O'Melveny Insights 2023

19 These cumulative actions are having profound impacts on the technology development strategies of companies that operate in both the United States and China, as well as their ability to offer products and services in those markets. As noted in the Biden Administration’s recent National Security Strategy, China’s emergence as both the “most consequential competitor” and “one of the largest trading partners” will require approaches that “fall outside the bounds of existing rules and regulations.” As the Administration pursues “responsible competition” with China, companies should anticipate that US national security strategy will continue to shape how the government regulates domestic and foreign technology, particularly if there is a nexus to China or other countries of concern, such as Russia. The following developments illustrate how US policy will impact decisions on both domestic and outbound investment, supply chain, exports, and imports: Commerce. The Department of Commerce has begun implementing the CHIPS Act, which appropriated US$52.7 billion to support the American semiconductor industry. That funding aims to not just buoy manufacturers, but incentivize the development of the semiconductor ecosystem, which includes suppliers, workforce development, and research and development. It also comes with strings attached. In addition to limitations on investing in and doing business with China, Commerce will prioritize projects that follow information security standards, supply chain security, and cybersecurity best practices. These The US government’s support for TSMC exemplifies the extent to which national security concerns about China have driven successive US administrations to pursue industrial incentives, novel regulatory regimes, and impose heightened restrictions related to technology and infrastructure. US offices among “the elite” for international trade: export controls and economic sanctions. —Chambers USA