Is Your Position Now Subject to a BIS License? BIS Expands Restrictions on Activities Performed by U.S. Persons

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Oct. 24,2022
By: Marvin E. McPherson

BIS’s new export controls on Chinese semiconductor, advanced computing, and supercomputer industries goes beyond what can be exported. Instead, the sweeping regulation impacts what activities U.S. persons can participate in without a license.

As previously touched upon, BIS published an Interim Final Rule (IFR) October 7, 2022 regarding New Export Controls on Advanced Computing and Semiconductor. As part of this rule, BIS amends Section 744.6 that require a license for U.S. persons supporting activities related to the “development” or “production” advanced computing integrated circuits (ICs) that could involve support to WMD and missile end uses.

BIS has defined support to encompass a number of activities, including, but not limited to, “shipping, transmitting, or transferring (in-country) items not subject to the EAR; facilitating such shipment, transmission, or transfer (in-country); or servicing items not subject to the EAR.”

Specifically, a license will be required for “U.S. persons” if the U.S. persons “support” the following activities:

(A)Shipping, transmitting, or transferring, or facilitating such movement, to or within China or servicing any item not subject to the EAR with knowledge that the item will be used in the development or production of ICs at a fabrication facility in China that produces ICs meeting any of the following criteria: (1) logic integrated circuits using a nonplanar architecture or with a “production” technology node of 16/14 nanometers or less, (2) NOT-AND (NAND) memory integrated circuits with 128 layers or more, or (3) dynamic random-access memory (DRAM) integrated circuits using a “production” technology node of 18 nanometer half-pitch or less.

(B)Shipping, transmitting, or transferring, or facilitating such movement, to or within China 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 with knowledge that the item will be used in the development or production of ICs at any fabrication facility in China if the U.S. person does not know whether the fabrication facility produces ICs meeting the criteria above.

(C)Shipping, transmitting, or transferring, or facilitating such movement, to or within China or servicing any item not subject to the EAR and meeting the parameters of ECCN 3B090, 3D001 (for 3B090), or 3E001 (for 3B090) regardless of the end use or end user.

There are no license exceptions available when considering the above prohibitions. License applications for U.S. person support will be reviewed under a policy of denial “except for end users in the PRC headquartered in the United States or a country in Country Group A:5 or A:6, which will be considered on a case-by-case basis taking into account factors including technology level, customers, and compliance plans.”

The IFR expands the compliance risk of U.S persons doing business globally. Companies should firstly review all classifications of items to ascertain if they are now subject to EAR or RS licenses. Secondly, companies should review whether or to what extent their employees may be engaging in prohibited “support” activities. Listing representative examples of activities alludes to the fact that other activities may also be covered but not named.

Please contact any BRC attorney with any questions or concern you may have navigating this tricky legislation.