The U.S. and China announced new restrictions this week on two-way trade in high-technology goods. The U.S. imposed additional controls on exports to China of goods related to the production of semiconductors, while China tightened controls on exports of dual-use items to the U.S.
U.S. Export Controls
The Bureau of Industry and Security announced Dec. 2 a package of rules designed to further impair China’s capability to produce advanced-node semiconductors that can be used in the next generation of advanced weapon systems and in artificial intelligence and advanced computing, which have significant military applications. According to a BIS press release, these rules include the following.
- new controls on exports of 24 types of semiconductor manufacturing equipment needed to produce advanced-node integrated circuits, including certain etch, deposition, lithography, ion implantation, annealing, metrology and inspection, and cleaning tools
- new controls on exports of three types of software tools for developing or producing advanced-node integrated circuits, including certain software that increases the productivity of advanced machines or allows less-advanced machines to produce advanced chips
- new controls on exports of high-bandwidth memory, which is a key component of advanced computing integrated circuits (these controls apply to U.S.-origin HBM as well as foreign-produced HBM subject to the Export Administration Regulations under the advanced computing foreign direct product rule, though certain HBM will be eligible for authorization under new license exception HBM)
- new red flag guidance to address compliance and diversion concerns
- 140 additions to the Entity List and 14 modifications; entities are located in China, Japan, Korea, and Singapore and include tool manufacturers, semiconductor fabs, and investment companies involved in advancing the Chinese government’s military modernization
- two new FDPRs (and corresponding de minimis provisions) that extend jurisdiction over specified foreign-produced semiconductor manufacturing equipment and related items if there is (1) knowledge that the foreign-produced commodity is destined to Macau or a destination in Country Group D:5, including China, or (2) knowledge of certain involvement by an entity on or added to the Entity List with a footnote 5 designation
- new software and technology controls, including restrictions on electronic computer-aided design and technology computer-aided design software and technology when there is knowledge that such items will be used for the design of advanced-node integrated circuits to be produced in Macau or a destination in Country Group D:5
- clarification that export controls apply to the export, reexport, or transfer (in-country) of software keys that allow access to the use of specific hardware or software or the renewal of existing software and hardware use licenses
China Export Controls
In an apparent response to the U.S. measures, China’s Ministry of Commerce issued a bulletin that, effective Dec. 3, further tightens controls on exports of dual-use items to the U.S. This includes a prohibition on exports of dual-use items to U.S. military end-users or end-uses; a general ban on exports to the U.S. of dual-use items related to the minerals gallium, germanium, antimony, and super-hard materials, which are used in the manufacture of products such as semiconductors, photovoltaic equipment, and fiber optic cables; and a stricter policy of end-use and end-user review for exports of dual-use items of graphite to the U.S.
U.S. importers of defense-related items and critical materials from China will be impacted by the new restrictions. For more information, please contact Xiaofeng Xu via email.
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