Bureau of Industry and Security Expands Export Controls on Advanced Computing-integrated Circuits for Supercomputer and Semiconductor End Use, and on Semiconductor Manufacturing Equipment and Related Equipment to China

• Publication year: 2024
• Citation: Vol. 1 No. 3

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Josephine I. Aiello LeBeau, Anne E. Seymour, Kara D. Millard, and Bryan Poellot ^*

In this article, the authors discuss new U.S. controls aimed at further slowing China's development of advanced artificial intelligence technologies.

The U.S. Department of Commerce's Bureau of Industry and Security (BIS) has issued new controls aimed at further slowing China's development of advanced artificial intelligence (AI) technologies. These new controls, published in two interim final rules and one final rule, finalize and expand the landmark controls issued in October 2022 on advanced computing integrated circuits (ICs) for supercomputer and semiconductor end use, and on semiconductor manufacturing equipment. The final rule also adds 13 entities involved in the development of advanced computing ICs located in China to the Entity List. ¹

These new controls are the latest move in the escalating trade war between the United States and China over the development of advanced computing capabilities. The October 2022 controls banned Chinese companies from buying advanced chips and chip-making equipment without a license. In the months after the unveiling of the October 2022 controls, Japan and the Netherlands

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also adopted similar rules restricting exports of semiconductor equipment to China.

The new measures have a clear objective: preventing the circumvention of the previously issued October 2022 controls and ensuring that all advanced computing ICs are covered by these controls. The update significantly expands the previous controls, extending beyond China and Macau to encompass dozens of countries, to disrupt any attempts to bypass these export controls by diverting shipments through intermediary nations. This broadened scope is intended to safeguard against potential loopholes and bolster the effectiveness of the export regulations.

Despite BIS efforts to reduce complexity and improve clarity, these expanded regulations can be difficult to interpret and, thus, difficult to comply with. The controls also come at a time of increased enforcement by BIS and an emphasis by many agencies, including BIS, ² on the importance of submitting a voluntary self-disclosure when national security-related violations are identified.

Interim Rule 1: Additional Export Controls on Advanced Computing Items, Supercomputer, and Semiconductor End Use (Effective November 17, 2023)

The first interim final rule implements new export controls on a broader scope of advanced computing chips and computers, and extends the countries to which the export, reexport, and transfer of these items are restricted. These expanded controls are intended to address concerns related to China's efforts to "use advanced computing ICs and supercomputing capacity in the development and deployment of these AI models to further its goal of surpassing the military capabilities of the United States and its allies."

The key changes include:

1. The expansion of the set of ICs controlled under Export Control Classification Number (ECCN) 3A090,
2. The addition of countries subject to Regional Stability (RS) controls (shown in Table 1),
3. The clarification of the scope of controls by adding new ECCN subparagraphs,

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Table 1. Expanded List of Countries Controlled for Regional Stability (Destinations Specified in Country Groups D:1, D:4, or D:5 Excluding Destinations Specified in Country Groups A:5 or A:6)

Afghanistan	Haiti	Qatar
Armenia	Iran	Russia
Azerbaijan	Iraq	Saudi Arabia
Bahrain	Jordan	Somalia
Belarus	Kazakhstan	South Sudan
Burma	Kuwait	Sudan
Cambodia	Kyrgyzstan	Syria
Central African	Laos	Tajikistan
Republic	Lebanon	Turkmenistan
China (PRC)	Libya	United Arab Emirates
Cuba	Macau	Uzbekistan
Democratic Republic	Moldova	Venezuela
of the Congo	Mongolia	Vietnam
Egypt	North Korea	Yemen
Eritrea	Oman	Zimbabwe
Georgia	Pakistan

4. The creation of new License Exception Notified Advanced Computing (NAC), and
5. Changes to the Foreign Direct Product Rules (FDPRs), U.S. person controls, and end-use restrictions to include new RS-controlled designations.

BIS Expands ICs Covered Under ECCN 3A090, and Computers and Other Related Items Covered by ECCN 4A090, by Including a New Performance Density Parameter

Through this new rule, BIS expands the universe of ICs controlled under ECCN 3A090, and thus, the computers and related equipment and components controlled under ECCN 4A090, by introducing a performance density parameter in order to prevent workarounds. The revised ECCN controls ICs with one or more digital processing units having either:

1. A "total processing performance" of 4800 or more, or a "total processing performance" of 1600 or more and a "performance density" of 5.92 or more (3A090.a), or

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2. A "total processing performance" of 2400 or more and less than 4800 and a "performance density" of 1.6 or more and less than 5.92, or a "total processing performance" of 1600 or more and a "performance density" of 3.2 or more and less than 5.92 (3A090.b).

The previous calculation method of bits x TOPS was replaced by "total processing performance" (TPP), which BIS states includes clear, objective criteria.

In an effort to mitigate the impact of this newly expanded definition, BIS excludes from ECCN 3A090 ICs that (1) are not designed or marketed for use in data centers, and (2) do not have a "total processing performance" of 4800 or more (see Note 2 to 3A090 ³ ). BIS also creates a new license exception NAC, discussed below, for items not designed or marketed for use in data centers and that have a "total processing performance" of 4800 or more. In Note 3 to 3A090, ⁴ the rule also clarifies that anything exempt from ECCN 3A090 also is exempt from the newly added .z ECCNs meant to cover dual controls, also discussed in more detail below.

BIS also specifies that to be covered under ECCN 4A090, an item must be a general purpose computer. BIS further explains that, as examples, BIS does not classify network security appliances or DNA sequencing appliances in Category 4.

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