Chip EQUIP Act
- Bill Number
- S. 3301
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 1
- Policy Area
- Foreign Trade and International Finance
- Status
- Introduced
- Latest Action
- 2025-12-02: Read twice and referred to the Committee on Commerce, Science, and Transportation.
- Last Updated
- 2026-01-29T12:03:18Z
AI-Generated Summary
Purpose
The Chip Equipment Quality, Usefulness, and Integrity Protection Act of 2025 (Chip EQUIP Act) aims to safeguard the U.S. semiconductor supply chain by restricting the use of federal funds for purchasing certain semiconductor manufacturing equipment produced by foreign entities of concern (FEOCs)—typically countries or companies posing national security risks, such as those in China—or their subsidiaries. It promotes reliance on U.S. or allied sources to ensure equipment quality, security, and integrity.
Key Provisions
- Definitions Added:
- Completed, fully assembled semiconductor manufacturing equipment: Refers to equipment where all or most parts, chambers, subsystems, and subcomponents are integrated, making it ready for use, installation, or direct purchase.
- Ineligible semiconductor manufacturing equipment: Fully assembled equipment (not just parts or subcomponents) manufactured, assembled, or refurbished by an FEOC or its subsidiary, specifically designed for semiconductor fabrication, assembly, testing, packaging, production, or research. Examples include:
- Deposition equipment (for layering materials on chips).
- Etching equipment (for removing material from chips).
- Lithography equipment (for patterning circuits on chips).
- Inspection, measuring, and test equipment.
- Wafer slicing, dicing, wire bonding, ion implantation, chemical mechanical polishing, diffusion/oxidation furnaces, thermal processing equipment, and automated material handling systems.
- Prohibitions on Federal Funds:
- For projects funded under the CHIPS and Science Act (via Sections 9902 and 9906 of the 2021 National Defense Authorization Act), agreements must include bans on procuring, installing, or using ineligible equipment. These bans last 10 years from the agreement date.
- The U.S. Secretary of Commerce must enforce these terms.
- Waiver Options:
- Waivers can be granted if:
- The equipment is unavailable in sufficient quantity or quality from the U.S. or allied/partner countries to meet production needs.
- The equipment was originally made by a non-FEOC entity but only refurbished by an FEOC.
- Use complies with U.S. Export Administration Regulations (rules governing exports for national security), and the Secretary—after consulting the Director of National Intelligence or Secretary of Defense—determines it serves U.S. national security interests.
- Waivers do not override existing FEOC restrictions under Section 9907 of the law.
Significant Changes to Existing Law
- Amends the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (which includes CHIPS Act provisions) by:
- Adding two new definitions (Sections 9901(14) and (15)) to clarify what qualifies as restricted equipment.
- Inserting a new subsection (f) in Section 9909 on ineligible uses of funds, shifting the prior subsection (f) to (g). This introduces binding 10-year prohibitions and waiver criteria, building on but expanding prior restrictions on FEOCs to cover fully assembled equipment specifically.
Potential Impacts
- On Government Agencies: The Department of Commerce gains enforcement responsibilities, including waiver decisions in coordination with intelligence and defense officials, potentially increasing administrative workload for overseeing CHIPS Act grants (totaling billions for semiconductor incentives).
- On Citizens and Industry: U.S. semiconductor firms receiving federal aid (e.g., for building factories) must source equipment domestically or from allies, which could raise short-term costs but enhance long-term supply chain security and reduce reliance on adversarial nations. This may accelerate domestic manufacturing innovation but could delay projects if alternatives are scarce.
- On International Relations: Strengthens U.S. alliances by favoring equipment from partner countries (e.g., Japan, Netherlands, South Korea) while escalating tensions with FEOCs like China, potentially disrupting global trade in semiconductors—a critical industry for electronics, autos, and defense.
Main Stakeholders Affected
- U.S. Semiconductor Companies: Recipients of CHIPS Act funding (e.g., Intel, TSMC's U.S. operations) must comply with sourcing rules, facing compliance costs but gaining supply chain protections.
- Federal Government: Department of Commerce, National Intelligence Director, and Department of Defense, as they administer funds, evaluate waivers, and assess national security.
- Foreign Entities: FEOCs and subsidiaries (e.g., Chinese firms like SMIC or equipment makers) lose access to U.S. federal-funded markets, impacting their exports.
- Allied Nations and Firms: Equipment suppliers from countries like the Netherlands (ASML for lithography) or Japan benefit from preferred status.
- U.S. Consumers and Economy: Indirectly affected through stable semiconductor supplies for everyday tech, though initial disruptions could increase prices for chips and devices.
Notable Legal, Constitutional, or Political Implications
- Legal: Reinforces executive authority over national security via waivers tied to export regulations (under the Export Control Reform Act), ensuring compliance without broad exemptions. It maintains separation of powers by requiring congressional oversight through the underlying NDAA framework.
- Constitutional: Aligns with Congress's commerce and defense powers (Article I), promoting economic security without directly infringing on free trade rights, though waivers introduce discretionary elements that could face challenges if seen as arbitrary.
- Political: Advances bipartisan goals of "reshoring" critical tech amid U.S.-China rivalry, but may spark debates on protectionism versus global cooperation. Enactment could influence future trade policies, emphasizing supply chain resilience post-COVID and geopolitical tensions.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (2)
Sen. Blackburn, Marsha [R-TN], Sen. Sheehy, Tim [R-MT]
Recent Actions
- 2025-12-02: Read twice and referred to the Committee on Commerce, Science, and Transportation.
- 2025-12-02: Introduced in Senate
Bill Versions
- Chip Equipment Quality, Usefulness, and Integrity Protection Act of 2025 — issued 2025-12-02 — PDF (5 pages)