S4585-118

1. Short title This Act may be cited as the The Chip Equipment Quality, Usefulness, and Integrity Protection Act of 2024 or the Chip EQUIP Act of 2024.

2. Purchases of semiconductor manufacturing equipment Section 9901 of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (15 U.S.C. 4651) is amended— by redesignating paragraphs (2), (3), (4), (5), (6), (7), (8), (9), (10), (11), (12), and (13) as paragraphs (3), (4), (6), (7), (8), (9), (10), (11), (12), (13), (14), and (15), respectively; by inserting after paragraph (1) the following: The term completed, fully assembled means the state in which all (or substantially all) necessary parts, chambers, subsystems, and subcomponents have been put together, resulting in a ready-to-use or ready-to-install item to be directly purchased from an entity. in subparagraph (A) of paragraph (4), as so redesignated, by striking paragraph (2) and inserting paragraph (3); and by inserting after paragraph (4), as so redesignated, the following: The term ineligible equipment— means completed, fully assembled semiconductor manufacturing equipment that is manufactured or assembled by a foreign entity of concern or subsidiary of a foreign entity of concern and used in the fabrication, assembly, testing, advanced packaging, production, or research and development of semiconductors; includes— deposition equipment; etching equipment; lithography equipment; inspection and measuring equipment; wafer slicing equipment; wafer dicing equipment; wire bonders; ion implantation equipment; chemical mechanical polishing; and diffusion or oxidation furnaces; and does not include any part, chamber, subsystem, or subcomponent that enables or is incorporated into such equipment. Section 9902 of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (15 U.S.C. 4652) is amended by adding at the end the following: Subject to paragraph (2), the Secretary shall include in the terms of each agreement with a covered entity for the award of Federal financial assistance under this section prohibitions with respect to a project relating to the procurement, installation, or use of ineligible equipment. The Secretary may waive the prohibitions described in paragraph (1) if— the ineligible equipment to be purchased by the applicable covered entity is not produced in the United States or an allied or partner country in sufficient and reasonably available quantities or of a satisfactory quality to support established or expected production capabilities; or the use of the ineligible equipment complies with the requirements set forth in the Export Administration Regulations, as defined in section 1742 of the Export Control Reform Act of 2018 (50 U.S.C. 4801); and the Secretary, in consultation with the Director of National Intelligence or the Secretary of Defense, determines the waiver is in the national security interest of the United States. Nothing in this subsection shall be construed to waive the application of section 9907. Section 48D(c)(1) of the Internal Revenue Code of 1986 is amended by striking section 9901(6) of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 and inserting section 9901 of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (15 U.S.C. 4651). Section 50(a)(6)(D)(i) of the Internal Revenue Code of 1986 is amended by striking section 9901(7) of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 and inserting section 9901 of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (15 U.S.C. 4651). Section 5949(j)(5) division E of James M. Inhofe National Defense Authorization Act for Fiscal Year 2023 (41 U.S.C. 4713 note; Public Law 117–263) is amended by striking paragraph (7) of section 9901 of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (15 U.S.C. 4651), as added by section 103(a)(4) of the CHIPS Act of 2022 (division A of Public Law 117–167) and inserting section 9901 of the William M. (Mac) Thornberry National Defense Authorization Act for Fiscal Year 2021 (15 U.S.C. 4651). (2)The term completed, fully assembled means the state in which all (or substantially all) necessary parts, chambers, subsystems, and subcomponents have been put together, resulting in a ready-to-use or ready-to-install item to be directly purchased from an entity.; (5)The term ineligible equipment— (A)means completed, fully assembled semiconductor manufacturing equipment that is manufactured or assembled by a foreign entity of concern or subsidiary of a foreign entity of concern and used in the fabrication, assembly, testing, advanced packaging, production, or research and development of semiconductors; (B)includes—(i)deposition equipment; (ii)etching equipment; (iii)lithography equipment; (iv)inspection and measuring equipment; (v)wafer slicing equipment; (vi)wafer dicing equipment; (vii)wire bonders; (viii)ion implantation equipment; (ix)chemical mechanical polishing; and (x)diffusion or oxidation furnaces; and(C)does not include any part, chamber, subsystem, or subcomponent that enables or is incorporated into such equipment.. (j)Ineligible use of funds(1)In generalSubject to paragraph (2), the Secretary shall include in the terms of each agreement with a covered entity for the award of Federal financial assistance under this section prohibitions with respect to a project relating to the procurement, installation, or use of ineligible equipment. (2)WaiverThe Secretary may waive the prohibitions described in paragraph (1) if— (A)the ineligible equipment to be purchased by the applicable covered entity is not produced in the United States or an allied or partner country in sufficient and reasonably available quantities or of a satisfactory quality to support established or expected production capabilities; or(B)(i)the use of the ineligible equipment complies with the requirements set forth in the Export Administration Regulations, as defined in section 1742 of the Export Control Reform Act of 2018 (50 U.S.C. 4801); and(ii)the Secretary, in consultation with the Director of National Intelligence or the Secretary of Defense, determines the waiver is in the national security interest of the United States.(3)Foreign entities of concernNothing in this subsection shall be construed to waive the application of section 9907..