Brief

"On January 15, 2025, the U.S. Bureau of Industry and Security issued an update regarding Commerce Strengthens Restrictions on Advanced Computing Semiconductors to Enhance Foundry Due Diligence and Prevent Diversion to PRC." The rules impose a broader license requirement for foundries and packaging companies seeking to export certain advanced chips, unless one of three conditions is met. The updates also create a process for new companies to be added to the list of Approved IC designers and OSATs, improve reporting for transactions involving newer customers who may pose a heightened risk of diversion, and make technical corrections to existing controls.

Updates to Prior Controls on Advanced Semiconductors Provide Additional Safeguards and Guidance for Chip Manufacturers
Washington, D.C. – Today, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) released two rules: one that updates export controls on advanced computing semiconductors, and another that places additional entities in the People’s Republic of China (PRC) and Singapore on the Entity List.
“These rules will further target and strengthen our controls to help ensure that the PRC and others who seek to circumvent our laws and undermine U.S. national security fail in their efforts,” said Secretary of Commerce Gina M. Raimondo. “We will continue to safeguard our national security by restricting access to advanced semiconductors, aggressively enforcing our rules, and proactively addressing new and emerging threats.”
“The Biden-Harris administration is committed to preventing the misuse of advanced U.S. technology and curbing the national security concerns raised by the PRC’s military-civil fusion,” said Under Secretary of Commerce for Industry and Security Alan F. Estevez. “By enhancing due diligence requirements, we are holding foundries accountable for verifying that their chips are not being diverted to restricted entities.”
“Preventing unauthorized parties from gaining access to our most advanced semiconductor technology is a BIS enforcement priority,” said Acting Assistant Secretary for Export Enforcement Kevin J. Kurland. “We will continue to use all of the authorities at our disposal, including investigations and Entity Listings, to counter PRC circumvention of our controls and hold violators accountable.”
Today’s rules reinforce and build on the October 7, 2022, October 17, 2023, and December 2, 2024, controls to restrict the PRC’s ability to obtain certain high-end chips critical for military advantage. These updates are necessary to maintain the effectiveness of these controls, close loopholes, and ensure they remain durable.
Among other changes, the rules:
Impose a broader license requirement for foundries and packaging companies seeking to export certain advanced chips, unless one of three conditions is met:
The export is to a trusted “Approved” or “Authorized” integrated circuit (IC) designer, who attests that the chips fall below the relevant performance threshold;
The chip is packaged by a front-end fabricator in a location outside of Macau or a destination in Country Group D:5 and the fabricator verifies the transistor count of the final chip; or
The chip is packaged by an “Approved” outsourced semiconductor assembly and test services (OSAT) company that verifies the transistor count of the final chip.

Create a process for new companies to be added to the list of Approved IC designers and OSATs.
Improve reporting for transactions involving newer customers who may pose a heightened risk of diversion.
Update other parts of the Export Administration Regulations (EAR), including the recent AI Diffusion rule, to ensure that license exceptions are only available for transactions involving approved or authorized IC designers.
Make technical corrections to the December 2 export controls, including to update the definition of “advanced-node integrated circuit” in § 772.1 for Dynamic Random-Access Memory (DRAM) chips.
Add 16 entities to the Entity List, including AI companies like Sophgo Technologies Ltd., that are acting at the behest of Beijing to further the PRC’s goals of indigenous advanced chip production, which poses a risk to U.S. and allied national security.
These controls were crafted to mitigate the PRC’s efforts to obtain high-end advanced computing semiconductors necessary to enable the development and production of technologies such as AI used in military applications. Advanced AI capabilities – facilitated by supercomputing, built on advanced semiconductors – present U.S. national security concerns because they can be used to improve the speed and accuracy of military decision making, planning, and logistics. These capabilities may also be used for cognitive electronic warfare, radar, signals intelligence, jamming, and to support facial recognition surveillance systems for human rights violations and abuses.
Exporters are encouraged to carefully review the full text of the rule, which makes changes to existing provisions of the EAR.
Additional Information
BIS’s actions are taken under the authority of the Export Control Reform Act of 2018 and its implementing regulations, the EAR.
Under these authorities, BIS possesses a variety of tools to control the export of U.S.-origin and certain foreign-produced commodities, software, and technology, as well as specific activities of U.S. persons, for national security and foreign policy reasons.
The Entity List (supplement no. 4 to part 744 of the EAR) identifies entities for which there is reasonable cause to believe, based on specific and articulable facts, that the entities – including businesses, research institutions, government and private organizations, individuals, and other types of legal persons – have been involved, are involved, or pose a significant risk of being or becoming involved in activities contrary to the national security or foreign policy interests of the United States. Parties on the Entity List are subject to individual licensing requirements and policies supplemental to those found elsewhere in the EAR.
The interagency End-User Review Committee (ERC) – comprised of the Departments of Commerce (Chair), Defense, State, Energy, and where appropriate, the Treasury – makes decisions regarding additions to, removals from, or other modifications to the Entity List. The ERC makes all decisions to add an entity to the Entity List by majority vote and makes all decisions to remove or modify an entity by unanimous vote.
For more information, please visit BIS’s website at: https:www.bis.gov.
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Highlights content goes here...

