china tariffs

acer-ceo-says-its-pc-prices-to-increase-by-10-percent-in-response-to-trump-tariffs

Acer CEO says its PC prices to increase by 10 percent in response to Trump tariffs

PC-manufacturer Acer has said that it plans to raise the prices of its PCs in the US by 10 percent, a direct response to the new 10 percent import tariff on Chinese goods that the Trump administration announced earlier this month.

“We will have to adjust the end user price to reflect the tariff,” said Acer CEO Jason Chen in an interview with The Telegraph. “We think 10 percent probably will be the default price increase because of the import tax. It’s very straightforward.”

These price increases won’t roll out right away, according to Chen—products shipped from China before the tariffs went into effect earlier this month won’t be subject to the increased import taxes—but we can expect them to show up in PC price tags over the next few weeks.

Chen also said that Acer was considering moving more of its manufacturing outside of China as a result of the tariffs, something that Acer had done for some of its desktop PCs after Trump imposed similar tariffs on Chinese imports during his first term. Manufacturing systems in the US is also “one of the options,” according to Chen.

Acer CEO says its PC prices to increase by 10 percent in response to Trump tariffs Read More »

trump-can-save-tiktok-without-forcing-a-sale,-bytedance-board-member-claims

Trump can save TikTok without forcing a sale, ByteDance board member claims

TikTok owner ByteDance is reportedly still searching for non-sale options to stay in the US after the Supreme Court upheld a national security law requiring that TikTok’s US operations either be shut down or sold to a non-foreign adversary.

Last weekend, TikTok briefly went dark in the US, only to come back online hours later after Donald Trump reassured ByteDance that the US law would not be enforced. Then, shortly after Trump took office, he signed an executive order delaying enforcement for 75 days while he consulted with advisers to “pursue a resolution that protects national security while saving a platform used by 170 million Americans.”

Trump’s executive order did not suggest that he intended to attempt to override the national security law’s ban-or-sale requirements. But that hasn’t stopped ByteDance, board member Bill Ford told World Economic Forum (WEF) attendees, from searching for a potential non-sale option that “could involve a change of control locally to ensure it complies with US legislation,” Bloomberg reported.

It’s currently unclear how ByteDance could negotiate a non-sale option without facing a ban. Joe Biden’s extended efforts through Project Texas to keep US TikTok data out of China-controlled ByteDance’s hands without forcing a sale dead-ended, prompting Congress to pass the national security law requiring a ban or sale.

At the WEF, Ford said that the ByteDance board is “optimistic we will find a solution” that avoids ByteDance giving up a significant chunk of TikTok’s operations.

“There are a number of alternatives we can talk to President Trump and his team about that are short of selling the company that allow the company to continue to operate, maybe with a change of control of some kind, but short of having to sell,” Ford said.

Trump can save TikTok without forcing a sale, ByteDance board member claims Read More »

china’s-plan-to-dominate-legacy-chips-globally-sparks-us-probe

China’s plan to dominate legacy chips globally sparks US probe

Under Joe Biden’s direction, the US Trade Representative (USTR) launched a probe Monday into China’s plans to globally dominate markets for legacy chips—alleging that China’s unfair trade practices threaten US national security and could thwart US efforts to build up a domestic semiconductor supply chain.

Unlike the most advanced chips used to power artificial intelligence that are currently in short supply, these legacy chips rely on older manufacturing processes and are more ubiquitous in mass-market products. They’re used in tech for cars, military vehicles, medical devices, smartphones, home appliances, space projects, and much more.

China apparently “plans to build more than 60 percent of the world’s new legacy chip capacity over the next decade,” and Commerce Secretary Gina Raimondo said evidence showed this was “discouraging investment elsewhere and constituted unfair competition,” Reuters reported.

Most people purchasing common goods don’t even realize they’re using Chinese chips, including government agencies, and the probe is meant to fix that by flagging everywhere Chinese chips are found in the US. Raimondo said she was “fairly alarmed” that research showed “two-thirds of US products using chips had Chinese legacy chips in them, and half of US companies did not know the origin of their chips including some in the defense industry.”

To deter harms from any of China’s alleged anticompetitive behavior, the USTR plans to spend a year investigating all of China’s acts, policies, and practices that could be helping China achieve global dominance in the foundational semiconductor market.

