Chip EQUIP Act
- Sponsor
- Rep. Lofgren, Zoe [D-CA-18]
- Committees
- Science, Space, and Technology Committee (primary)
- Last action
- Sep 16, 2026
Bottom line
The Chip EQUIP Act aims to secure the U.S. semiconductor supply chain by preventing federal funds from being used to acquire manufacturing equipment from foreign entities of concern, thereby reinforcing national security and promoting trusted domestic production.
What it actually does
This bill amends the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (which includes the CHIPS Act) to prohibit recipients of federal financial assistance under that Act from using funds to procure, install, or use 'ineligible semiconductor manufacturing equipment' for a period of 10 years. Ineligible equipment is defined as completed, fully assembled equipment manufactured, assembled, or refurbished by a foreign entity of concern or its subsidiary, with specific types of equipment listed. The bill includes waiver provisions for certain circumstances.
Proponents argue
Supporters argue that this bill is a critical national security measure, ensuring that federal investments in domestic semiconductor manufacturing do not inadvertently support or become reliant on adversarial foreign entities. They contend it will strengthen the resilience and integrity of the U.S. semiconductor supply chain, protecting sensitive technology and intellectual property from foreign influence and espionage.
Opponents contend
Potential opponents might express concerns that such broad prohibitions could limit access to essential equipment, potentially increasing costs for U.S. manufacturers or delaying the establishment of new facilities if alternative, non-FEOC sources are insufficient or more expensive. They might also raise questions about the practical implementation of identifying 'foreign entities of concern' and the potential for unintended disruptions to global supply chains.
The bill is very concise and clearly structured, allowing for a quick and comprehensive understanding of its core provisions and implications.
Section 2(a), amending 15 U.S.C. 4651
Definition of 'Completed, Fully Assembled' Equipment
This provision adds a new definition to the existing law, clarifying what 'completed, fully assembled' means for semiconductor manufacturing equipment. It specifies that such equipment is in a state where all or substantially all necessary parts are put together, making it ready-to-use or ready-to-install, and ready to be purchased directly from an entity. This distinction is important for determining what constitutes 'ineligible equipment'.
Supporters argue
Proponents argue that a clear definition of 'completed, fully assembled' equipment is essential to prevent loopholes and ensure that the restrictions on foreign entities of concern apply effectively to finished products, rather than individual components, which are often globally sourced.
Critics contend
No specific opposition is typically raised against definitional provisions that aim for clarity, though some might argue that the definition could be too broad or too narrow, potentially capturing or excluding unintended items.
Tradeoffs
The tension lies in defining the scope precisely enough to be effective without being overly burdensome or creating unintended consequences for complex global supply chains where subcomponents may originate from various sources.
Section 2(a), amending 15 U.S.C. 4651
Definition of 'Ineligible Semiconductor Manufacturing Equipment'
This section defines 'ineligible semiconductor manufacturing equipment' as completed, fully assembled equipment manufactured, assembled, or refurbished by a foreign entity of concern or its subsidiary. It lists various types of equipment, such as deposition, etching, lithography, and inspection tools, but explicitly excludes individual parts, chambers, subsystems, or subcomponents. This definition is central to the bill's prohibitions.
Section 2(b), amending 15 U.S.C. 4659
Prohibition on Ineligible Use of Funds
This provision mandates that the Secretary of Commerce include terms in agreements for federal financial assistance under the CHIPS Act that prohibit the procurement, installation, or use of 'ineligible semiconductor manufacturing equipment' for 10 years. This directly prevents federal funds from being used to acquire equipment from foreign entities of concern for projects supported by the CHIPS Act.
Section 2(b), amending 15 U.S.C. 4659
Waiver Authority for Prohibitions
This provision grants the Secretary of Commerce the authority to waive the prohibition on using ineligible equipment under specific conditions. These conditions include: if the equipment is not produced in sufficient quantities or satisfactory quality in the U.S. or allied countries; if the equipment was manufactured by a non-FEOC but refurbished by an FEOC; or if the use complies with Export Administration Regulations and the Secretary, in consultation with intelligence or defense officials, determines it's in the national security interest of the U.S.
The bill's definitions of 'completed, fully assembled' and 'ineligible semiconductor manufacturing equipment' explicitly exclude 'any part, chamber, subsystem, or subcomponent that enables or is incorporated into such equipment.'
Section 2(a), amending 15 U.S.C. 4651
Why it matters:This is standard legislative practice to provide precise scope. It's crucial for clarity, distinguishing between finished goods and the complex global supply chains for individual components.
Case for: Proponents argue this exclusion is vital for practicality, as many subcomponents in semiconductor manufacturing equipment are globally sourced, and attempting to restrict them would be overly burdensome and potentially impossible, hindering U.S. production. It focuses the prohibition on the final, integrated product where the greatest security risk is perceived.
Case against: Critics might argue that excluding subcomponents could create a loophole, allowing foreign entities of concern to still exert influence or introduce vulnerabilities if they control critical, high-value subcomponents that are then integrated into 'eligible' equipment. This could be seen as a partial solution to a complex problem.
Estimated impact: This exclusion significantly narrows the scope of the prohibition, focusing on the final assembly rather than the entire component supply chain. It prevents widespread disruption to existing global component sourcing practices.
One of the conditions for a waiver is that 'the use of the ineligible semiconductor manufacturing equipment complies with the requirements set forth in the Export Administration Regulations'.
Section 2(b)(2)(C)(i), amending 15 U.S.C. 4659
Why it matters:This is standard legislative practice to reference existing regulatory frameworks. It ensures consistency with broader U.S. export control policy.
Case for: Proponents argue that linking waivers to EAR compliance provides an additional layer of national security vetting, ensuring that any exceptions to the prohibition are consistent with existing controls on sensitive technologies and do not inadvertently facilitate technology transfer to adversaries.
Case against: Critics might argue that relying on EAR compliance for waivers could add complexity and potential delays to the waiver process, as the EAR itself is a complex and evolving regulatory framework. It could also be seen as potentially redundant if the 'national security interest' determination is already robust.
Estimated impact: This provision integrates the bill's restrictions with existing U.S. export control policy, potentially streamlining enforcement and ensuring a consistent approach to technology security. It adds a specific legal hurdle for waiver approval.