Purpose:
The U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has released two rules to update export controls on advanced computing semiconductors and place additional entities from the People’s Republic of China (PRC) and Singapore on the Entity List. The purpose of these updates is to provide additional safeguards and guidance for chip manufacturers, strengthen controls, and prevent the misuse of advanced U.S. technology by the PRC.

These rules aim to maintain the effectiveness of existing controls, close loopholes, and ensure they remain durable in preventing unauthorized parties from gaining access to high-end semiconductor technology. The updates also seek to hold foundries accountable for verifying that their chips are not being diverted to restricted entities, as part of efforts to prevent the PRC’s military-civil fusion.

The Biden-Harris administration is committed to preventing the misuse of advanced U.S. technology and curbing national security concerns raised by the PRC’s actions. These updates reinforce and build on previous controls implemented in October 2022, October 2023, and December 2024, which restricted the PRC’s ability to obtain certain high-end chips critical for military advantage.

Effects on Industry:
The updates will have a significant impact on the semiconductor industry, particularly chip manufacturers and foundries. The rules impose a broader license requirement for these entities seeking to export certain advanced chips, unless one of three conditions is met. This means that foundries and packaging companies must now verify the transistor count of final chips or ensure they are being exported to trusted IC designers or OSATs.

The updates also create a process for new companies to be added to the list of approved IC designers and OSATs, which will require these entities to undergo additional due diligence. This will lead to increased costs and administrative burdens for chip manufacturers and foundries as they navigate the updated regulations.

Additionally, exporters are encouraged to carefully review the full text of the rule, which makes changes to existing provisions of the Export Administration Regulations (EAR). This may lead to confusion and uncertainty among industry stakeholders, particularly small and medium-sized enterprises that may not have the resources or expertise to fully understand the implications of these updates.

Relevant Stakeholders:
The updates are relevant to a wide range of stakeholders, including:

  • Chip manufacturers and foundries
  • IC designers and OSATs
  • Exporters seeking to export advanced chips
  • The semiconductor industry as a whole
  • The U.S. government agencies responsible for implementing and enforcing these regulations

Next Steps:
To comply with or respond to the updates, stakeholders should take the following actions:

  • Review the full text of the rule and ensure understanding of the changes made to existing provisions of the EAR
  • Conduct a risk assessment to determine whether they are affected by the updates
  • Ensure compliance with the updated regulations, including obtaining necessary licenses and permits
  • Consider seeking guidance from industry associations or regulatory experts if needed

Any Other Relevant Information:
The BIS’s actions are taken under the authority of the Export Control Reform Act of 2018 and its implementing regulations, the EAR. The Entity List identifies entities for which there is reasonable cause to believe have been involved in activities contrary to U.S. national security or foreign policy interests.

Additions to the Entity List are made by a majority vote of the interagency End-User Review Committee (ERC), while removals or modifications require unanimous votes. The ERC makes decisions regarding additions, removals, or other modifications to the Entity List.

For more information on these updates and related regulations, please visit BIS’s website at https://www.bis.gov/.

U.S. Bureau of Industry and Security

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