The agency will start by probing “China’s manufacturing of foundational semiconductors (also known as legacy or mature node semiconductors),” the press release said, “including to the extent that they are incorporated as components into downstream products for critical industries like defense, automotive, medical devices, aerospace, telecommunications, and power generation and the electrical grid.”

Additionally, the probe will assess China’s potential impact on “silicon carbide substrates (or other wafers used as inputs into semiconductor fabrication)” to ensure China isn’t burdening or restricting US commerce.

Some officials were frustrated that Biden didn’t launch the probe sooner, the Financial Times reported. It will ultimately be up to Donald Trump’s administration to complete the investigation, but Biden and Trump have long been aligned on US-China trade strategies, so Trump is not necessarily expected to meddle with the probe. Reuters noted that the probe could set Trump up to pursue his campaign promise of imposing a 60 percent tariff on all goods from China, but FT pointed out that Trump could also plan to use tariffs as a “bargaining chip” in his own trade negotiations.

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China hits US with ban on critical minerals used in tech manufacturing

Although China’s response to the latest curbs was swift and seemingly strong, experts told Ars that China’s response to Biden’s last round of tariffs was relatively muted. It’s possible that this week’s ban on exports into the US could also be a response to President-elect Donald Trump’s threat to increase tariffs on all Chinese goods once he takes office.

Analysts warned Monday that new export curbs could end up hurting businesses in the US and allied nations while potentially doing very little to block China from accessing US tech. On Tuesday, four Chinese industry associations seemingly added fuel to the potential fire threatening US businesses by warning Chinese firms that purchasing US chips is “no longer safe,” Asia Financial reported.

Apparently, these groups would not say how or why the chips were unsafe, but the warning could hurt US chipmaking giants like Nvidia, AMD, and Intel, the financial industry publication closely monitoring China’s economy forecast said.

This was a “rare, coordinated move” by industry associations advising top firms in telecommunications, autos, semiconductors, and “the digital economy,” Asia Financial reported.

As US-China tensions escalate ahead of Trump’s next term, the tech industry has warned that any unpredictable rises in costs may end up spiking prices on popular consumer tech. With Trump angling to add a 35 percent tariff on all Chinese goods, that means average Americans could also end up harmed by the trade war, potentially soon paying significantly more for laptops, smartphones, and game consoles.

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trump’s-60%-tariffs-could-push-china-to-hobble-tech-industry-growth

Trump’s 60% tariffs could push China to hobble tech industry growth


Retaliation likely, experts say

Tech industry urges more diplomacy as it faces Trump’s proposed sweeping tariffs.

Now that the US presidential election has been called for Donald Trump, the sweeping tariffs regime that Trump promised on the campaign trail seems imminent. For the tech industry, already burdened by the impact of tariffs on their supply chains, it has likely become a matter of “when” not “if” companies will start spiking prices on popular tech.

During Trump’s last administration, he sparked a trade war with China by imposing a wide range of tariffs on China imports, and President Joe Biden has upheld and expanded them during his term. These tariffs are taxes that Americans pay on restricted Chinese goods, imposed by both presidents as a tactic to punish China for unfair trade practices, including technology theft, by hobbling US business with China.

As the tariffs expanded, China has often retaliated, imposing tariffs on US goods and increasingly limiting US access to rare earth materials critical to manufacturing a wide range of popular products. And any such retaliation from China only seems to spark threats of more tariffs in the US—setting off a cycle that seems unlikely to end with Trump imposing a proposed 60 percent tax on all China imports. Experts told Ars that the tech industry expects to be stuck in the middle of the blow-by-blow trade war, taking punches left and right.

Currently, there are more than $300 billion in tariffs on Chinese imports, but notably, there are none yet on popular tech like smartphones, laptops, tablets, and game consoles. Back when Trump last held office, the tech industry successfully lobbied to get those exemptions, warning that the US economy would hugely suffer if tariffs were imposed on consumer tech. Prices on game consoles alone could spike by as much as 25 percent as tech companies coped with increasing costs from tariffs, the industry warned, since fully decoupling from China was then, and is still now, considered impossible.

Trump’s proposed 60 percent tariff would cost tech companies four times more than that previous round of tariffs that the industry dodged when Trump last held office. A recent Consumer Technology Association (CTA) study found that prices could jump even higher than previously feared if consumer tech is as heavily taxed as Trump intends. Laptop prices could nearly double, game console prices could rise by 40 percent, and smartphone prices by 26 percent.

