What does this mean for Berkeley Lab?

• Be vigilant about activities involving advanced computing chips (advanced-node integrated circuits), process design kits (PDKs), or hardware components used for semiconductor manufacturing or used in supercomputers as defined. Contact us if the activity involves China, Hong Kong, Macau, or another country in Country Group D.
• Continue to conduct restricted party screening using Visual Compliance, monitor dynamic alerts, and escalate any positive restricted party screening matches needing assistance to resolve. 
• Be mindful of any red flags associated with your activities involving others and contact us when deemed necessary.

Your questions can be directed to the Export Compliance Office at exportcontrol@lbl.gov. 

We ask that you share this communication with others in your Divisions who may be impacted by these changes. 

Background

On October 7, 2023, the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce implemented new export control regulations under the Export Administration Regulations (EAR). These regulations were designed to address China’s military modernization efforts, specifically targeting advanced computing and semiconductor manufacturing equipment (SME). Subsequent amendments on November 17, 2023, expanded the EAR’s scope considerably. The updated regulations now encompass a broader range of controls and extend their reach beyond China to include nations in Country Group D. This comprehensive approach is intended to prevent sensitive technologies from reaching entities that pose a global security risk, reflecting the U.S. government’s dedication to protecting critical technologies in the face of evolving global dynamics.

Key Points of the Regulations

1. Updates to Export Control Classification Numbers (ECCNs)
   
   The rules included adjustments to the performance parameters for advanced computing chips (and related items such as components, equipment, software, and technology) and expanded controls on equipment used in the production of advanced chips. The newly added .z subparagraph to the ECCNs is of particular interest.
   
   
2. Controls on Semiconductor Manufacturing Equipment (SME)
   
   The new rules expanded the types of SME under control and implemented key changes in export licensing requirements. This includes targeting machinery used for manufacturing chips under certain size thresholds and certain manufacturing methods. It also sets the de minimis threshold to zero percent for key equipment when exported for use in developing or producing advanced-node integrated circuits​​.
   
   
3. Restrictions Against China and Country Group D
   
   The rules impose export license restrictions not only on China and Macau but also on countries subject to Country Group D and others based on the risk of diversion. Export licenses for controlled items destined for these countries and establish different review standards for export licenses based on the destination country​​ with a presumption of denial in certain instances​​.
   
   
4. End-Use/End-User-Based Controls
   
   There are new end-use restrictions and expanded U.S. jurisdiction with revised Foreign Direct Product (FDP) rules. This includes controls based on the sensitivity of the items exported (Advanced Computing FDP rule and Supercomputer FDP rule) and their intended end use, focusing particularly on preventing the diversion of technology to China​​ and restricted entities (Entity List FDP rule). 
   
   The Advanced Computing FDP rule targets the export, reexport, or transfer (in-country) of specific advanced computing items, such as integrated circuits, computer commodities, and software, that are the direct product of U.S.-origin technology or software.
   
   The Supercomputer FDP expands the scope of the EAR whenever the exporter has “knowledge” at the time of export, reexport, or transfer (in-country) that the foreign-produced items that are in scope of the regulations are destined for a destination, end use, or end-user of concern. BIS provided guidance on what constitutes sufficient knowledge for a transaction to be subject to end-use and U.S. person controls. This involves evaluating information available in the normal course of business to determine when additional due diligence is warranted​​.
   
   The Entity List FDP rule further restricts foreign-produced items subject to the EAR when the entity is designated as a ‘Footnote 1 or 4’ entity. Additional Chinese entities were also added to the Entity List. These lists identify parties that are subject to specific export license requirements for the export, reexport, and transfer (in-country) of specified items​​.
   
   
5. Jurisdiction over Foreign-Made Advanced Chips
   
   The new rules clarified the extent to which foreign-made advanced chips are subject to U.S. jurisdiction, particularly through the expanded application of the de minimis rule for certain foreign-made advanced chips and equipment by specifying that foreign-made items with any amount of U.S.-origin content are subject to EAR, emphasizing the expanded jurisdiction​​.
   
   
6. Refinement on Restrictions on U.S. Persons Activities 
   
   The rules significantly revised U.S. export control policies regarding semiconductors and supercomputers, particularly impacting the activities of U.S. persons. These changes narrowed allowable activities, focusing on restricting U.S. involvement in China’s advanced semiconductor sector. New export licensing requirements and clearer operational guidelines were introduced to prevent U.S. support for sensitive technologies in restricted areas while addressing the U.S. tech industry’s concerns about the scope of permissible activities. 
   
   
7. Five New Red Flags
   
   BIS introduced new red flags (Red Flag no. 15-19) to aid semiconductor fabrication plants in identifying attempts to circumvent controls. These include mismatches between the stated use of an item and its traditional use and indications of intent to develop or produce supercomputers or integrated circuits (ICs) in restricted countries​​​​.
   
   
8. Circumvention Prevention
   
   The rules include new measures to prevent the circumvention of restrictions. BIS made revisions such as removing “interconnect bandwidth” as a method for determining chip restrictions and adding “performance density” as a control parameter​​.

Summary

These revised regulations signify a strategic and nuanced approach by the U.S. government to intensify control over semiconductor and supercomputing technology exports, focusing particularly on China and other targeted countries and entities to deter the diversion and improper utilization of these critical technologies.