The Biden administration says US tech companies that receive federal funding will be barred from building advanced technology facilities in China for 10 years, The guidelines were unveiled as part of a $50bn plan aimed at building up the local semiconductor industry.
They are faced with a global microchip shortage which has slowed production.
US Commerce Secretary Gina Raimondo says they are going to be implementing the guardrails to ensure those who receive CHIPS funds cannot compromise national security.