Any drastic spike in pricing could radically reshape markets for popular tech products at a time when tariffs and political tensions increasingly block US business growth into China. Diverting resources to decouple from China could disrupt companies’ abilities to fund more US innovation, risking Americans’ access to the latest tech at affordable prices. Experts told Ars that it’s unclear exactly how China will respond if Trump’s proposed tariffs become a reality, but that retaliation seems likely given the severity and broad scope of the looming tariffs regime. While some experts speculate that China may currently have fewer options to retaliate, according to CTA VP of International Trade Ed Brzytwa, “in terms of economic tools, there’s a lot of things that China could still do.”

How would China respond to Trump’s tariffs?

Nearly everyone—tech companies, lawmakers, and even US Treasury Secretary Janet Yellen—agrees that it would be impossible to fully decouple from China, where 30 percent of global manufacturing occurs. It will take substantial time and investment to shift supply chains that were built over decades of tech progress.

For tech companies, alienating China also comes with the additional risk of stifling growth into China markets, as China seemingly runs out of obvious ways to retaliate against the US without directly targeting US businesses.

After Trump’s early round of tariffs started a US-China trade war, China retaliated with more tariffs, and nothing the Biden administration has done has seemingly eased those tensions.

According to a November report from the nonpartisan nonprofit US-China Business Council, any “escalation of US tariffs would likely trigger retaliatory measures from China,” which could include increasing tariffs on US exports.

That could hurt tech companies even more than current tariffs already are, while spiking net job losses to more than 800,000 by 2025, the council warned, making “US businesses less competitive in the Chinese market” and “resulting in a permanent loss of revenue.” In another report from 2021, the council estimated that if the US intensifies the trade war while forcing a decoupling with China, it could ultimately decrease the US real gross domestic product by $1.6 trillion over the next five years.

The US-China Business Council declined to comment on how Trump’s proposed tariffs could impact the GDP.

In May, following Biden’s latest round of tariffs—on imports like electric vehicles, semiconductors, battery components, and critical minerals used in tech manufacturing—China immediately threatened retaliation. A Chinese foreign ministry spokesperson, Wang Wenbin, confirmed that “China opposes the unilateral imposition of tariffs which violate World Trade Organization [WTO] rules and will take all necessary actions to protect its legitimate rights,” CNN reported.

Nobody is sure how China may retaliate if Trump’s sweeping tariff regime is implemented. Peterson Institute for International Economics senior fellow Mary Lovely said that China’s response to Biden’s 100 percent tariff on EVs was surprisingly “muted,” but if a 60 percent tariff were imposed on all China goods, the country “would likely retaliate.”

Tech industry strategist and founder of Tirias Research Jim McGregor told Ars that China has already “threatened to start cutting back on access to rare earth materials,” potentially limiting US access to critical components of semiconductors. Brzytwa told Ars that “the processed materials that result from those rare earths are important for manufacturing of a variety of products in the United States or elsewhere.”

China “might be running out of room to retaliate with tariffs,” Brzytwa suggested, but the country could also place more restrictions on US exports or heighten the scrutiny of US companies, possibly even limiting investments. McGregor pointed out that China could also block US access to Taiwan or stop shipments into and out of Taiwan.

“They’ve already encircled the island recently with military weaponry, so they didn’t even have to invade Taiwan,” McGregor said. “They can actually block aid to Taiwan, and with the vast majority of our semiconductors still produced there, that would have a huge impact on our industry and our economy.”

Brzytwa is worried that if China is pushed too far in a trade war, it may lash out in other ways.

“I think what we worry about as well is that whatever actions the United States undertakes become so provocative that China decides to act out outside the economic arena through other means,” Brzytwa told Ars.

What should the US be doing?

If the US wants to succeed in safeguarding US national security and tech innovation, Lovely told Congress the country must clarify “its strategic intent with respect to trade with China” and reform tariffs to align with that strategic intent.

She said that Trump’s “whole kitchen sink” approach has not worked, and rather than being strategic, Biden has been capricious in upholding and expanding on Trump’s tariffs.

