U.S. Reveals New Chip Export Controls on China
On December 2, the U.S. Department of Commerce's Bureau of Industry and Security (BIS) announced a series of new regulations aimed at further weakening China's ability to produce advanced semiconductor nodes used in next-generation weapons systems, as well as artificial intelligence (AI) and advanced computing technologies with significant military applications. These regulations include new controls on 24 semiconductor manufacturing equipment and 3 software tools used for developing or producing semiconductors, as well as controls on high-bandwidth memory (HBM). Additionally, the BIS issued new guidelines to address compliance and transfer issues, added 140 entities to the Entity List, and modified 14 others, which include Chinese tool manufacturers, semiconductor plants, and investment companies involved in advancing China's semiconductor capabilities, posing potential national security threats to the U.S. and its allies.
The primary objectives of these actions are to slow China's development of AI technologies that could alter the future of warfare and to hinder China's efforts to develop a domestic semiconductor ecosystem, which is seen as being established at the expense of U.S. and allied national security. To achieve these goals, BIS is implementing various regulatory measures, including but not limited to the imposition of new controls on semiconductor manufacturing equipment required for the production of advanced node integrated circuits (ICs), such as certain etching, deposition, photolithography, ion implantation, annealing, metrology, inspection, and cleaning tools.
The new regulations also impose controls on software tools used for developing or producing advanced node ICs, including those that improve the productivity of advanced equipment or enable less advanced equipment to manufacture advanced chips. Further, new controls have been introduced for HBM, which is critical for large-scale AI training and inference, and a key component in advanced computing ICs. These regulations apply to both U.S.-origin HBM and foreign-made HBM subject to the Export Administration Regulations (EAR) under the Foreign Direct Product (FDP) rule for advanced computing. Certain HBM products may qualify for a license exception.
The BIS also added 140 new entities to the Entity List and made 14 modifications, covering semiconductor plants, equipment companies, and investment firms that operate at China's request to advance China's semiconductor objectives. These activities are considered threats to U.S. and allied national security. In addition, the BIS introduced two new Foreign Direct Product rules and corresponding minimum thresholds. The Semiconductor Manufacturing Equipment (SME) FDP expands jurisdiction over specific foreign-made SME and related items if it is known that such items are being shipped to Macao or countries in the D:5 group, including China.
The new regulations also extend jurisdiction over foreign-made SME and related items if certain entities listed on the Entity List or identified as part of the FN5 designated entity list are involved in activities that support China's military modernization, such as the production of advanced node semiconductors, including those intended for military purposes.
Additionally, the BIS implemented new software and technology controls, including restrictions on electronic computer-aided design (ECAD) and technical computer-aided design (TCAD) software and technologies. These restrictions apply when these items are intended for the design of advanced node ICs produced in Macao or the D:5 group countries. Furthermore, the BIS clarified existing regulations regarding software keys, now subject to export, re-export, or transfer (domestic) controls when they provide access to hardware or software licenses for continued use.
