US Government Expands Export Controls on Semiconductor and Supercomputer Items

On October 7, 2022, the US Department of Commerce’s Bureau of Industry and Security (BIS) issued two rules amending the Export Administration Regulations (EAR) to expand export controls on China-destined semiconductor and supercomputer items. During a public briefing held on October 13, 2022, BIS noted that the expanded controls reflect the US government’s new approach in export controls, in particular in key technology areas including advanced logic and memory chips, to “maintain as large of a lead as possible” as reflected in the September 16, 2022 remarks by National Security Advisor Jake Sullivan.

The first rule on "Implementation of Additional Export Controls: Certain Advanced Computing and Semiconductor Manufacturing Items; Supercomputer and Semiconductor End Use; Entity List Modification" changes the Commerce Control List (CCL) to add certain semiconductor manufacturing and other semiconductor items and advanced computing items which are now subject to new Regional Stability (RS) controls when destined to China; expands the scope of foreign-produced items subject to the EAR through revisions to and addition of Foreign Direct Product Rules (FDPRs); imposes license requirements on certain China-origin technology exports; introduces new end use and end user controls with respect to semiconductor manufacturing activities and supercomputers; and restricts US persons’ activities with respect to development or production of certain high-performance integrated circuits (ICs) in China. The rule takes effect in phases, with some measures taking immediate effect on October 7, 2022 and other measures taking effect on October 12, 2022 and October 21, 2022. To minimize disruptions, BIS is also providing limited exceptions to the new export controls measures through a Temporary General License (TGL) and a savings clause.

BIS is seeking public comments on this first rule and interested parties may submit their comments by December 12, 2022.

The second rule on “Revisions to the Unverified List; Clarifications to Activities and Criteria that May Lead to Additions to the Entity List” adds 31 Chinese entities, including those operating in the semiconductor sector, to the Unverified List (UVL) and revises the EAR to explicitly note that the foreign government’s prevention of end use checks by US government agencies may lead to addition of relevant entities to the Entity List.

Changes to the Commerce Control List for Advanced Computing and Semiconductor Items and New Regional Stability (RS) Controls

Semiconductor Manufacturing Items

Effective October 7, 2022, the CCL is revised to add ECCN 3B090, which controls certain semiconductor manufacturing equipment, and revises ECCNs 3D001 and 3E001 to control software and technology associated with the newly added ECCN 3B090. BIS also is revising the heading of ECCN 3B991 to add reference to 3B090. ECCNs 3B090, 3D001 (for 3B090), and 3E001 (for 3B090) are controlled for RS reasons with respect to China.

Advanced Computing and Other Semiconductor Items

Effective October 21, 2022, the CCL is revised to add ECCNs 3A090, 4A090, and 4D090, and to revise ECCNs 3A991, 3D001, 3E001, 4A994, 4D994, 4E001, 5A992, and 5D992, as follows:

