the Fund shall be available to the Secretary of State, subject to appropriation, on and after the date on which the Secretary of State enters into an arrangement or agreement with the governments of countries that are partners of the United States to participate in the common funding mechanism under paragraph (1) of subsection (b).

(ii) Consultation

Before entering into an arrangement or agreement as described clause (i), the Secretary of State, in consultation with the Secretary of Commerce, shall ensure any partner government maintains export control licensing policies on semiconductor technology substantively equivalent to the United States with respect to restrictions on such exports to the People's Republic of China.

(b) Common funding mechanism for development and adoption of measurably secure semiconductors and measurably secure semiconductors supply chains

(1) In general

The Secretary of State, in consultation with the Secretary of Commerce, the Secretary of Defense, the Secretary of Homeland Security, the Secretary of the Treasury, the Secretary of Energy, and the Director of National Intelligence, is authorized to establish a common funding mechanism, in coordination with foreign partners, that uses amounts from the Fund to support the development and adoption of secure semiconductors and secure semiconductors supply chains, including for use in research and development collaborations among partner countries participating in the common funding mechanism. In establishing and sustaining a common funding mechanism, the Secretary of State should leverage United States funding in order to secure contributions and commitments from trusted foreign partners, including cost sharing and other cooperative measures leading to the development and adoption of secure semiconductors and secure microelectronic supply chains.

(2) Commitments

In creating and sustaining a common funding mechanism described in paragraph (1), the Secretary of State should promote efforts among foreign partners to—

(A) establish transparency requirements for any subsidies or other financial benefits (including revenue foregone) provided to semiconductors firms located in or outside such countries;

(B) establish consistent policies with respect to countries that—

(i) are not participating in the common funding mechanism; and

(ii) do not meet transparency requirements established under subparagraph (A);

(C) promote harmonized treatment of semiconductors and verification processes for items being exported to a country considered a national security risk by a country participating in the common funding mechanism;

(D) establish consistent policies and common external policies to address nonmarket economies as the behavior of such countries pertains to semiconductors;

(E) align policies on supply chain integrity and semiconductors security, including with respect to protection and enforcement of intellectual property rights; and

(F) promote harmonized foreign direct investment screening measures and export control policies with respect to semiconductors to align with national, multilateral, and plurilateral security priorities.

(c) Notifications to be provided by the Fund

(1) In general

Not later than 15 days prior to the Fund making a financial commitment associated with the provision of expenditures under subsection (a)(4)(A) in an amount in excess of $1,000,000, the Secretary of State shall submit to the appropriate committees of Congress report in writing that contains the information required by paragraph (2).

(2) Information required

The information required by this subsection includes—

(A) the amount of each such expenditure;

(B) an identification of the recipient or beneficiary; and

(C) a description of the project or activity and the purpose to be achieved by an expenditure of the Fund.

(3) Arrangements or agreements

The Secretary of State shall notify the appropriate committees of Congress not later than 30 days after entering into a new bilateral or multilateral arrangement or agreement described in subsection (a)(4)(B).

(Pub. L. 116–283, div. H, title XCIX, §9905, Jan. 1, 2021, 134 Stat. 4854; Pub. L. 118–31, div. F, title LXVII, §6707(b)(1)(B), Dec. 22, 2023, 137 Stat. 1018.)

Editorial Notes

Amendments

2023—Subsecs. (c), (d). Pub. L. 118–31 redesignated subsec. (d) as (c) and struck out former subsec. (c) which required the Secretary of State to report to Congress annually on the implementation of this section.

§4656. Advanced microelectronics research and development

(a) Subcommittee on microelectronics leadership

(1) Establishment required

The President shall establish in the National Science and Technology Council a subcommittee on matters relating to leadership and competitiveness of the United States in microelectronics technology and innovation (in this section referred to as the "Subcommittee)".

(2) Membership

The Subcommittee shall be composed of the following members:

(A) The Secretary of Defense.

(B) The Secretary of Energy.

(C) The Director of the National Science Foundation.

(D) The Secretary of Commerce.

(E) The Secretary of State.

(F) The Secretary of Homeland Security.

(G) The United States Trade Representative.

(H) The Director of National Intelligence.

(I) The heads of such other departments and agencies of the Federal Government as the President determines appropriate.

(3) Duties

The duties of the Subcommittee are as follows:

(A) National strategy on microelectronics research

(i) In general

In consultation with the advisory committee established in (b), and other appropriate stakeholders in the microelectronics industry and academia, the Subcommittee shall develop a national strategy on microelectronics research, development, manufacturing, and supply chain security to—

(I) accelerate the domestic development and production of microelectronics and strengthen the domestic microelectronics workforce; and

(II) ensure that the United States is a global leader in the field of microelectronics research and development.

