the new FDP Rules, HBM controls and Entity List license requirements, will go into effect December 31, 2024.These rules are likely to be among the final export control measures that BIS will issue during the Biden Administration and its purported “small yard, high fence” strategy. As we look ahead to export control policy under the incoming Trump Administration, it is likely that controls on semiconductors, advanced computing and supercomputing, among other high-tech sectors, will continue to be national security and foreign policy focal points.FootnotesPress Release, Dep’t of Commerce, Commerce Strengthens Export Controls to Restrict China’s Capability to Produce Advanced Semiconductors for Military Applications (Dec. 2, 2024).Foreign Produced Direct Product Rule Additions, 89 Fed. Reg. 96790 (Dec. 5, 2024).Additions and Modifications to the Entity List; Removals from the Validated End-User (VEU) Program, 89 Fed. Reg. 96830 (Dec. 5, 2024)Implementation of Additional Export Controls, 87 Fed. Reg. 62186 (Oct. 7, 2022).Export Controls on Semiconductor Manufacturing Items, 88 Fed. Reg. 73424 (Oct. 25, 2023).Country Group D:5 includes Afghanistan, Belarus, Burma, Cambodia, Central African Republic, China (PRC), Congo (Democratic Republic of), Cuba, Eritrea, Haiti, Iran, Iraq, North Korea, Lebanon, Libya, Nicaragua, Russia, Somalia, South Sudan, Sudan, Syria, Venezuela and Zimbabwe.

making modifications, or determining what steps can be taken to ensure that their LLMs are not misused by U.S. adversaries.The concerns regarding AI are similar to when encrypted technologies were of concern to the U.S. and other governments. As such, it is important to understand how the governmental agencies classify technology that is supported by AI. Furthermore, companies should consider updating policies, procedures, and training requirements to include the updated sanctions related to AI technologies.FootnotesSee H.R. 8315, 118th Cong. (2023). Available at https://www.congress.gov/bill/118th-congress/house-bill/8315/text.[Back]U.S. persons include U.S. citizens, legal permanent resident aliens, asylees, refugees, and entities organized under the laws of the U.S. including foreign branches.[Back]For purposes of export controls, China includes the Hong Kong Special Administrative region after the United States Government revoked its special status under U.S. law in 2020.[Back]See 87 Fed. Reg. 62186 (Oct. 13, 2022) (to be codified at 15 C.F.R. Parts 734 – 774).[Back]See 50 U.S.C. §§ 4801-4852. [Back]Hadley Sayers is a law student and not admitted to practice law.

y Groups D:1, D:4 and D:5, as set forth in Part 740 of the EAR. Among other changes, the new IFRs collectively: (i) expand the range of advanced chips and semiconductor manufacturing equipment subject to licensing requirements; (ii) significantly expand the countries that are subject to licensing requirements beyond China; (iii)correspondingly expand the scope of foreign-made advanced chips, and items incorporating such chips, that may be subject to U.S. jurisdiction pursuant to the foreign direct product rule, including based on an expanded scope of end-destinations outside China or parties to the transaction that are headquartered in a D:5 country or Macau; and (iv) impose licensing requirements in certain instances on entities located worldwide that are headquartered in a D:5 country or Macau.In addition to implementing significant changes to the EAR, the IFRs also provide BIS responses to comments received in relation to the changes issued on 7 October 2022 (the “October 7 Rule”) (87 FR 62186). These responses cover 141 different topics and provide important guidance regarding interpretation, implementation and enforcement of the October 7 Rule and IFRs. The effective date for the IFRs is 17 November 2023. Simultaneous with these rules, the Bureau of Industry and Security also added 13 Chinese entities to the Entity List, subject to the expanded Entity List foreign direct product rule (see, Annex A). Practical Considerations and PrioritiesThe IFRs make significant changes to the EAR and include detailed and technical information throughout, covering more than 400 pages. We have provided below a summary of the key changes described in the IFR. While companies will need to conduct a detailed review of the full impact of these changes on their business operations, certain practical considerations and priority issues for companies include the following:Classification Reviews: Companies active at any stage of the semiconductor or supercomputing supply chain will need to careful