“If you try to do everything, you end up doing nothing well,” Lovely told Ars. “Rather than just vilifying China (which, granted, China deserves a lot of vilification)” and “deluding” Americans into thinking tariffs are good for them, Lovely suggested, Trump should analyze “what’s the best thing for the United States?”

Instead, when Lovely shared a report in August with the Trump campaign—estimating that it would cost “a typical US household in the middle of the income distribution more than $2,600 a year” if Trump follows through on his tariff plans, which also include a 20 percent universal tariff on all imports from anywhere—Trump’s team rejected input “from so-called experts,” Lovely said.

Lovely thinks the US should commit to a long-term solution to reduce reliance on China that can be sustained through each presidential administration. That could mean working to support decarbonization efforts and raise labor standards in allied nations where manufacturing could potentially be diverted, essentially committing to build a new global value chain after the past 35 years of China’s manufacturing dominance.

“The vast majority of the world’s electronic assembly is done in China,” McGregor told Ars. And while “a lot of companies are trying to have slowly migrated some of their manufacturing out of China and trying to build new facilities, that takes decades to really shift.”

Even if the US managed to block all imports from China in a decade, Lovely suggested that “we would still have a lot of imports from China because Chinese value added is going to be embedded in things we import from Vietnam and Thailand and Indonesia and Mexico.”

“The tariff can be effective in changing these direct imports, as we’ve seen, yeah, but they’re not going to really push China out of the global economy,” Lovely told Ars.

Consequences of a lack of diplomacy

All experts agreed that more diplomacy is needed since decoupling is impossible, especially in the tech industry, where isolating China has threatened to diverge standards and restrict growth into China markets that could spur US innovation.

“We need somebody desperately that’s going to try to bridge barriers, not create them,” McGregor told Ars. “Unfortunately, we have nobody in Washington that appears to want to do that.”

Choosing diplomacy over tariffs could also mean striking trade agreements to curtail China’s unfair trade practices that the US opposes, such as a deal holding China accountable to WTO commitments, Brzytwa told Ars.

But even though China’s spokesperson cited the WTO commitments in his statement opposing US tariffs last May, Brzytwa said, the US has seemingly given up on the WTO dispute settlement process, feeling that it doesn’t work because “China doesn’t fit the WTO.”

“It’s a lot of defeatism, in my view,” Brzytwa said.

Consumers will pay the costs

Brzytwa warned that if Trump deepens US-China trade tensions, it would likely cause ripple effects across the US, potentially constricting access to the best tech available today, which would result in limited productivity across industry.

Any costs of new tariffs “would be passed on to consumers, and consumers would purchase less of those products,” Brzytwa said. “In our view, that is not supportive of innovation when people are not purchasing the latest technologies that might be more capable, more energy-efficient, and might have new features in them that allow us to be more productive.”

Brzytwa said that a CTA study showed that if tariffs are imposed across the economy, all companies would have to stop everything to move away from China and into the US. That would take at least a decade, 10 times the labor force the US has now, and cost $500 billion in direct business investments, the study estimated. “And that’s before you get to environmental costs or energy costs,” Brzytwa told Ars, while noting that an alternative strategy relying on treaty allies and trading partners could cut those costs to $127 billion but not eliminate them.

“It wouldn’t happen in a way where there’s no cost increase,” Brzytwa said. “Of course, there’s going to be a cost increase.”

The hardest-hit tech companies by China tariffs so far have likely been small businesses with little chance to grow since they’re “paying more in tariff costs or they’re paying more in administrative costs, and they’re not spending money on research and development, or they’re not hiring new people, because they’re just trying to stay alive,” Brzytwa said.

Lovely has testified three times to Congress and plans to continue stressing what the negative impacts “might be for American manufacturers for consumers” from what she thinks are “rather extreme moves” expanding tariffs without clear purpose under both Trump and Biden.

But while Congress controls the power to tax, it’s the executive branch that controls foreign policy, and in this highly politicized environment, even well-researched studies done by nonpartisan civil servants can’t be depended on to influence presidents who are determined to use tariffs to appear strong against China, Lovely suggested.

On the campaign trail, both candidates appeared to be misleading Americans into thinking that tariffs “are good for them,” Lovely said. If Trump’s tariffs get implemented once he’s sworn back in, that will only make it that much worse if the rug gets yanked from under them and Americans are suddenly hit with higher prices on their favorite devices.

“It’s going to be like shock therapy, and it’s not going to be pleasant,” Lovely told Ars.