(ii) Elements

The strategy developed under this subparagraph shall address—

(I) activities that may be carried out to strengthen engagement and outreach between the Department of Defense and industry, academia, international partners of the United States, and other departments and agencies of the Federal Government on issues relating to microelectronics;

(II) priorities for research and development to accelerate the advancement and adoption of innovative microelectronics and new uses of microelectronics and components, including for technologies based on organic and inorganic materials;

(III) the role of diplomacy and trade in maintaining the position of the United States as a global leader in the field of microelectronics;

(IV) the potential role of a Federal laboratory, center, or incubator exclusively focused on the research and development of microelectronics, as described in section 231(b)(15) of the National Defense Authorization Act for Fiscal Year 2017 (as added by section 276 of this Act) in carrying out the strategy and plan required under this subparagraph; and

(V) such other activities as the Subcommittee determines may be appropriate to overcome future challenges to the innovation, competitiveness, supply chain integrity, and workforce development of the United States in the field of microelectronics.

(B) Fostering coordination of research and development

The Subcommittee shall coordinate microelectronics related research, development, manufacturing, and supply chain security activities and budgets of Federal agencies and ensure such activities are consistent with the strategy required under subparagraph (A).

(C) Reporting and updates

(i) Progress briefing

Not later than one year after January 1, 2021, the President shall provide to the appropriate committees of Congress a briefing on the progress of the Subcommittee in developing the strategy required under subparagraph (A).

(ii) Strategy update

Not less frequently than once every 5 years, the Subcommittee shall update the strategy developed under subparagraph (A) and submit the revised strategy to the appropriate committees of Congress.

(4) Sunset

The Subcommittee shall terminate on the date that is 10 years after January 1, 2021.

(b) Industrial advisory committee

(1) Establishment

The Secretary of Commerce, in consultation with the Secretary of Defense, the Secretary of Energy, and the Secretary of Homeland Security, shall establish an advisory committee to be composed of not fewer than 12 members, including representatives of industry, federal laboratories, and academic institutions, who are qualified to provide advice to the United States Government on matters relating to microelectronics research, development, manufacturing, and policy.

(2) Duties

The advisory committee shall assess and provide guidance to the United States Government on—

(A) science and technology needs of the nation's domestic microelectronics industry;

(B) the extent to which the strategy developed under subsection (a)(3) is helping maintain United States leadership in microelectronics manufacturing;

(C) assessment of the research and development programs and activities authorized under this section; and

(D) opportunities for new public-private partnerships to advance microelectronics research, development, and domestic manufacturing.

(3) FACA exemption

Section 14 of the Federal Advisory Committee Act (5 U.S.C. App.) ¹ shall not apply to the advisory committee established under this subsection.

(c) National semiconductor technology center

(1) Establishment

Subject to the availability of appropriations for such purpose, the Secretary of Commerce, in collaboration with the Secretary of Defense, shall establish a national semiconductor technology center to conduct research and prototyping of advanced semiconductor technology and grow the domestic semiconductor workforce to strengthen the economic competitiveness and security of the domestic supply chain. Such center shall be operated as a public private-sector consortium with participation from the private sector, the Department of Energy, and the National Science Foundation. The Secretary may make financial assistance awards, including construction awards, in support of the national semiconductor technology center.

(2) Functions

The functions of the center established under paragraph (1) shall be as follows:

(A) To conduct advanced semiconductor manufacturing, design and packaging research, and prototyping that strengthens the entire domestic ecosystem and is aligned with the strategy required under subsection (a)(3)(A) with emphasis on the following:

(i) Semiconductor advanced test, assembly, and packaging capability in the domestic ecosystem.

(ii) Materials characterization, instrumentation and testing for next generation microelectronics.

(iii) Virtualization and automation of maintenance of semiconductor machinery.

(iv) Metrology for security and supply chain verification.

(B) To establish and capitalize an investment fund, in partnership with the private sector, to support startups and collaborations between startups, academia, established companies, and new ventures, with the goal of commercializing innovations that contribute to the domestic semiconductor ecosystem, including—

(i) advanced metrology and characterization for manufacturing of microchips using 3 nanometer transistor processes or more advanced processes; and

(ii) metrology for security and supply chain verification.

