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January 23rd

Understanding the New Export Administration Regulations for Advanced Computing Integrated Circuits

Date of publication: January 23rd, 2025

Introduction

The Bureau of Industry and Security (BIS) has recently published an Interim Final Rule (IFR) to the Export Administration Regulations (EAR) to include additional due diligence measures for advanced computing integrated circuits (ICs). These changes aim to enhance the effectiveness of those controls, protect U.S. national security, and assist companies in the semiconductor supply chain in complying with the EAR. More specifically, it focuses on providing “front-end fabricators” with objective, bright-line rules to assist in better identifying transactions with potential risk for diversion; enhancing due diligence procedures to ensure that new customers are appropriately vetted by “front-end fabricators” prior to providing ICs that may meet the advanced computing control levels; and improving reporting for transactions involving newer customers who may pose a heightened risk of diversion.
This IFR is being issued subsequent to a series of rules BIS enacted October 7, 2024 that restricted the ability of the People's Republic of China (PRC) and other countries of concern to obtain certain advanced computing ICs and related items.
This article provides an overview of the key changes and what they mean for your business.

Key changes to the EAR

  1. New due diligence procedures:
    BIS has introduced new procedures to help identify transactions with potential risks for diversion to unauthorized end uses or end users. This includes enhanced due diligence for new customers and improved reporting requirements.
  2. Revised Export Control Classification Numbers (ECCNs):
    The rule revises ECCN 3A090 and adds new notes to clarify the scope of controls on advanced computing ICs. Companies must comply with these changes by January 31, 2025.
  3. Approved IC designers and OSAT companies:
     BIS has created lists of approved integrated circuit designers and Outsourced Semiconductor Assembly and Test (OSAT) companies. Companies on these lists have been vetted and are considered low-risk for diversion. The list of companies can be located in the Federal Register Notice.
  4. Reporting requirements for front-end fabricators:
    Companies producing ICs specified under ECCN 3A090.a must submit quarterly reports to BIS. These reports should include information about the ICs produced and the customers they are sold to.
  5. License exceptions and modifications:
     The rule modifies License Exceptions AIA and ACM, allowing exceptions only for items designed by approved or authorized IC designers.

Section 740: License exceptions

  1. Revisions to license exceptions AIA and ACM:
    • The amendments specify that certain ECCNs, such as 3A090.a, are only eligible for License Exceptions if designed by approved or authorized integrated circuit designers. This ensures that only low-risk entities can utilize these exceptions.
  2. Addition of supplements Nos. 6 and 7:
    • Supplement No. 6
      lists approved integrated circuit designers.
    • Supplement No. 7
       lists approved Outsourced Semiconductor Assembly and Test (OSAT) companies. These lists help identify entities that are considered low-risk for diversion.

Section 742: Regional stability controls

  1. Expansion of controls:
    • The amendments introduce additional controls on ECCNs related to semiconductor manufacturing equipment, such as 3B001.a.4, c, d, f.1, f.5, f.6, k to n, p.2, p.4, r, and 3B002.c. These controls apply to exports, reexports, and transfers to Macau and destinations specified in Country Group D:5.
  2. New reporting requirements:
    • Companies are required to report transactions involving advanced computing ICs to ensure compliance with the expanded controls.

Section 774: The commerce control list

  1. Revisions to ECCNs:
  • ECCN 3A090:
    Now includes specific notes and technical parameters to clarify the scope of items controlled. It introduces a presumption that certain advanced logic ICs are controlled unless specific criteria are met.
  • ECCN 3B001:
    Updated to include additional controls on equipment for semiconductor manufacturing, emphasizing the need for compliance with new technical standards.
  • ECCNs 3D992, 3D993, 3E992, 3E993:
     Revised to include software and technology controls related to semiconductor manufacturing equipment, ensuring that these items are not diverted to unauthorized uses.

Compliance dates

  • Effective date:
     January 16, 2025
  • Compliance date:
     January 31, 2025. This compliance date only applies to EAR text that this rule revises, and does not otherwise impact any provision that was in effect prior to January 16, 2025 or added to the EAR through other rules.
  • Comment period:
     Comments on the interim final rule must be submitted by March 14, 2025.

How to submit comments

Comments on the interim final rule can be submitted via the Federal rulemaking portal at www.regulations.gov using the regulations.gov ID BIS–2024–0055. Please refer to RIN 0694-AJ98 in all comments. Ensure to mark any business confidential information appropriately.

Contact information

For further assistance or questions regarding the new regulations, contact:
  • Regulatory Policy Division, Office of Exporter Services, Bureau of Industry and Security, U.S. Department of Commerce at 202–482–2440 or email RPD2@bis.doc.gov.
  • For technical questions, contact Carlos Monroy at 202–482–3246 or Carlos.Monroy@bis.doc.gov.

Conclusion

The new regulations follow a steady stream of related new export controls on advanced computing equipment in recent years. Each update has significantly updated and/or expanded the scope of controls on advanced computing items. These planned updates to the EAR are crucial for maintaining compliance and ensuring that advanced computing ICs are not diverted to unauthorized uses. The new rules are complex, time-consuming and will increase costs to comply. We encourage all clients to review these changes carefully and ensure that their business practices align with the new regulations. For more detailed information, please refer to the full text of the Federal Register Notice or contact the relevant authorities.
These changes have been incorporated in ONESOURCE Global Trade Content.
For more information on how ONESOURCE Global Trade solutions can assist you in managing sanctions and export controls, contact your Account Manager or Client Services Manager.

This article applies to:

  • Product: ONESOURCE Global Trade