Photo of Ashley Belanger

Ashley is a senior policy reporter for Ars Technica, dedicated to tracking social impacts of emerging policies and new technologies. She is a Chicago-based journalist with 20 years of experience.

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trump’s-election-win-spells-bad-news-for-the-auto-industry

Trump’s election win spells bad news for the auto industry


so we’re really doing this again, huh?

As a candidate, Donald Trump had no love for EVs or foreign imports.

Expect bigger and less efficient trucks in the coming years. Credit: Emily Elconin/Bloomberg via Getty Images

Yesterday, Donald Trump won a second presidential term from American voters. His first term was marked, among other things, by attempts to water down environmental laws and regulations aimed at the auto industry. And as a candidate in 2024, Trump has promised plenty of disruption to the sector through both trade policy and an abrogation of the government’s commitment to fight climate change. Here are some of the more significant changes we think are coming.

Electric vehicle adoption

The Inflation Reduction Act of 2022 was one of President Joe Biden’s signature policy achievements, part of a $450 billion climate package. One of its many sections revised the way we incentivize consumers to buy electric vehicles, with an update to the clean vehicle tax credit that requires final assembly in North America, as well as ever-increasing amounts of US-sourced battery components and minerals to be eligible.

But such policies are not loved by the Republican Party. During his first term, Trump repeatedly criticized EVs, saying that “all-electric is not going to work,” and he vociferously attacked EVs during his campaign, telling supporters at his party’s national convention in July that “I will end the electric vehicle mandate on day one,” referring to a current White House goal to reach 50 percent EV adoption by 2030, and calling the most significant climate legislation ever “the new green scam.”

The Project 2025 policy document, developed by the Heritage Foundation in lieu of an official Republican Party manifesto, contains little affection for EVs. It says we should “respect the right of Americans to buy and drive cars of their own choosing rather than trying to force them into electric vehicles and eventually out of the driver’s seat altogether in favor of self-driving robots” and that the waiver given to the California Air Resource Board should only apply to that state and not the other 16 states and the District of Columbia, which currently abide by CARB’s emissions rules.

Indeed, the Trump campaign press secretary told journalists that California’s waiver would be “immediately revoked” if Trump returned to office.

As such, fuel efficiency rules set forth by the US Department of Energy and the US Environmental Protection Agency, which are meant to go into effect in two years, are almost certainly toast at this point. As we know, the previous Trump administration took an unorthodox approach to undermining existing fuel economy standards, sidelining the EPA in the process.

Given these facts, the future for electric vehicle adoption in the US now appears questionable, and it’s likely that OEMs—the American ones in particular—will return to their 2016–2020 playbook, which involved lots of supersized gas-guzzling SUVs and pickup trucks, with less emphasis on the safety of pedestrians. As an example, Ford has been candid that its EV division is losing billions of dollars a year, and a second Trump administration may well empower shareholders to demand a more profitable allocation of those resources from the automakers in which they are invested.

For companies like Toyota and Stellantis, which lag behind European and Korean rivals when it comes to EVs, Trump’s election will no doubt give their product planners a small measure of relief.

The EV industry says it is ready to work with the incoming government “and all groups that want to ensure our nation’s innovation and economic competitiveness remain the best in the world. The next four years are critical to ensuring that these technologies are developed and deployed by American workers in American factories for generations—a goal that unites every state regardless of their electoral college votes,” said the Zero Emission Transportation Association (ZETA).

“We encourage members of both parties to support policies that provide business and trade certainty so that EV manufacturers up and down the supply chain can unleash the next chapter of American automotive dominance. The United States’ global competitiveness depends on it,” ZETA said to Ars in a statement.

Tesla off the hook?

Tesla, however, should be placed to do better under the next Trump administration. Its CEO Elon Musk has taken a hard right turn politically over the past couple of years, funding republican political causes to the tune of tens of millions of dollars before contributing more than $150 million to Trump’s reelection—a far cry from the Musk of the early 2010s who claimed that climate change was the most pressing issue facing humanity.

As it stands, the future looks very bright for Musk and Tesla. In recent years, the Texas-based automaker has been the subject of at least 14 safety defect investigations by the National Highway Traffic Safety Administration, and many Tesla watchers believed that NHTSA has been getting ready to order a costly hardware recall due to the dangerous nature of Tesla’s “Full Self Driving” and “Autopilot” driver assistance systems.