• ECCN 3A090 will control ICs that have or are programmable to have an aggregate bidirectional transfer rate over all inputs and outputs of 600 Gbytes/s or more to or from ICs other than volatile memories. A note to ECCN 3A090.a provides that the ICs specified by that paragraph include graphical processing units (GPUs), tensor processing units (TPUs), neural processors, in-memory processors, vision processors, text processors, co-processors/accelerators, adaptive processors, field-programmable logic devices (“FPLDs”), and application-specific integrated circuits (ASICs). ECCN 3A090 is subject to RS and Anti-Terrorism(AT) controls.
• ECCNs 3D001, 3E001 will be revised to include software and technology associated with ECCN 3A090. Two ECCNs related to ECCN 3A090 are subject to RS and AT controls.
• ECCN 4A090 will control computers, electronic assemblies and components, not elsewhere specified, containing ICs that exceed the limit in ECCN 3A090.a. ECCN 4A090 is subject to RS and AT controls.
• ECCN 4D090 will control software that is specially designed or modified for the development or production of the items controlled under ECCN 4A090. ECCN 4D090 is subject to RS and AT controls.
• ECCN 4E001 will be revised to include technology related to 4A090 or 4D090. ECCN 4E001 related to 4A090 or 4D090 is subject to RS and AT controls.
• ECCN 3A991 will be revised to add new paragraph 3A991.p for ICs that do not appear elsewhere on the CCL and have a processing performance of 8 Tera Operations Per Second (TOPS) or more, or an aggregate bidirectional transfer rate over all inputs and outputs of 150 Gbyte/s or more to or from ICs other than volatile memories. ECCN 3A991.p is subject to AT controls.
• ECCNs 3D991, 3E991 will be revised to include software and technology associated with ECCN 3A991.p. ECCNs 3D991 and 3E991 related to ECCN 3A991.p is subject to AT controls.
• ECCN 4A994.l will be revised to add new paragraph 4A994.l for computers, electronic assemblies and components, not elsewhere specified, containing ECCN 3A991.p ICs that exceed the limit of ECCN 3A991.p. ECCN 4A994.l is subject to AT controls.
• ECCNs 4D994, 4E994 will be revised to include software and technology associated with ECCN 4A994.l. ECCNs 4D994 and 4E994 related to 4A994.l is subject to AT controls.
• ECCNs 5A992.c, 5D992.c will be revised to also control for RS reasons when destined to China mass-market encryption items that are controlled under ECCN 5A992.c (mass market encryption commodities) or ECCN 5D992.c (mass market encryption software) and meet or exceed the performance parameters of ECCN 3A090 or 4A090. Mass-market encryption items classified under these ECCNs have previously been subject only to AT controls.

New RS Controls

As a result of the imposition of China-specific RS controls, a license is required for items specified in ECCNs 3A090, 3B090, 4A090, 5A992.c (that meet or exceed the performance parameters of ECCNs 3A090 or 4A090) and associated software and technology in 3D001 (for 3A090 or 3B090), 3E001 (for 3A090 or 3B090), 3B090, or 3D001 (for 3A090 or 3B090), 4D090, 4E001 (for 4A090 and 4D090), and 5D992.c (that meet or exceed the performance parameters of ECCNs 3A090 or 4A090) being exported, reexported, or transferred (in-country) to or within China. As noted above, the effective date for ECCN 3B090 and related software and technology is October 7, 2022, and the effective date for other ECCNs is October 21, 2022.

During the public briefing held on October 13, 2022, BIS stated that, practically speaking, only Categories 3, 4 and 5 would likely be impacted by the new RS controls. However, BIS noted that the rule would still cover any items that meet or exceed the performance parameters of ECCN 3A090 or 4A090, even if such items are classified in other Categories of the CCL.

Implications for Russia and Belarus

Because EAR imposes a license requirement on exports, reexports and transfers (in-country) to or in Russia or Belarus of items classified in any Categories of the CCL, items covered by the new ECCNs may not be exported, reexported or transferred (in-country) to or in Russia or Belarus without a license. Similarly, FDPRs for Russia and Belarus and military end users/uses in Russia and Belarus may also be applicable. Only a limited number of license exceptions remain available for Russia and Belarus (but not for the military end users/uses FDPR), including License Exception TMP for items for use by the news media; License Exception GOV; License Exception TSU for software updates for subsidiaries, branch offices or sales offices of companies from the United States or certain partner countries; License Exception BAG, excluding firearms and ammunition; License Exception AVS, except for certain Russian/Belarusian aircrafts; License Exception ENC for civil end users that are subsidiaries, branch offices or sales offices of companies from the United States or certain partner countries; and License Exception CCD.

License Exception Eligibility and License Review Policy

Only a limited number of license exceptions are available for the newly added or revised ECCNs that are controlled for RS reasons.

For ECCN 3B090 and associated software and technology in ECCNs 3D001 and 3E001, the only available license exception is License Exception GOV under Section 740.11(b)(2)(ii) for exports, reexports and transfers (in-country) made by or consigned to a department or agency of the US government.

