The Chip EQUIP Act prohibits the use of federal semiconductor manufacturing assistance funds to purchase certain fully assembled semiconductor manufacturing equipment made by foreign entities of concern for a period of ten years, with limited national security waivers available.
Mark Kelly
Senator
AZ
The Chip EQUIP Act aims to protect U.S. semiconductor manufacturing by restricting the use of federal funding for certain foreign-made equipment. Specifically, it prohibits using federal semiconductor assistance funds to procure or install "ineligible semiconductor manufacturing equipment" made by entities of concern for a period of ten years. The Secretary of Commerce retains limited waiver authority under specific national security or supply chain conditions.
Chip EQUIP Act Bans Federal Funds for Foreign-Made Semiconductor Gear for 10 Years
The Chip Equipment Quality, Usefulness, and Integrity Protection Act of 2025, or the Chip EQUIP Act, is all about putting up guardrails on federal funding for domestic chip manufacturing. Think of it as a supply chain security upgrade, specifically targeting the high-tech machinery used to make the chips that run everything from your phone to your car.
The 10-Year Blackout on Foreign Gear
This bill amends existing law to prohibit companies receiving federal semiconductor manufacturing assistance funds from using that money to buy, install, or use specific types of equipment made or refurbished by a “foreign entity of concern.” This isn't a short-term measure; the prohibition lasts for a full 10 years from the date the funding agreement is signed. The list of banned gear is extensive, covering 12 specific categories like lithography, etching, and ion implantation equipment—the heavy hitters of chip production. The idea is to ensure that when taxpayer money is used to build up US chip capacity, it doesn't end up funding equipment tied to potential adversaries. For a manufacturer building a new fabrication plant (fab), this means immediately locking in their equipment sourcing strategy for a decade.
Where the Line is Drawn: Fully Assembled vs. Parts
Here’s a crucial detail for anyone in the manufacturing or supply chain game: the prohibition only applies to equipment that is “completed, fully assembled.” The bill explicitly states that the ban does not include “individual parts, chambers, subsystems, or subcomponents” that go into the equipment. This distinction matters a lot. If you’re a company building a new fab, you can’t buy a completed, foreign-made lithography machine using federal funds. However, the current text suggests you might still be able to source major components or subsystems from that same foreign entity, provided they are then assembled into the final machine elsewhere. This creates a potential gray area where manufacturers might try to work around the restriction by purchasing equipment piece-by-piece rather than fully assembled.
The Secretary’s Safety Valve
Recognizing that the US and its allies don't always produce the best or most available version of every machine, the bill gives the Secretary of Commerce a waiver authority—a necessary safety valve. The Secretary can lift the ban under three specific conditions. The most practical one is if the ineligible equipment is “not produced in sufficient quantity or quality in the United States or an allied country.” This is a nod to the reality that some specialized tools are currently monopolized by a few global players. The Secretary can also grant a waiver if the equipment was only refurbished by a foreign entity of concern (but not manufactured by one), or if a waiver is determined to be in the “national security interest,” a broad term that gives the Secretary significant discretion after consulting with defense and intelligence officials. For companies, this means that while the general rule is strict, there is a path to using necessary, highly specialized foreign tools if they can prove there’s no viable alternative.