In an era of rapid technological advancement, the semiconductor industry has become a focal point of international competition. On September 22, 2023, the U.S. Department of Commerce unveiled the highly anticipated final rules for the CHIPS Act guardrails. The introduction of these regulations has undoubtedly sent ripples across the globe, profoundly impacting the future development of the semiconductor supply chain.

Definitions of Restricted Entities, Restricted Activities, and Restricted Industries:The final rules retain the basic regulatory logic of the proposed rules but introduce significant adjustments to the scope of restricted entities, activities, and industries. These adjustments determine which entities and behaviors will face restrictions, thereby influencing the global semiconductor industrys structure and operations.

Scope and Application of FEOC:The final rules clarify the scope of FEOC (Foreign Entity of Concern), including any Chinese entity and entities in which Chinese entities directly or indirectly hold more than 25% equity. This means not only Chinese entities but also overseas investments by Chinese enterprises will face restrictions.

U.S. Policymaking and Industry Collaboration: The U.S. Department of Commerce has fully considered industry feedback during policymaking. For instance, the definition of joint research incorporates industry input, ensuring domestic semiconductor fabless manufacturers can still utilize overseas foundries for high-performance IC production.

Adjustments in the Global Semiconductor Industry: With the implementation of the CHIPS Act guardrails, the global semiconductor industry will undergo significant adjustments. Enterprises must closely monitor policy changes and adapt their business plans and technical roadmaps to address future challenges and opportunities.

Strategies for Chinese Enterprises: Facing FEOC restrictions, Chinese enterprises must carefully assess whether their industries fall under FEOC-related restrictions under specific acts. By restructuring relevant business frameworks, Chinese firms can mitigate impacts and maintain global competitiveness.

Rebuilding the U.S. Domestic Supply Chain: The CHIPS Act is part of U.S. efforts to rebuild its domestic supply chain. As the Act is fully implemented, details of related regulations like the IRA will also emerge, further shaping the global semiconductor landscape.

Periodic Evaluation of Technical Guardrails: The U.S. Department of Commerce has clarified that the technical guardrails in the final rules are not static and will undergo periodic reviews and adjustments. This offers flexibility but also requires enterprises to remain vigilant and adapt to regulatory changes.

Interaction Between Enterprises and Policymakers: Enterprises should leverage policy formulation windows to submit compelling comments to U.S. regulatory agencies. This not only safeguards their interests but also promotes fairer and more reasonable policymaking.

The release of the CHIPS Act guardrails marks a new era for the global semiconductor industry. In this era, regulatory changes and intensified international competition demand enterprises to maintain sharp insights and agile strategies. Let us witness how the semiconductor industry writes a new chapter amid this transformation.