But a position for Musk in Trump’s cabinet is well within the bounds of possibility—as a candidate, Trump more than once has suggested making Musk a key adviser or giving him control of one or more government departments. With the keys to the Department of Transportation (and thereby NHTSA) in his pocket, any meaningful regulation of Tesla would be very unlikely.

Perhaps a Musk cabinet position would safeguard the National Electric Vehicle Infrastructure program, however. This $7.5 billion program is building out fast chargers along highway corridors and in underserved communities, and the disbursement of funds by the state DOTs (which administer it) has been glacial, making it a potentially ripe target for cancellation. But Tesla has been a recipient of NEVI funding and stands to benefit further in the future if the program survives.

But not every Tesla watcher thinks this would be entirely positive for the company. Musk already splits his time as CEO between several companies, and some investors think a cabinet position would mean even more time away from Tesla’s helm. “Musk getting a cabinet seat in a Trump win would be a complicated decision that would take time away from Tesla and is not what shareholders want to see,” said longtime Tesla bull and analyst Dan Ives to Investors Business Daily.

Big import tariffs on imported cars and parts

Under the Biden administration, there has already been broad bipartisan support to protect US auto manufacturing from cheap Chinese imports, supported by both automakers and unions. In addition to tying clean vehicle tax credits to North American manufacturing, the Biden administration recently levied a 100 percent import tariff on Chinese-made EVs.

Many industry watchers think this will only escalate under the new administration after Trump repeatedly suggested abolishing many federal taxes—including income tax—and replacing them with import tariffs that would significantly drive up the cost of imported goods to US consumers. German automakers that depend on the US market are already seeing their stocks slide today, even though companies like Mercedes-Benz and BMW already have US manufacturing sites. “There’s some natural cover-up against possible tariffs,” BMW CEO Oliver Zipse told Automotive News.

Photo of Jonathan M. Gitlin

Jonathan is the Automotive Editor at Ars Technica. He has a BSc and PhD in Pharmacology. In 2014 he decided to indulge his lifelong passion for the car by leaving the National Human Genome Research Institute and launching Ars Technica’s automotive coverage. He lives in Washington, DC.

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us-suspects-tsmc-helped-huawei-skirt-export-controls,-report-says

US suspects TSMC helped Huawei skirt export controls, report says

In April, TSMC was provided with $6.6 billion in direct CHIPS Act funding to “support TSMC’s investment of more than $65 billion in three greenfield leading-edge fabs in Phoenix, Arizona, which will manufacture the world’s most advanced semiconductors,” the Department of Commerce said.

These investments are key to the Biden-Harris administration’s mission of strengthening “economic and national security by providing a reliable domestic supply of the chips that will underpin the future economy, powering the AI boom and other fast-growing industries like consumer electronics, automotive, Internet of Things, and high-performance computing,” the department noted. And in particular, the funding will help America “maintain our competitive edge” in artificial intelligence, the department said.

It likely wouldn’t make sense to prop TSMC up to help the US “onshore the critical hardware manufacturing capabilities that underpin AI’s deep language learning algorithms and inferencing techniques,” to then limit access to US-made tech. TSMC’s Arizona fabs are supposed to support companies like Apple, Nvidia, and Qualcomm and enable them to “compete effectively,” the Department of Commerce said.

Currently, it’s unclear where the US probe into TSMC will go or whether a damaging finding could potentially impact TSMC’s CHIPS funding.

Last fall, the Department of Commerce published a final rule, though, designed to “prevent CHIPS funds from being used to directly or indirectly benefit foreign countries of concern,” such as China.

If the US suspected that TSMC was aiding Huawei’s AI chip manufacturing, the company could be perceived as avoiding CHIPS guardrails prohibiting TSMC from “knowingly engaging in any joint research or technology licensing effort with a foreign entity of concern that relates to a technology or product that raises national security concerns.”

Violating this “technology clawback” provision of the final rule risks “the full amount” of CHIPS Act funding being “recovered” by the Department of Commerce. That outcome seems unlikely, though, given that TSMC has been awarded more funding than any other recipient apart from Intel.

The Department of Commerce declined Ars’ request to comment on whether TSMC’s CHIPS Act funding could be impacted by their reported probe.

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