On 17 October, the Biden Administration released a new package of export controls on advanced computing semiconductors and semiconductor manufacturing equipment, as well as certain components used in supercomputing applications, to arms embargoed countries, including China. This latest amendment to the export rules comes one year after the Biden Administration first imposed significant restrictions on the sale of advanced semiconductor technology to China. The changes will impact a number of emerging technology areas and supply chain considerations overall, notably hampering China’s ability to access advanced chips needed to power many complex artificial intelligence (AI) models.
The latest export controls are broken down into three new rules:
- An expansion of the scope of qualifying advanced chips.
- New export controls on certain semiconductor manufacturing equipment (SME) items.
- A large number of additions to the Bureau of Industry and Security’s (BIS) Entity List.
Rule 1
Part 1 of the first rule removes “interconnect bandwidth” as a parameter for identifying restricted chips and adds a new “performance density threshold”. Whereas under the existing rules a chip had to both exceed a certain performance speed and bandwidth threshold, the new rules consider performance speed alone. The performance density threshold was introduced to preempt future workarounds, such as buying a larger number of smaller chips of relative strength when combined. In addition, sellers of “certain additional chips with performance just below the restricted threshold” will still be required to notify the US government prior to any transaction. Lastly, BIS will introduce a new exemption permitting the export of chips for consumer applications.
Part 2 introduces new requirements to combat circumvention of the export controls. It applies the chip restrictions to any company that is headquartered in China, Macau, or any other destination subject to a US arms embargo as a means of closing loopholes relating to foreign subsidiaries and branches. The new rule also expands the licensing requirements to all 22 countries to which the US maintains an arms embargo and additional third countries used to divert or access restricted items, bringing the total to over 40 jurisdictions.
Rule 2
BIS expanded the list of SME items within the scope of the 2022 export controls, as well as the number of countries to which the restrictions apply up to the 22 countries on which the US maintains an arms embargo. Rule 2 also codifies previously existing agency guidance to clarify requirements for US companies. The list itself is scheduled to be published on 25 October.
Rule 3
BIS added two PRC entities and their subsidiaries (totalling 13 entities) involved in the development of advanced chips to its Entity List.
Access Partnership closely monitors ongoing dynamics concerning US-China trade relations and provides global technology leaders with key insights on geopolitical developments. For more information on this topic, please contact Jacob Hafey at jacob.hafey@accesspartnership.com.
