New Limits on Exports of Semiconductor Manufacturing Technology to China

The Bureau of Industry and Security has issued a final rule that, effective Dec. 31, will remove three companies from the validated end-user authorization list for China and thus require a license for their exports to China of U.S.-origin goods, software, and technology for the manufacture of semiconductors. (Press reports indicate that a fourth company will be removed from this list as well.)

VEUs are designated entities located in eligible destinations to which eligible items may be exported, reexported, or transferred (in-country) under a general authorization instead of a license. Eligible destinations of VEUs may obtain eligible items without the need for the VEUs’ supplier to obtain an export or reexport license from BIS. Eligible items vary among VEUs and may include commodities, software, and/or technology, except items controlled for missile technology or crime control reasons on the Commerce Control List.

An agency press release states that the three identified companies will have until Dec. 31 to apply for and obtain licenses for affected exports. BIS estimates that this rule will result in the submission of an additional 1,000 license applications annually, noting that it intends to grant those that will allow these companies to operate their existing fabs in China but not those that would allow them to expand capacity or upgrade technology at those fabs.