(C) To work with the Secretary of Labor, the Director of the National Science Foundation, the Secretary of Energy, the private sector, institutions of higher education, and workforce training entities to incentivize and expand geographically diverse participation in graduate, undergraduate, and community college programs relevant to microelectronics, including through—

(i) the development and dissemination of curricula and research training experiences; and

(ii) the development of workforce training programs and apprenticeships in advanced microelectronic design, research, fabrication, and packaging capabilities.

(d) National Advanced Packaging Manufacturing Program

Subject to the availability of appropriations for such purpose, the Secretary of Commerce shall establish a National Advanced Packaging Manufacturing Program led by the Director of the National Institute of Standards and Technology, in coordination with the national semiconductor technology center established under subsection (c), to strengthen semiconductor advanced test, assembly, and packaging capability in the domestic ecosystem, and which shall coordinate with a Manufacturing USA institute established under subsection (f), if applicable. The Director may make financial assistance awards, including construction awards, in support of the National Advanced Packaging Manufacturing Program.

(e) Microelectronics research at the National Institute of Standards and Technology

Subject to the availability of appropriations for such purpose, the Director of the National Institute of Standards and Technology shall carry out a microelectronics research program to enable advances and breakthroughs in measurement science, standards, material characterization, instrumentation, testing, and manufacturing capabilities that will accelerate the underlying research and development for metrology of next generation microelectronics and ensure the competitiveness and leadership of the United States within this sector.

(f) Creation of a Manufacturing USA institute

Subject to the availability of appropriations for such purpose, the Director of the National Institute of Standards and Technology may establish not more than 3 Manufacturing USA Institutes described in section 278s(d) of this title that are focused on semiconductor manufacturing. The Secretary of Commerce may award financial assistance to any Manufacturing USA Institute for work relating to semiconductor manufacturing. Such institutes may emphasize the following:

(1) Research to support the virtualization and automation of maintenance of semiconductor machinery.

(2) Development of new advanced test, assembly and packaging capabilities.

(3) Developing and deploying educational and skills training curricula needed to support the industry sector and ensure the United States can build and maintain a trusted and predictable talent pipeline.

(g) Domestic production requirements

The head of any executive agency receiving funding under this section shall develop policies to require domestic production, to the extent possible, for any intellectual property resulting from microelectronics research and development conducted as a result of such funding and domestic control requirements to protect any such intellectual property from foreign adversaries.

(h) Construction projects

Section 3212 of title 42 shall apply to a construction project that receives financial assistance under this section.

(Pub. L. 116–283, div. H, title XCIX, §9906, Jan. 1, 2021, 134 Stat. 4856; Pub. L. 117–167, div. A, §103(c), Aug. 9, 2022, 136 Stat. 1388.)

Editorial Notes

References in Text

Section 231(b)(15) of the National Defense Authorization Act for Fiscal Year 2017 (as added by section 276 of this Act), referred to in subsec. (a)(3)(A)(ii)(IV), is section 231(b)(15) of Pub. L. 114–328, as added by section 276 of Pub. L. 116–283, which is set out in a note under section 2302 of Title 10, Armed Forces.

Section 14 of the Federal Advisory Committee Act, referred to in subsec. (b)(3), is section 14 of Pub. L. 92–463, which was set out in the Appendix to Title 5, Government Organization and Employees, and was repealed and restated as section 1013 of Title 5 by Pub. L. 117–286, §§3(a), 7, Dec. 27, 2022, 136 Stat. 4204, 4361.

Amendments

2022—Subsec. (a)(3)(A)(ii)(II). Pub. L. 117–167, §103(c)(1)(A), inserted ", including for technologies based on organic and inorganic materials" after "components".

Subsec. (a)(3)(A)(ii)(V). Pub. L. 117–167, §103(c)(1)(B), substituted "supply chain integrity, and workforce development" for "supply chain integrity".

Subsec. (c)(1). Pub. L. 117–167, §103(c)(2)(A), inserted "and grow the domestic semiconductor workforce" after "prototyping of advanced semiconductor technology" and inserted at end "The Secretary may make financial assistance awards, including construction awards, in support of the national semiconductor technology center."

Subsec. (c)(2)(B). Pub. L. 117–167, §103(c)(2)(B)(i), inserted "and capitalize" before "an investment fund" in introductory provisions.

Subsec. (c)(2)(C). Pub. L. 117–167, §103(c)(2)(B)(ii), added subpar. (C) and struck out former subpar. (C) which read as follows: "To work with the Secretary of Labor, the Director of the National Science Foundation, the Secretary of Energy, the private sector, institutions of higher education, and workforce training entities to incentivize and expand participation in graduate and undergraduate programs, and develop workforce training programs and apprenticeships, in advanced microelectronic design, research, fabrication, and packaging capabilities."

