US tech companies that receive funding as part of the A$74 billion CHIPS acts will be barred from building factories in China for a decade, the Biden administration has declared.

The broad aim of the bill is to advance semiconductor production in the US, in order to reduce reliance on Chinese companies.

With the recent shortages and supply chain issues, many industries, from computing to automotive, were financially hampered and unable to fulfil production orders.

“As a percentage of GDP, we spend less than half as much as the Chinese Communist Party on basic research,” Senator Chuck Schumer said when the bill was passed in late July, “which is even more devastating, given China has spent decades stealing America’s intellectual property. With this bill, that’s finally going to change.”

The new rules will ensure the federal funds remain in America.

“We’re going to be implementing the guardrails to ensure those who receive CHIPS funds cannot compromise national security they’re not allowed to use this money to invest in China, they can’t develop leading-edge technologies in China for a period of ten years,” said US Commerce Secretary Gina Raimondo.

Currently, the US produces less than 10 per cent of the world’s semiconductors.