Congress approved $52 billion in funding to support chip manufacturing.

A historic $52 billion federal program to develop domestic chip manufacturing capacity was approved by the U.S. Congress, but it comes with a crucial restriction: companies receiving funding are not allowed to increase their production of sophisticated chips in China.

The restrictions will hit TSMC and Intel Corp.

The Chip Act specifically forbids businesses receiving federal support from notably increasing chip manufacturing in China or Russia for a period of ten years. Chips made of logic and memory are both prohibited.

If interested chip manufacturers increase their output of 28nm or older semiconductors to meet the needs of a market that is mostly Chinese or of a foreign nation that is interested, an exception might be made.

According to Intel spokesperson Nancy Sanchez, “Such complicated and significant legislation demands the cooperation of all stakeholders.” Many companies in our industry have cooperated with our trade group to contribute to the policy and guarantee we have the best possible legislation. “