For ECCNs 3A090, 4A090, and associated software and technology in 3D001, 3E001, 4D090, and 4E010, and IC, computer, or assembly meeting performance parameters of these new ECCNs but are classified elsewhere in the CCL (e.g., 5A002, 5D002, 5A992.c and 5D992.c), the only available license exceptions are License Exception RPL under Section 740.10 for certain servicing and replacement of parts and equipment; License Exception GOV under Section 740.11(b)(2)(ii) for exports, reexports and transfers (in-country) made by or consigned to a department or agency of the US government; and License Exception TSU (Technology and Software Unrestricted) under Section 740.13(a) and (c) for certain operation technology and software and software updates.

Any requests for license will be reviewed based on the policy of resumption of denial, except for certain end users in China that are headquartered in the United States or in a Country Group A:5 or A:6 country, for whom case-by-case review policy will apply.

New Foreign Direct Product Rules

BIS revised the Entity List Foreign Direct Product Rule (FDPR) to add new controls related to newly created “footnote 4” entities and created two new FDPRs. These changes to the FDPRs are effective October 21, 2022.

Revised Entity List FDPR (Footnote 4)

Under the revised Entity List FDPR, a foreign-produced item is subject to the EAR if:

• It is a direct product of technology or software subject to the EAR and specified in ECCN 3D001, 3D991, 3E001, 3E002, 3E003, 3E991, 4D001, 4D993, 4D994, 4E001, 4E992, 4E993, 5D001, 5D002, 5D991, 5E001, 5E002, or 5E991 of the CCL; or is produced by any plant or major component of a plant when the plant or major component of a plant, whether made in the United States or a foreign country, itself is a direct product of US-origin technology or software that is specified in one of aforementioned ECCNs; and
• There is “knowledge” that it will be incorporated into, or will be used in, the production or development of any part, component, or equipment produced, purchased, or ordered by a footnote 4 entity or if any footnote 4 entity is a party to any transaction involving the foreign produced item, e.g., as a purchaser, intermediate consignee, ultimate consignee, or end user.

Relatedly, BIS added “footnote 4” designation to the following 28 Chinese entities that were previously added to the Entity List:

• Beijing Institute of Technology;
• Beijing Sensetime Technology Development Co., Ltd.;
• Changsha Jingjia Microelectronics Co., Ltd.;
• Chengdu Haiguang Integrated Circuit;
• Chengdu Haiguang Microelectronics Technology;
• PRC Aerospace Science and Technology Corporation (CASC) 9th Academy 772
• Research Institute
• Dahua Technology;
• Harbin institute of technology;
• Higon;
• IFLYTEK;
• Intellifusion;
• Megvii Technology;
• National Supercomputer Center Zhengzhou;
• National Supercomputing Center Changsha (NSCC-CS);
• National Supercomputing Center Guangzhou (NSCC-GZ);
• National Supercomputing Center Jinan;
• National Supercomputing Center Shenzhen;
• National Supercomputing Center Tianjin (NSCC-TJ);
• National Supercomputing Center Wuxi (NSCC-WX);
• National University of Defense Technology;
• New H3C Semiconductor Technologies Co., Ltd.;
• Northwestern Polytechnical University;
• Shanghai High-Performance Integrated Circuit Design Center;
• Sugon;
• Sunway Microelectronics;
• Tianjin Phytium Information Technology;
• Wuxi Jiangnan Institute of Computing Technology; and
• Yitu Technologies

Advanced Computing FDPR

Under the new Advanced Computing FDPR, a foreign-produced item is subject to the EAR if:

• It is a direct product of technology or software subject to the EAR and specified in ECCN 3D001, 3D991, 3E001, 3E002, 3E003, 3E991, 4D001, 4D090, 4D993, 4D994, 4E001, 4E992, 4E993, 5D001, 5D002, 5D991, 5E001, 5E991, or 5E002 or is produced by any plant or major component of a plant when the plant or major component of a plant, whether made in the United States or a foreign country, itself is a direct product of US-origin technology or software that is specified in one of aforementioned ECCNs;
• It is specified in ECCN 3A090, 3E001 (for 3A090), 4A090, or 4E001 (for 4A090); or an IC, computer, “electronic assembly” or “component” specified elsewhere on the CCL and meets the performance parameters of ECCN 3A090 or 4A090; and
• There is “knowledge” that the foreign-produced item is destined to China or will be incorporated into any part, component, computer, or equipment not designated EAR99 that is destined to China; or technology developed by an entity headquartered in China for the production of a mask or an IC wafer or die.

