Chip EQUIP Act
- Sponsor
- Sen. Kelly, Mark [D-AZ]
- Committees
- Commerce, Science, and Transportation Committee (primary)
- Last action
- Dec 2, 2025
Bottom line
The bill aims to bolster U.S. semiconductor supply chain security by restricting the use of federal funds to purchase manufacturing equipment from foreign entities of concern, with provisions for waivers under specific circumstances.
What it actually does
This bill amends the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 to prohibit recipients of federal financial assistance under the CHIPS Act from procuring, installing, or using certain semiconductor manufacturing equipment from foreign entities of concern or their subsidiaries. It defines 'ineligible semiconductor manufacturing equipment' and establishes specific conditions under which the Secretary of Commerce may waive these prohibitions.
Proponents argue
Supporters argue this bill is crucial for national security, preventing federal funds from inadvertently supporting adversarial nations' semiconductor industries, and ensuring the integrity and security of the U.S. semiconductor supply chain. It promotes domestic and allied manufacturing capabilities and reduces strategic dependencies.
Opponents contend
Opponents might argue that these restrictions could increase costs for U.S. companies, limit access to essential equipment not readily available from domestic or allied sources, and potentially slow down the expansion of U.S. semiconductor manufacturing capacity, thereby undermining the broader goals of the CHIPS Act.
The bill is very short and straightforward, making it highly accessible for a quick read and understanding.
Section 2(a), adding 15 U.S.C. 4651(14)
Defining 'Completed, Fully Assembled' Equipment
This provision clarifies what 'completed, fully assembled' means for semiconductor manufacturing equipment. It specifies that the equipment must have all or substantially all necessary parts, chambers, subsystems, and subcomponents put together, making it ready-to-use or install and ready to be purchased directly from an entity. This definition is crucial for determining which equipment falls under the subsequent prohibitions.
Supporters argue
Supporters argue that a clear definition prevents circumvention of the bill's intent by ensuring that only fully functional equipment, rather than individual components, is subject to the ban, simplifying compliance and enforcement.
Critics contend
No specific opposition is typically raised against definitional provisions unless they are seen as overly broad or narrow in a way that creates loopholes or undue burdens.
Tradeoffs
Balances the need for clear scope and enforceability with avoiding overly broad restrictions that could hinder legitimate component sourcing.
Section 2(a), adding 15 U.S.C. 4651(15)
Defining '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, intended for semiconductor production. It lists specific types of equipment, such as lithography, etching, and inspection tools, but explicitly excludes individual parts, chambers, subsystems, or subcomponents.
Section 2(b), adding 15 U.S.C. 4659(f)(1)
Prohibiting Federal Funds for Ineligible Equipment
This provision mandates that agreements for Federal financial assistance under the CHIPS Act (sections 9902 and 9906) must include prohibitions against procuring, installing, or using 'ineligible semiconductor manufacturing equipment' for 10 years from the agreement's signing date. This directly ties federal funding to compliance with the new restrictions, ensuring that taxpayer money supports secure supply chains.
Section 2(b), adding 15 U.S.C. 4659(f)(2)
Secretary's Waiver Authority for Prohibitions
This provision grants the Secretary of Commerce (or relevant agency head) authority to waive the prohibitions under specific conditions. These conditions include when compliant equipment is not sufficiently available from the U.S. or allied countries, when the equipment was refurbished by a foreign entity of concern but originally manufactured/assembled by a non-FEOC, or if the use complies with export regulations and is deemed in the national security interest by the Secretary in consultation with the Director of National Intelligence or the Secretary of Defense.
This clause explicitly states that individual parts, chambers, subsystems, or subcomponents are not considered 'ineligible semiconductor manufacturing equipment.' This means the prohibition applies only to the completed, fully assembled equipment, not its constituent parts.
Section 2(a), adding 15 U.S.C. 4651(15)(C)
Why it matters:This is standard legislative practice to clarify scope and avoid overreach, rather than being evasive. It ensures the focus remains on completed systems, preventing undue burden on the global component supply chain.
Case for: Supporters argue this prevents unnecessary restrictions on the global supply chain for individual components, which are often sourced internationally. It allows U.S. manufacturers to continue building or assembling equipment using diverse parts, as long as the final assembly is not by a foreign entity of concern.
Case against: Critics might argue that this exclusion could create a potential loophole, allowing foreign entities of concern to still profit from selling critical subcomponents, even if they cannot sell the fully assembled equipment, thus partially undermining the bill's intent to reduce reliance on such entities.
Estimated impact: This provision significantly narrows the scope of the prohibition, impacting the sourcing strategies for thousands of individual components used in semiconductor equipment, allowing for continued global sourcing of these items.