Background

The U.S. has imposed new export controls designed to restrict China’s ability to obtain advanced computing chips, develop and maintain supercomputers, and manufacture advanced semiconductors. A new rule also makes clear that the U.S. may tighten restrictions on exports to companies when foreign governments prevent the U.S. from conducting end-use checks.

For more information on these new export restrictions, please contact attorney Kristine Pirnia at (202) 730-4964 or via email.

Computing/Semiconductors

A BIS interim final rule imposes (1) restrictive export controls on certain advanced computing semiconductor chips, transactions for supercomputer end-uses, and transactions involving certain entities on the Entity List, and (2) new controls on certain semiconductor manufacturing items and on transactions for certain integrated circuit end-uses. Specifically, this rule:

- adds certain advanced and high-performance computing chips and computer commodities that contain such chips to the Commerce Control List;

-  adds new license requirements for items destined for a supercomputer or semiconductor development or production end-use in China;

- expands the scope of the Export Administration Regulations over certain foreign-produced advanced computing items and foreign-produced items for supercomputer end-uses;

- expands the scope of foreign-produced items subject to license requirements to 28 existing entities on the Entity List that are located in China;

- adds certain semiconductor manufacturing equipment and related items to the CCL;

- adds new license requirements for items destined to a semiconductor fabrication facility in China that fabricates certain ICs (licenses for facilities owned by Chinese entities will face a presumption of denial while those for facilities owned by multinationals will be decided on a case-by-case basis);

- restricts the ability of U.S. persons to support the development or production of ICs at certain China-located semiconductor fabrication facilities without a license;

- adds new license requirements to export items to develop or produce semiconductor manufacturing equipment and related items; and

- establishes a temporary general license to minimize the short-term impact on the semiconductor supply chain by allowing specific, limited manufacturing activities related to items destined for use outside China.

BIS is accepting public comments on these changes through Dec. 12.

Unverified List

The UVL contains the names and addresses of foreign persons who are or have been parties to a transaction involving the export, reexport, or transfer (in-country) of items subject to the EAR whose bona fides (i.e., legitimacy and reliability relating to the end-use and end-user of items subject to the EAR) BIS has been unable to verify through an end-use check; e.g., the foreign party cannot be located at the address indicated on export documents, or during a check a recipient of items subject to the EAR is unable to produce them for visual inspection or provide sufficient documentation or other evidence to confirm their disposition. BIS may also place persons on the UVL when there is insufficient evidence to place them on the Entity List.

BIS has issued a final rule adding 31 entities in China to the UVL and removing nine others. License exceptions may not be used for exports, reexports, and transfers (in-country) involving a party listed on the UVL. Additionally, exporters, re-exporters, and transferors must obtain (and maintain a record of) a UVL statement from a party to the transaction listed on the UVL before proceeding with shipments to such persons when those shipments are not subject to a license requirement. Finally, electronic export information must be filed in the Automated Export System for all exports of tangible items subject to the EAR when a party to the transaction is listed on the UVL.

This rule also clarifies that a sustained lack of cooperation by a host government that prevents BIS from conducting an end-use check to verify the bona fides of a company on the UVL may constitute a basis for adding that company to the Entity List. Consistent with this regulatory change, BIS has issued a policy memorandum that calls for (1) adding parties to the UVL 60 days after checks are requested but host government inaction prevents their completion and (2) an additional 60-day process for adding UVL parties to the Entity List when there is a sustained lack of cooperation by a host government to facilitate completion of the checks.

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