The Bureau of Industry and Security announced this week a package of rules designed to broaden and strengthen controls on exports of advanced computing semiconductors and semiconductor manufacturing equipment and items that support supercomputing applications and end-uses. BIS said these rules reinforce regulations issued a year ago that limited exports to China by closing loopholes and restricting Beijing’s ability to both purchase and manufacture certain high-end chips critical for military advantage. According to press sources, additional updates are expected at least annually.

Advanced Computing Chips

An interim final rule effective Nov. 17 retains the stringent China-wide licensing requirements imposed in the October 2022 rule while making two categories of changes. One is adjusting the parameters that determine whether an advanced computing chip is restricted; related changes include requiring a notification for exports of certain additional chips with performance just below the restricted threshold, creating a new license exception NAC (notified advanced computing), and introducing an exemption that will permit the export of chips for consumer applications.

The second category encompasses new measures to address risks of circumvention of existing export controls.

- establishing a worldwide licensing requirement for exports of controlled chips to any company headquartered in any destination subject to a U.S. arms embargo or Macau, or whose ultimate parent company is headquartered in any of those countries

- creating new red flags and additional due diligence requirements to help foundries identify restricted chip designs from countries of concern

- expanding licensing requirements for exports of advanced chips, with a presumption of denial, to all 22 countries to which the U.S. maintains an arms embargo and Macau

- creating a notification requirement for a small number of high-end gaming chips

Comments on related issues, including the application of controls on deemed exports and reexports, may be submitted through Dec. 18.

Semiconductor Manufacturing Equipment

A separate interim final rule makes the following additional changes to the October 2022 regulations, effective Nov. 17. Comments are due by Dec. 18.

- imposing export controls on additional types of semiconductor manufacturing equipment

- expanding license requirements for semiconductor manufacturing equipment beyond China and Macau to 21 other countries for which the U.S. maintains an arms embargo

- refining and better focusing the U.S. persons restrictions, while codifying previously existing agency guidance, to ensure U.S. companies cannot provide support to advanced Chinese semiconductor manufacturing while avoiding unintended impacts

Entity List

Effective Oct. 17, a BIS final rule adds to the Entity List two Chinese entities and their subsidiaries (a total of 13 entities) involved in the development of advanced computing chips. These entities are also subject to restrictions on foreign-produced items made with U.S. technology. BIS states that foundries producing chips for these listed parties will need a BIS license before they may send such chips to these entities or parties acting on their behalf as a result of applying the “footnote 4” Entity List foreign direct product rule designation.

For more information on the impact of these rules, please contact Kristine Pirnia at (202) 730-4964 or via email.

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