Chip EQUIP Act

Section 9901 of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (15 U.S.C. 4651) is amended—

(1) by redesignating paragraphs (2), (3), (4), (5), (6), (7), (8), (9), (10), (11), (12), and (13) as paragraphs (3), (4), (6), (7), (8), (9), (10), (11), (12), (13), (14), and (15), respectively;

(2) by inserting after paragraph (1) the following new paragraph:

(2) The term completed, fully assembled means the state in which all (or substantially all) necessary parts, chambers, subsystems, and subcomponents have been put together, resulting in a ready-to-use or ready-to-install item to be directly purchased from an entity.

(3) in subparagraph (A) of paragraph (4), as so redesignated, by striking paragraph (2) and inserting paragraph (3); and

(4) by inserting after such redesignated paragraph (4) the following new paragraph:

(5) The term ineligible equipment —

(A) means completed, fully assembled semiconductor manufacturing equipment that is manufactured or assembled by a foreign entity of concern or subsidiary of an entity of concern and used in the fabrication, assembly, testing, advanced packaging, production, or research and development of semiconductors;

(B) includes—

(i) deposition equipment;

(ii) etching equipment;

(iii) lithography equipment;

(iv) inspection and measuring equipment;

(v) wafer slicing equipment;

(vi) wafer dicing equipment;

(vii) wire bonders;

(viii) ion implantation equipment;

(ix) chemical mechanical polishing; and

(x) diffusion or oxidation furnaces; and

(C) does not include any part, chamber, subsystem, or subcomponent that enables or is incorporated into such equipment.

Section 9902 of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (15 U.S.C. 4652) is amended by adding at the end the following new subsection:

Subject to paragraph (2), the Secretary shall include in the terms of each agreement with a covered entity for the award of Federal financial assistance under this section prohibitions with respect to a project relating to the procurement, installation, or use of ineligible equipment.

The Secretary may waive the prohibitions under paragraph (1) if—

(A) the ineligible equipment to be purchased by the applicable covered entity is not produced in the United States or allied or partner countries in sufficient and reasonably available quantities or of a satisfactory quality to support established or expected production capabilities; or

(i) the use of the ineligible equipment complies with the requirements set forth in the Export Administration Regulations (as such term is defined in section 1742 of the Export Control Reform Act of 2018 (50 U.S.C. 4801)); and

(ii) the Secretary, in consultation with the Director of National Intelligence or the Secretary of Defense, determines such waiver is in the national security interest of the United States.

Nothing in this subsection may be construed to waive the application of section 9907.

The Internal Revenue Code of 1986 is amended—

(A) in paragraph (1) of section 48D(c), by striking section 9901(6) of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 and inserting section 9901 of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (15 U.S.C. 4651); and

(B) in clause (i) of section 50(a)(6)(D), by striking section 9901(7) of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 and inserting section 9901 of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (15 U.S.C. 4651).

Paragraph (5) of section 5949(j) of division E of James M. Inhofe National Defense Authorization Act for Fiscal Year 2023 (41 U.S.C. 4713 note; Public Law 117–263) is amended by striking paragraph (7) of section 9901 of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (15 U.S.C. 4651), as added by section 103(a)(4) of the CHIPS Act of 2022 (division A of Public Law 117–167) and inserting section 9901 of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (15 U.S.C. 4651).