nse, the Secretary of State, and the Director of National Intelligence, determines to be engaged in conduct that is detrimental to the national security or foreign policy of the United States.A “covered entity” is an entity that: (1) develops, domestically or abroad, a design of a semiconductor that is the direct product of US-origin technology or software; and (2) purchases covered semiconductor products or services from SMIC (or any subsidiary, affiliate, or successor of such entity) or (2) an entity that the Secretary of Defense or Secretary of Commerce, determines to be owned or controlled by, or otherwise connected to, the government of a “foreign country of concern.”The NDAA23 would require Federal authorities to report the information to appropriate committees in Congress and leadership within 120 days.Implementation of Additional Export Controls: Certain Advanced Computing and Semiconductor Manufacturing Items; Supercomputer and Semiconductor End Use; Entity List Modification, 87 Fed. Reg. 62186 (Oct. 13, 2022), available at https://www.federalregister.gov/documents/2022/10/13/2022-21658/implementation-of-additional-export-controls-certain-advanced-computing-and-semiconductor.[View source.]

U.S. industries supplying Chinese facilities with products, equipment, software, and technology used in semiconductor development and production are subject to regulatory controls under the Export Administration Regulations (“EAR”). New rules published by the Department of Commerce’s Bureau of Industry and Security (“BIS”) on October 13, 2022, 87 FR 62186, imposed additional license requirements regarding the export, reexport, or transfer of certain items, equipment, software, and technology to The People’s Republic of China (“PRC” or “China”). The implementation of these rules is expected to be one of many measures taken by the Department of Commerce to strangle China’s plans of becoming a world-stage manufacturer of semiconductors.The new restrictions include end-use and end-user controls, Foreign Direct Product (“FDP”) rules for advanced computers, supercomputing, and transactions involving Entity List companies and persons, item-specific controls providing for additional Export Control Classification Numbers (“ECCNs”) that expand the Commerce Control List (“CC”) in Categories 3 through 5, Regional Stability requirements on related items, the addition of 28 entities to the Unverified List, and restrictions on activities by U.S. persons located anywhere involving items not subject to the EAR. Licence applications for controlled items

ch and a leading catalyst of continued American leadership in innovation and technological advancement.A core part of U.S. universities’ missions is to engage in fundamental research, defined as research in science, engineering, or mathematics, the results of which ordinarily are published and shared broadly within the research community, and for which the researchers have not accepted restrictions for proprietary or national security reasons.Against this backdrop and as part of this “All of Government” approach to protecting U.S. technology, in October 2022, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) issued a new regulation that requires a BIS export license for any U.S. person to provide information that would “support” the development or production of any chip at a “facility” in China that also produces certain advanced chips, regardless of whether such information is “subject to the Export Administration Regulations (“EAR”) or “not subject to the EAR”. 87 FR 62186.In November 2022, the Deputy Assistant Secretary, Export Enforcement, BIS, gave a speech to university attorneys at a conference in Washington DC, emphasizing that the new regulation applies to universities, even when the information is “not subject to the EAR.” As written and discussed by BIS leadership, not only does this new regulation significantly expand the usual regulatory jurisdiction of BIS, but also potentially imposes new and significant restrictions on the ability of U.S. universities to conduct free and open fundamental research, which in turn would undercut a key principle behind America’s leadership in technological innovation.As drafted, it is unclear whether the regulation could bar a faculty member who had engaged in fundamental research regarding chip technology from sending his published research results to the People’s Republic of China as described in the regulations. When asked about this at a recent conference, BIS Deputy Assistant Secretary stated that “BIS ha

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 RulesNew Regulations (87 FR 62186)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 “producti