Navigating the New Export Maze: BIS Issues Further Advanced Computing and Semiconductor Manufacturing Items … – Morgan Lewis
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The Department of Commerce’s Bureau of Industry and Security (BIS) recently published new Frequently Asked Questions (FAQs) on its interim final rules (IFRs) concerning semiconductor manufacturing equipment and advanced computing items.
These FAQs provide additional insight into BIS’s interpretation of various technical and regulatory requirements under the updated regulations. The FAQs reflect BIS’s efforts to balance national security concerns with the cooperation from private sectors in key technological areas.
BIS and other US government agencies have used FAQs to outline the government’s regulatory and enforcement priorities and to clarify or confirm interpretations when questions arise. With these FAQs, BIS addressed specific questions about licensing, the control criteria of the export control classification numbers (ECCNs), and the role and scope of US persons when complying with the new regulations.
FAQs are informative, but not binding, and therefore provide guidance that should be confirmed with BIS if companies intend to rely on the responses to conduct business. Companies can confirm these interpretations either through the submission of export licenses or advisory opinion requests—the latter of which are also not binding per se but reflect an official position from the agency that BIS publishes for the community.
This LawFlash summarizes key highlights of BIS’s FAQs. For a detailed review of the IFRs, refer to our previous report.
BIS explained that in promulgating the IFRs, it considered the impact of export controls on cross-border technology collaboration, particularly in healthcare and environmental technology, and adjusted the scope of the controls by, for example, implementing the semiconductor manufacturing equipment end-use control in § 744.23(a)(4), expanding license exception eligibility, and added exclusions to the §§ 744.6 and 744.23 controls. BIS also confirmed that Cyprus is no longer included in Country Group D:5 in Supplement No. 1 to part 740 because it has been removed from 22 CFR 126.1 of the State Department’s International Traffic in Arms Regulations.
BIS provided additional details regarding technical specifications and measurements related to export controls associated with semiconductor manufacturing equipment and advanced computing items, including how to calculate “performance density” and “die size” for semiconductor manufacturing:
BIS also provides details regarding the conditions under which License Exception Notified Advanced Computing (NAC) applies, including notification requirements, applicable items, and filing processes.
The FAQs address licensing requirements for various technologies and scenarios, particularly focusing on the development and production of advanced-node integrated circuits.
“Us Person” activities and potential facilitation are of heightened concern to companies that employ US persons in operations located in China or abroad. Understanding these sensitivities, the FAQs provide some clarification of excluded activities and covered activities. Given this FAQ, we anticipate that BIS will continue to clarify the scope and reach of the US Person activities’ requirements:
Lastly, the FAQs outline the requirements for filing and licensing for .z category items in the Automated Export System (AES) Electronic Export Information (EEI). Additionally, the FAQs explain that .z items do require licenses for countries outside of Country Groups D:1, D:4, and D:5 as the .z entries are designed to control items that meet the criteria of both a specific ECCN and the parameters set in 3A090/4A090. These entries retain the original license requirements of the item and add new RS-related license requirements.
For instance, 4A003.z controls items that meet the criteria of both 4A003.b and 4A090, requiring a license for the same destinations as 4A003.b items plus additional restrictions on 4A090 items. Outside of Country Groups D:1, D:4, and D:5, these items are eligible for the same license exceptions as a 4A003.b item.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following:
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