U.S. advanced technology companies are banned from building factories in China for 10 years

The Biden administration has banned U.S. technology companies that receive federal funding. The ban covers the construction of "advanced technology" facilities in China for 10 years.

This is because business groups are pushing for more government support to reduce dependence on China.

According to U.S. Commerce Secretary Gina Raimondo, the administration plans to impose restrictions on government money receivers in order to protect national security. That is, they are not allowed to invest that money in China and develop advanced technology there for 10 years, but they are allowed to expand their existing plants to produce assemblies in China to serve the Chinese market. This is how the U.S. Secretary of Commerce explained the U.S. Chip and Science Act.

Worries about losing their technological advantage to China resulted in the signing of the law on allocating $280 billion for high-tech manufacturing and research by the U.S. president, Joe Biden in August.

The investment includes tax benefits for companies that build computer chip plants in the United States.

In 1990, the U.S. was producing 40% of the semiconductors that are key from automobiles to cell phones. Currently, this production covers about 10% of semiconductors.

Some chip producers in the U.S. have already been affected by Washington's sanctions on the sale of U.S. technology to China. Earlier this month, U.S. officials banned Nvidia and AMD from selling artificial intelligence chips to China.

Dan Ives of Wedbush Securities described the restrictions as a "gut punch" for Nvidia. The BBC reports that he also considers these sanctions as a strong blow for China, which would cause more misunderstandings and conflicts in terms of geopolitical tensions.