BIS also provided a model certificate for the new Advanced Computing FDPR. However, BIS noted that the use of this model certificate alone is not a comprehensive due diligence process.

Supercomputer FDPR

Under the new Supercomputer FDPR, a foreign-produced item is subject to the EAR if:

• It is a direct product of technology or software subject to the EAR and specified in ECCN 3D001, 3D991, 3E001, 3E002, 3E003, 3E991, 4D001, 4D993, 4D994, 4E001, 4E992, 4E993, 5D001, 5D991, 5E001, 5E991, 5D002, or 5E002; or is produced by any plant or major component of a plant when the plant or major component of a plant, whether made in the United States or a foreign country, itself is a direct product of US-origin technology or software that is specified in one of the aforementioned ECCNs; and
• There is “knowledge” that the foreign produced item will be used in the design, development, production, operation, installation, maintenance, repair, overhaul, or refurbishing of a supercomputerlocated in or destined to China; or incorporated into, or used in the development or production of any part, component or equipment that will be used in a supercomputer¹ located in or destined to China.

License Requirement for 3E001 Technology Exports From China

Effective October 21, 2022, a license is required for the export from China to any destination worldwide of ECCN 3E001 (for 3A090) technology developed by an entity headquartered in China that is the direct product of software subject to the EAR and is for the “production” of commodities identified in ECCN 3A090 or 4A090, or identified elsewhere on the CCL that meet or exceed the performance parameters of ECCN 3A090 or 4A090, consistent with the newly added Advanced Computing Foreign Direct Product (FDP) rule discussed above. BIS specifically advised that entities receiving such technology should confirm that a license was obtained; if not General Prohibition 10 may be implicated.²

New End Use and End User Controls for Semiconductor Manufacturing and Supercomputers

Effective October 7, 2022, there is a new license requirement under Section 744.23 for export, reexport or transfer (in-country) when there is “knowledge”³ at the time that the specified items will be used, directly or indirectly, in an applicable semiconductor manufacturing related end use. Specifically, the following products meet the scope of this new restriction:

• Any item subject to the EAR when there is “knowledge” that the item will be used in the development or production of ICs at a semiconductor fabrication facility located in China that fabricates ICs meeting any of the following criteria:

(1) Logic ICs using a non-planar transistor architecture or with a production technology node of 16/14 nanometers or less;

(2) NOT AND (NAND) memory ICs with 128 layers or more; or

(3) DRAM ICs using a production technology node of 18 nanometer half-pitch or less;

• Any item subject to the EAR and classified in an ECCN in Product Groups B, C, D, or E in Category 3 of the CCL when there is “knowledge” that the item will be used in the development or production of ICs at any semiconductor fabrication facility located in China, but you do not know whether such semiconductor fabrication facility fabricates ICs meeting the above three criteria; or
• Any item subject to the EAR when there is “knowledge” that the item will be used in the development or production in China of any parts, components or equipment specified under ECCN 3B001, 3B002, 3B090, 3B611, 3B991, or 3B992.

Effective October 21, 2022, the new license requirement under Section 744.23 will be expanded to apply to export, reexport or transfer when there is “knowledge” at the time that the specified items will be used, directly or indirectly, in an applicable supercomputer manufacturing related end use.

• An IC subject to the EAR and specified in ECCN 3A001, 3A991, 4A994, 5A002, 5A004, or 5A992 or a computer, electronic assembly or component subject to the EAR and specified in ECCN 4A003, 4A004, 4A994, 5A002, 5A004, or 5A992, when there is “knowledge” that the item will be used in

(1) the development, production, use, operation, installation (including on-site installation), maintenance (checking), repair, overhaul, or refurbishing of a supercomputer located in or destined to China or

(2) the incorporation into, or the development or production of any component or equipment that will be used in a supercomputer located in or destined to China.