Subsec. (d). Pub. L. 117–167, §103(c)(3), substituted "a Manufacturing USA institute" for "the Manufacturing USA institute" and inserted at end "The Director may make financial assistance awards, including construction awards, in support of the National Advanced Packaging Manufacturing Program."

Subsec. (f). Pub. L. 117–167, §103(c)(4), substituted, in introductory provisions, "not more than 3 Manufacturing USA Institutes" for "a Manufacturing USA institute", "are focused on semiconductor manufacturing. The Secretary of Commerce may award financial assistance to any Manufacturing USA Institute for work relating to semiconductor manufacturing." for "is focused on semiconductor manufacturing.", and "Such institutes may emphasize" for "Such institute may emphasize".

Subsec. (h). Pub. L. 117–167, §103(c)(5), added subsec. (h).

¹ See References in Text note below.

§4657. Prohibition relating to foreign entities of concern

None of the funds authorized to be appropriated to carry out this chapter may be provided to a foreign entity of concern.

(Pub. L. 116–283, div. H, title XCIX, §9907, Jan. 1, 2021, 134 Stat. 4860.)

Editorial Notes

References in Text

This chapter, referred to in text, was in the original "this subtitle" and was translated as reading "this title", meaning title XCIX of div. H of Pub. L. 116–283, to reflect the probable intent of Congress.

§4658. Defense Production Act of 1950 efforts

(a) In general

Not later than 180 days after January 1, 2021, the President shall submit to Congress a report on a plan of action for any use of authorities available in title III of the Defense Production Act of 1950 (50 U.S.C. 4531 et seq.) to establish or enhance a domestic production capability for microelectronics technologies and related technologies, subject to—

(1) the availability of appropriations for that purpose; and

(2) a determination made under the plan pursuant to such title III that such technologies are essential to the national defense and that domestic industrial capabilities are insufficient to meet these needs.

(b) Coordination

The President shall develop the plan of action required by subsection (a) in consultation with any relevant head of a Federal agency, an advisory committee established under section 708(d) of the Defense Production Act of 1950 (50 U.S.C. 4558(d)), and appropriate stakeholders in the private sector.

(Pub. L. 116–283, div. H, title XCIX, §9908, Jan. 1, 2021, 134 Stat. 4860.)

Editorial Notes

References in Text

The Defense Production Act of 1950, referred to in subsec. (a), is act Sept. 8, 1950, ch. 932, 64 Stat. 798, which is classified principally to chapter 55 (§4501 et seq.) of Title 50, War and National Defense. Title III of the Act is classified generally to subchapter II (§4531 et seq.) of chapter 55. For complete classification of this Act to the Code, see section 4501 of Title 50 and Tables.

§4659. Additional authorities

(a) In general

In carrying out the responsibilities of the Department of Commerce under this chapter, the Secretary may—

(1) enter into agreements, including contracts, grants and cooperative agreements, and other transactions as may be necessary and on such terms as the Secretary considers appropriate;

(2) make advance payments under agreements and other transactions authorized under paragraph (1) without regard to section 3324 of title 31;

(3) require a person or other entity to make payments to the Department of Commerce upon application and as a condition for receiving support through an award of assistance or other transaction;

(4) procure temporary and intermittent services of experts and consultants in accordance with section 3109 of title 5;

(5) notwithstanding section 3104 of title 5 or the provisions of any other law relating to the appointment, number, classification, or compensation of employees, make appointments of scientific, engineering, and professional personnel, and fix the basic pay of such personnel at a rate to be determined by the Secretary at rates not in excess of the highest total annual compensation payable at the rate determined under section 104 of title 3, except that the Secretary shall appoint not more than 25 personnel under this paragraph;

(6) with the consent of another Federal agency, enter into an agreement with that Federal agency to use, with or without reimbursement, any service, equipment, personnel, or facility of that Federal agency; and

(7) establish such rules, regulations, and procedures as the Secretary considers appropriate.

(b) Requirement

Any funds received from a payment made by a person or entity pursuant to subsection (a)(3) shall be credited to and merged with the account from which support to the person or entity was made ¹

(Pub. L. 116–283, div. H, title XCIX, §9909, as added Pub. L. 117–167, div. A, §103(d), Aug. 9, 2022, 136 Stat. 1389.)

Editorial Notes

References in Text

This chapter, referred to in subsec. (a), was in the original "this division" and was translated as reading "this title", meaning title XCIX of div. H of Pub. L. 116–283, to reflect the probable intent of Congress.

¹ So in original. Probably should be followed by a period.