The U.S. Department of Commerce (DOC) has now published the final rule related to the national security guardrails for CHIPS Act Funding. This final rule becomes effective on November 24, 2023. This article provides a quick summary of the final rule along with some interpretive guidance.
Some Points of Interest
- A semiconductor has been defined as follows:
§ 231.115 Semiconductor.
Semiconductor means an integrated electronic device or system most commonly manufactured using materials such as, but not limited to, silicon, silicon carbide, or III–V compounds, and processes such as, but not limited to, lithography, deposition, and etching. Such devices and systems include but are not limited to analog and digital electronics, power electronics, and photonics, for memory, processing, sensing, actuation, and communications applications.
- Foreign Countries of Concern include China, Russia, Iran, North Korea, and any country that the Secretary determines to be engaged in conduct that is detrimental to the national security or foreign policy of the United States. For more information see § 231.102 of the final rule.
- Restrictions extend beyond items subject to the Export Administration Regulations.
- There is no exception for fundamental research (under the definition of joint research). However, the DOC did not speak to whether fundamental research is or is not excepted under technology licensing.
- Semiconductors critical to national security are identified. For more information see § 231.118 of the final rule.
- What is and is not technology licensing is identified. For more information see § 231.120 of the final rule. This may be of interest to IPO.
- Prohibition of certain joint research or technology licensing – (Technology Clawback – Recipients may not engage in “joint research” or “technology licensing” efforts with a “foreign entity of concern” related to a “technology or product that raises national security concerns.”) For more information see § 231.203 of the final rule. This may be of interest to IPO.
- Expect additional conditions on certain joint research or technology licensing. For more information see § 231.204 of the final rule. This may be of interest to IPO and SPO.
- Technology or products that raise national security concerns are identified. For more information see § 231.121 of the final rule.
- Perform Restricted Party Screening prior to engaging in activities with other parties and escalate positive matches needing assistance from the Export Compliance Office (ECO) to email@example.com. Monitor and action your dynamic alerts.
- If funding is related to the CHIPS Act, expect restrictions to be imposed.
- Be cautious and contact the ECO:
- When working with sponsors on semiconductor-related work involving foreign countries of concern.
- Prior to licensing technology related to semiconductors.