The Chip EQUIP Act prevents American companies that receive federal funding for semiconductor manufacturing from buying certain advanced equipment made by foreign countries considered threats to U.S. interests—primarily China. This restriction lasts for 10 years after a company signs an agreement to receive federal money.

The law targets specific types of equipment used to make computer chips, including machines for depositing materials, etching patterns, advanced imaging (lithography), testing, and other specialized manufacturing processes. The goal is to keep sensitive chipmaking technology and know-how within the U.S. and allied countries, protecting both national security and American competitiveness in this critical industry.

There are some exceptions built in. If the equipment isn't available in sufficient quality or quantity from the U.S. or friendly countries, companies can ask for a waiver. Similarly, if foreign companies only refurbished equipment (rather than originally manufacturing it), or if using the equipment complies with existing export control rules and the government determines it's in America's national security interest, the restriction can be lifted. Essentially, the law says: if you want federal support to build chips in America, you need to source your manufacturing equipment from trusted sources.