Just the Facts: 6 Takeaways from BIS’s Semiconductor FAQs
On October 28, 2022, the US Department of Commerce, Bureau of Industry (BIS) issued FAQs on the new semiconductor regulations. The FAQs are short and relatively clear (thank you!) even if they were released on a Friday afternoon. (BIS, if you are reading this alert, can you please stop releasing these things on Fridays? We like to have an occasional weekend off.)
BIS FAQs on Semiconductor, Advanced Computing, and Supercomputer Rules
For those that like things REALLY short, we have distilled the FAQs even further:
- BIS has decided to use the definition of facilities in the Export Administration Regulations (EAR), meaning each building at a company campus is considered to be a separate facility. As such, a fab facility is a specific building and unless your customer is located in the same building as a controlled PRC semiconductor fab, your export may be okay. However, you have to conduct diligence to confirm it’s a different building and “ensure” your item or activity is only for “unrestricted fabrication.” And yes, if a building has both controlled and non-controlled lines, it is subject to the new controls.
- The US person restrictions “do not extend” to US persons “conducting administrative or clerical activities (e.g. arranging for shipment or preparing financial documents) or other otherwise implementing a decision to approve a restricted shipment, transmittal, or in-country transfer, or “development” or “production” activities that are not directly related to the provision of specific items to or servicing of specific items for advanced PRC fabs (i.e., those developing or producing integrated circuits meeting the criteria in § 744.6(c)(2)(i)(A)-(C), absent evidence of knowledge of a violation by those persons.” This would have been a nice thing to know on October 7 when the regulation was released, or even October 12 when the prohibitions on US persons went into effect. Based on numerous media reports, within days of the new regulations, US persons working in controlled Chinese fabs were asked to leave and several companies headquartered in the United States and allied countries obtained authorizations to permit US persons employees working in China. It is unclear if all these departures (and licensing) were required considering the now clarified scope of the US person restrictions.
- Your BIS license to export to China is still good (until BIS tells you it isn’t).
- You can rely on those mysterious BIS authorizations issued to major multinationals provided you meet the terms of the authorization. We are waiting to see if BIS will give similar requests by smaller companies the same special treatment.
- Just because it’s mass market does not mean you can keep on shipping. You need to check your mass market hardware (ECCN 5A992) and software (ECCN 5D992) to determine if they meet or exceed the parameters of new ECCNs 3A090 and 4A090. If so, those items now require a license to China pursuant to § 742.6(a)(6). Same goes for your ECCN 5A002 hardware and ECCN 5D002 software that qualifies for license exception ENC. The golden years of encryption exports are officially over. (But we did see this coming with military end use and end user and Russia/Belarus controls!)
- Hong Kong is China but Macau still isn’t – who knew?
Stay tuned for more Facts on FAQs in future!
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