License Exception Eligibility and License Review Policy

There are no license exceptions available for these new end use and end user controls. Any requests for license will be reviewed based on the policy of resumption of denial, except for certain end users in China that are headquartered in the United States or in a Country Group A:5 or A:6 country, for whom case-by-case review policy will apply.

Impact on Validated End User Program

Pursuant to Authorization Validated End-User (VEU), certain validated end users may receive eligible items that will be used in a specific eligible destination, including in China. Many companies operating in the semiconductor and supercomputing industries that are headquartered in the United States or its partner countries have received VEU authorization prior to the issuance of the new export controls on semiconductor and supercomputing items. However, items obtained under Authorization VEU in China may not be used for any activities described in Part 744 of the EAR, which now includes the new end use, end user controls for semiconductor and supercomputer manufacturing.

During the public briefing on October 13, 2022, in response to a question on whether BIS is contemplating establishing a VEU program for the new end use, end user controls, BIS officials responded that companies from the United States and several of its partner countries already have entities that are VEUs in China. In addition, BIS reportedly has issued specific authorizations to certain VEU eligible companies to permit them to continue to supply equipment and items to their facilities in China for a year without having to seek additional licenses.⁴

Restriction on US Persons’ Activities

Effective October 12, 2022, BIS is providing public notice that US persons’ support that meets certain specified criteria implicates general prohibitions under the EAR.

US Persons’ Support With Knowledge of Development/Production of Specified ICs

Specifically, the specified activities by a US person will trigger a license requirement when there is “knowledge” that the item will be used in the development or production of ICs at a semiconductor fabrication facility located in China that fabricates ICs meeting any of the following criteria:

• Logic ICs using a non-planar transistor architecture or with a production technology node of 16/14 nanometers or less;
• NOT AND (NAND) memory ICs with 128 layers or more; or
• DRAM ICs using a production technology node of 18 nanometer half-pitch or less.

Specified activities include:

• Shipping, transmitting or transferring (in-country) to or within China any item not subject to the EAR;
• Facilitating the shipment, transmission or transfer (in-country) of any item not subject to the EAR; or
• Servicing any item not subject to the EAR.

US Persons’ Support Without Knowledge of Development/Production of Specified ICs

In addition, the specified activities of a US person triggers a license requirement when there is “knowledge” that the item will be used in the development or production of ICs at a semiconductor fabrication facility located in China, but the US person does not know whether the semiconductor fabrication facility fabricates ICs meeting any of the following criteria:

• Logic ICs using a non-planar transistor architecture or with a production technology node of 16/14 nanometers or less;
• NOT AND (NAND) memory ICs with 128 layers or more; or
• DRAM ICs using a production technology node of 18 nanometer half-pitch or less

Specified activities include:

• Shipping, transmitting or transferring (in-country) to or within China any item not subject to the EAR and meeting the parameters of any ECCN in Product Groups B, C, D, or E in Category 3 of the CCL;
• Facilitating the shipment, transmission or transfer (in-country) to or within China of any item not subject to the EAR and meeting the parameters of any ECCN in Product Groups B, C, D, or E in Category 3 of the CCL; or
• Servicing any item not subject to the EAR and meeting the parameters of any ECCN in Product Groups B, C, D, or E in Category 3 of the CCL

Other Specified Activities

Furthermore, the following activities by a US person also trigger a license requirement:

• Shipping, transmitting or transferring (in-country) to or within China any item not subject to the EAR and meeting the parameters of ECCN 3B090, 3D001 (for 3B090), or 3E001 (for 3B090) regardless of end use or end user;
• Facilitating the shipment, transmission or transfer (in-country) to or within China of any item not subject to the EAR and meeting the parameters of ECCN 3B090, 3D001 (for 3B090), or 3E001 (for 3B090), regardless of end use or end user; or
• Servicing any item not subject to the EAR located in China and meeting the parameters of ECCN 3B090, 3D001 (for 3B090), or 3E001 (for 3B090), regardless of end use or end user.

