New BIS Chip FAQs Tackle Advanced Computing Notification, US Persons Controls
The Bureau of Industry and Security published a new set of frequently asked questions for its recently updated semiconductor export controls (see 2310170055), offering guidance on the agency’s new export notification requirement, its controls on U.S. persons activities, the scope of its end-use controls, direction for electronic export information filers and more. The FAQs also give input on several export scenarios that may require a license and preview at least one export control revision that BIS plans to make.
A large portion of the nine-page FAQ document focuses on new License Exception Notified Advanced Computing (NAC), which authorizes certain chip exports to China, Macau and destinations subject to a U.S. arms embargo. Companies using the license exception must submit notifications to BIS with data about the chip, including its total processing performance, the name of the exporter and other parties to the transactions, the volume and value of the shipment, and more (see 2311200042). BIS has 25 days to review that data before approving use of the license exception.
In the FAQs, BIS stressed that the 25-day review period isn’t just a formality. The agency said it may block certain exports from using the license exception even if the chip meets all the technical parameters, adding that it also will review NAC notifications for national security concerns and “require a license application for any notifications that raise concerns.” Those concerns “could be based on many factors including the type of item, quantity, and the end user/end use.”
BIS also said it doesn’t plan to publish a list of advanced computing chips that are eligible for license exception NAC, even though it was told a list could make the process “less burdensome” for exporters. BIS said it would be difficult to list a set of chips that would qualify for the exception because the agency’s “review process also considers additional factors, such as end users, end uses, and volume.”
The agency also said it plans to correct Export Control Classification Number 4A090.b to clarify an “issue” raised by a member of industry about the scope of the license exception NAC's requirements. The agency said exporters should “assess all computers, ‘electronic assemblies,’ and ‘components’ containing integrated circuits, any of which meets or exceeds the limits in 3A090.b, against the requirements of License Exception NAC notwithstanding ECCN 4A090.b currently being reserved.” BIS said it will “revise ECCN 4A090.b to clarify this issue.”
BIS also said exporters submitting a NAC notification should authorize BIS to contact the chip designer or manufacturer on the exporters’ behalf to obtain information on the chip’s performance density if the exporter doesn’t have this information. “In most cases,” the agency said, “this will not be necessary as BIS will probably have this information.”
The agency also said it’s expecting to receive multiple “duplicative” NAC notification requests from different exporters for the same chip. But if BIS approves one notification, that doesn’t mean all other exporters shipping that item are also approved. “Approval of the NAC notification request is only valid for the exporter who submitted the application,” the agency said.
The FAQs also address the U.S. persons controls included under the chip restrictions, and clarify that certain exclusions for those controls only apply to “natural” U.S. persons -- not a U.S. entity. BIS said the point of excluding “natural” U.S. persons from the controls was to “eliminate discrimination against U.S. person employees of non-U.S. person entities headquartered in allied countries.”
Another question asks BIS to clarify its end-use controls for certain advanced-node integrated circuits in 744.23(a)(2) of the Export Administration Regulations. That control imposes restrictions on certain items used in the “development” or “production” of ICs destined to a facility that produces advanced-node ICs and that is located in certain restricted countries.
The questioner asked BIS to clarify if those end-use controls apply to a research and development facility only involved in manufacturing prototypes that aren’t meant for sale and that isn’t “capable of serial production.” The person asked whether this facility is “excluded from this end use control” because it’s “solely a ‘development’ facility.”
BIS didn’t give an answer because it said it needed more information. It encouraged the commenter to submit an advisory opinion request to “facilitate BIS's assessment of whether the activity would qualify as ‘development’ versus ‘production.’”
In another FAQ, BIS confirmed that its definition for “facility” includes facilities where production “may occur beyond a fabrication facility,” such as “beyond the clean room or production floor.” It also includes facilities “where important late-stage product engineering or early-stage manufacturing steps (among others) may occur” and also captures development and “product engineering activities at R&D fabrication ‘facilities’ that may not engage in volume manufacturing.”
The FAQs also touch on EEI requirements in the Automated Export System, including for new .z category items, an identifier introduced by BIS to make it easier for exporters to identify items subject to the advanced chip export controls. The agency stressed that EEI filing is mandatory for .z category items for all countries, including for transactions below the $2,500 threshold that normally exempts exports from EEI. BIS also said EEI filers should include the .z in front of the article or commodity descriptions for all .z category items.
Other FAQs address various export scenarios and whether a license is required, including in transactions involving the transfer or release of EAR99 technology; a transaction to upgrade equipment installed in a facility that produces ICs, but not advanced-node ICs, in a D:5 country; scenarios that may or may not be eligible for the agency’s temporary general license; and more.