Semiconductor Sovereignty Act
The Semiconductor Sovereignty Act would require the Secretary of Commerce (through the Under Secretary of Commerce for Industry and Security) to produce an initial, comprehensive report within 240 days of enactment. The report would map critical inputs, equipment, software, processes, and supply chains for semiconductors and related technologies; analyze offshore versus reshored manufacturing and research trends; assess where offshoring is occurring and why; and evaluate the roles of foreign nationals and foreign entities in the U.S. semiconductor ecosystem, including any assets or funding linked to the federal government (notably CHIPS Act recipients). Based on these findings, the Act directs the administration to identify strategic responses—such as disincentives for offshoring and incentives to increase domestic production and R&D, including tax incentives and subsidies—aimed at strengthening U.S. competitiveness and national security. The bill also requires annual (and updated) follow-up reports, with the Secretary assessing whether strategies remain current and updating them as needed. A prohibition is included on disclosing personally identifiable information about certain foreign nationals and officials in the reporting. In short, the bill seeks to create a formal, data-driven, annual cycle of analysis and policy recommendations to bolster domestic semiconductor manufacturing and research, with a particular emphasis on reducing offshoring and protecting national security.
Key Points
- 1Initial comprehensive report due within 240 days after enactment. The report must identify: critical inputs (tools like photolithography equipment and photomasks, software), manufacturing and research processes (design, packaging), key minerals and chemicals, and supply chains; offshore/reshoring trends; locations of offshoring; bottlenecks; the role of foreign nationals and workers; and the involvement of private/public sector Americans who work for foreign entities; and entities that received federal support (e.g., CHIPS Act funds) but later offshore.
- 2Assessment and strategy recommendations. The Secretary must determine offshore manufacturing trends over a long horizon (up to 30 years after enactment), assess implications for the U.S. economy, national security, supply chains, allies, adversaries, and geopolitically sensitive markets (including Taiwan), and propose strategies to: disincentivize offshoring; increase domestic manufacturing and R&D (including via tax incentives and subsidies) and attract/retain foreign human capital; strengthen long-term U.S. competitiveness; and enhance government oversight and reduce problematic acquisitions.
- 3Public reporting and transparency. The Secretary must submit to Congress and publish in the Federal Register a report detailing the determinations, assessments, and each strategy and recommendation, with policy recommendations for implementing them.
- 4Prohibition on disclosing certain information. The report cannot include personally identifiable information about foreign nationals described in the bill or American officials who work for foreign entities.
- 5Ongoing reporting requirement. Not later than one year after the initial report—and annually thereafter—the Secretary must assess whether the strategies are outdated and, if so, submit updated strategies; after such updates, another yearly determination is required.
- 6Consultation and scope. The Secretary must consult with heads of other federal agencies as appropriate. The bill defines “foreign entity” broadly as a company organized under foreign law or with principal place of business outside the United States. The act covers semiconductors and “other similar technologies,” indicating a broad scope beyond semiconductors alone.
- 7Context reference. The bill explicitly notes relevance to CHIPS Act of 2022 funding for domestic manufacturing and research and the subsequent offshoring activity, tying the new reporting requirements to existing policy and funding frameworks.