License Exception Eligibility and License Review Policy

There are no license exceptions available for these new restrictions on US persons’ activities. Any requests for a license will be reviewed based on the policy of resumption of denial, except for certain end users in China that are headquartered in the United States or in a Country Group A:5 or A:6 country, for whom case-by-case review policy will apply.

Temporary General License and Savings Clause

Temporary General License

Effective October 21, 2022 through April 7, 2023, there is a Temporary General License (TGL) for exports, reexports, in-country transfers, and exports from abroad destined to or within China by companies not headquartered in Country Groups D:1 or D:5 or E to continue to engage in integration, assembly (mounting), inspection, testing, quality assurance, and distribution of items covered by ECCN 3E090 or 4A090, and associated software and technology in ECCN 3D001, 3E001, 4D090, or 4E001; or any item that is a computer, IC, electronic assembly, or component and associated software and technology specified elsewhere which meets or exceeds the performance parameters of ECCN 3A090 or 4A090.

The purpose of this TGL is to avoid disruption of supply chains for items covered by ECCNs that are ultimately destined to customers outside of China. Consequently, the TGL does not authorize the export, reexport, in-country transfer, or export from abroad to end users or ultimate consignees in China. TGL also does not overcome any license requirements regarding an entity on the Entity List or other prohibited end use and end user restrictions. In addition, before any export, reexport or transfer (in-country) to China pursuant to this TGL, the exporter, reexporter or transferor must retain the name of the entity receiving the item, the complete physical address of where the item is destined in China and the location of that company’s headquarters.

In addition to the TGL, companies may seek individual licenses from BIS. For transactions that are covered by the new export control measures, license requests will be reviewed based on the policy of resumption of denial, except for certain end users in China that are headquartered in the United States or in a Country Group A:5 or A:6 country, for whom case-by-case review policy will apply.

Savings Clause

As with prior changes to the EAR, BIS provided a savings clause to minimize disruptions. Specifically, the savings clause allows for the shipments of items removed from license exception eligibility or eligibility for export, reexport or transfer (in-country) without a license as a result of the amendments to the EAR that were on dock for loading, on lighter, laden aboard an exporting carrier, or en route aboard a carrier to a port of export, on October 7, 2022 to continue to the destination under the previous license exception eligibility or without a license. To take advantage of this savings clause, the item must be actually exported, reexported or transferred (in-country) before November 7, 2022

In addition, deemed exports and reexports of technology and software related to ECCNs 3A991.p and 4A994.l that previously did not require a license but now require a license due to the amendments, will only require a license if the technology or software release exceeds the scope of the technology or software that the foreign national already had access to prior to the implementation of the revised controls.

UVL Changes and Entity List Criteria

Entity List Criteria

BIS is also clarifying the criteria for addition to the Entity List to address concern over its inability to determine compliance with the EAR when “a host government’s action or inaction creates a circumstance that may place an entity at significant risk of being or becoming involved in activities contrary to the national security or foreign policy interests of the United states.” To address this concern, BIS is revising Section 744.11 of the EAR to add language to refer to entities that are “at significant risk” of acting contrary to US foreign policy and national security interests. BIS also added illustrative examples to Section 744.11(b) to specifically note “prevention of the accomplishment of an end use check conducted by or on behalf of BIS or the Directorate of Defense Trade Controls of the Department of State.” These include: (1) the entity precluding access to, refusing to provide information about, or providing false or misleading information about, the parties to the transaction or the item to be checked; (2) a sustained lack of cooperation by the host government to schedule and facilitate completion of an end-use check of entities identified on the UVL.

BIS officials have stated, including at the annual BIS Update Conference in July 2022, that BIS is experiencing significant challenges coordinating with China’s Ministry of Commerce to schedule end-use checks. The rule appears to signal that if this continues, BIS is prepared to designate to the Entity List entities at which it is prevented from performing these checks.

UVL Changes

BIS added the following 31 Chinese entities, including those operating in the semiconductor sector, to the UVL:

• Beijing Naura Magnetoelectric Technology Co., Ltd.
• Beijing PowerMac Company
• CCIC Southern Electronic Product Testing Co., Ltd.
• Chang Zhou Jin Tan Teng Yuan Machinery Parts Co., Ltd.
• Institute of Mineral Resources, Chinese Academy of Geological Sciences
• Chinese Academy of Science (CAS) Institute of Chemistry
• Chongqing Optel Telecom
• Chongqing Xinyuhang Technology Co., Ltd.
• Dandong Nondestructive Electronics
• DK Laser Company Ltd.
• Foshan Huaguo Optical Co., Ltd.
• GRG Metrology & Test (Chongqing) Co., Ltd.
• Guangdong Dongling Carbon Tech. Co., Ltd.
• Guangxi Yuchai Machinery Co., Ltd.
• Guangzhou GRG Metrology & Test (Beijing) Co., Ltd.
• Jialin Precision Optics (Shanghai) Co., Ltd.
• Lishui Zhengyang Electric Power Construction
• Nanjing Gova Technology Co., Ltd.
• Ningbo III Lasers Technology Co., Ltd.
• Qingdao Sci-Tech Innovation Quality Testing Co., Ltd.
• Shanghai Tech University
• Suzhou Sen-Chuan Machinery Technology Co., Ltd.
• Tianjin Optical Valley Technology Co., Ltd.
• University of Chinese Academy of Sciences
• University of Shanghai for Science and Technology
• Vital Advanced Materials Co., Ltd.
• Wuhan Institute of Biological Products Co., Ltd.
• Wuhan Juhere Photonic Tech Co., Ltd.
• Wuxi Hengling Technology Co., Ltd.
• Xian Zhongsheng Shengyuan Technology Co., Ltd.
• Yangtze Memory Technologies Co., Ltd.

As a result, the use of license exceptions for exports, reexports and transfers (in-country) involving the above parties is suspended. In addition, EAR also requires exporters, reexporters and transferors to obtain and maintain a record of a UVL statement from a party or parties to the transaction that are listed on the UVL before proceeding with exports, reexports and transfers (in-country) to such persons when the exports, reexports and transfers (in-country) are not subject to a license requirement. Such UVL statement should include: (1) an agreement to cooperate with end-use checks, including a post-shipment verification, conducted by or behalf of BIS for any item subject to the EAR in transactions to which the entity was a party in the last five years; (2) an agreement not to use the items for any use prohibited by the EAR; and (3) a declaration of the end use, end user and country of ultimate destination of the items subject to the EAR. Moreover, when a party or parties to the transaction is/are listed on the UVL, Electronic Export Information (EEI) must be filed in the Automated Export System (AES) for all exports of tangible items subject to the EAR.

Conclusion

These two rules reflect sweeping changes to semiconductor and advance computing related export controls with respect to China. We also anticipate Chinese officials to implement measures in response to these new China-based restrictions. Such measure may include reactive expansion of exports of Chinese products and technology to the United States and other trade related protective measures, as well as additional domestic incentives and subsidies for Chinese companies adversely impacted by the new rules. In addition, the Chinese government (and private parties in China) may seek to utilize China’s Countering Foreign Sanctions Laws to counter the effects of additional export controls measures. Therefore, companies in the related sector, especially those with presence or dealings in China, should carefully review the implications of these new controls for their business. In addition, interested parties may wish to consider submitting comments on the first rule on Implementation of Additional Export Controls: Certain Advanced Computing and Semiconductor Manufacturing Items; Supercomputer and Semiconductor End Use; Entity List Modification during the 60-day comment period.

* Junghyun Baek contributed to this Advisory. Mr. Baek is a graduate of Harvard Law School and is employed at Arnold & Porter’s Foreign Legal Consultant Office as a Law Clerk.

© Arnold & Porter Kaye Scholer LLP 2022 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.