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Correcting and Clarifying Export Controls Issued on Advanced Computing and Semiconductor Manufacturing Items

On March 29, 2024, the U.S. Commerce Department’s Bureau of Industry and Security (BIS) issued an interim final rule (“2024 IFR”) clarifying and correcting its October 2023 interim final rules on advanced computing/supercomputers (AC/S IFR) and semiconductor manufacturing equipment (SME IFR) (collectively called the “2023 IFRs”).

The 2023 IFRs further expanded the export controls imposed by the October 2022 interim final rule on advanced computing integrated circuits, supercomputers and semiconductor manufacturing equipment (“2022 IFR”), aimed at curtailing efforts by the People’s Republic of China to obtain advanced computing chips, supercomputers and advanced semiconductors for its military applications. (We previously wrote about the 2023 rules here.) The 2024 IFR corrects inadvertent errors in those rules and provides additional clarifications.

The 2024 IFR is effective April 4, 2024. Any comments from the public must be received by BIS no later than April 29, 2024.

A summary of the key clarifications and corrections contained in the 2024 IFR follows.


BIS added a new License Exception Advanced Computing Authorized (ACA), separating former License Exception Notified Advanced Computing (NAC) into two distinct license exceptions.

New License Exception ACA applies to exports, reexports, and transfers (in-country) of the specified advanced computing items that are currently not covered by License Exception NAC, including:

  • exports, reexports, and transfers (in-country) of the specified items to different destinations (i.e., to Country Groups D:1 (national security) or D:4 (missile technology) (except Macau and D:5 destinations)); and
  • transfers (in-country) of the specified items to the destinations covered under NAC.

(A summary of these changes can also be found in this chart.)

Additional revisions to harmonize EAR provisions and for easier readability. Notable revisions include:

  • The license review standards under 744.23(d) are now split into three new paragraphs for easier readability:

(d)(1) presumption of denial policy, e.g., destined for Macau and D:5 countries;

(d)(2) presumption of approval policy, e.g., for end users headquartered in the United States or a destination in A:5 or A: 6 countries that are not majority-owned by entities headquartered in Macau or D:5 destination; and

(d)(3) case-by-case policy, e.g., for certain specified Advanced Computing ECCNs.

  • Addition of ECCN 3B001.j (i.e., EUV masks) and associated software and technology to restrictions on specific activities of “U.S. persons” under §744.6, which had been previously unintentionally excluded from controls. BIS noted that EUV masks are required for lithography, a critical technology for advanced-node IC production.
  • In order to prevent against unintended consequences stemming from the AC/S IFR, BIS restored the other reasons for control (e.g., NS) for items that meet the specifications in .z paragraphs of these ECCNs.


BIS clarified that it requires a license for direct and indirect exports, reexports, and transfers (in-country) of front-end SME under §744.23(a)(4).

For direct exports, a license is required for exports, reexports, or transfers of any item subject to the EAR and specified on the CCL when destined to Macau or a D:5 destination for the “development” or “production” of specified front-end SME.

For indirect exports, a license is required for exports, reexports, or transfers of any item subject to the EAR and specified on the CCL to any destination when there is “knowledge” that the item is for the “development” or “production” of a specified foreign-made item, whether subject to the EAR or not, that are themselves ultimately used for “development” or “production” of specified front-end SME by an entity headquartered in, or with an ultimate parent headquartered in, Macau or a D:5 destination.

BIS’s guidance clarifies that a license is required when an item that is listed on the Commerce Control List (“CCL”) is incorporated into foreign-made items that are themselves destined for the “development” or “production” of specified front-end SME in Macau or D:5 destinations under §744.23(a)(4).

BIS’s rationale is that the definition of “production” in §772.1 of the EAR includes the term “integration,” i.e., the regulatory provision already included the physical incorporation of one item into another, or the joining of two items.

For example, under §744.23(a)(4), a license is required even when the export, reexport, or transfer (in-country) is to a third party Original Equipment Manufacturer (OEM) in a third country when there is “knowledge” at the time of the export that the item would be incorporated into a foreign-made SME item (not subject to the EAR) by the OEM in the third country, and then that item would be ultimately sent for “production” of specified SME to a manufacturer of Category 3 items in China, and is by an entity headquartered in, or with an ultimate parent headquartered in, Macau or a D:5 destination. See Topic 45.

If there is “development” or “production” of front-end SME produced at the direction of entities headquartered outside of Macau or D:5 destinations, the Temporary General License (TGL) in General Order 4, Supplement No. 1 to Part 736, is available, provided the other requirements of that section are satisfied.

BIS recommends careful, separate assessments of §744.23(a)(2), (a)(3), and (a)(4).

The 2024 IFR includes a number of comments from BIS in response to prior questions asked relating to the supply chains of supercomputers, advanced node-ICs and SMEs and how the positioning and “knowledge” of these supply chains will be reviewed for purposes of control under §744.23. Based on BIS’s responses, §744.23(a)(2), (a)(3), and (a)(4) must be assessed individually, as BIS views the license requirements under each paragraph differently, given (a)(2) and (a)(3) discuss production of certain ICs and advanced computing items, and (a)(4) discusses the equipment to produce ICs.

  • BIS confirmed that at any point in the supply chain, if there is any “knowledge” that some of the items being transferred (in-country) is ultimately for direct use in a prohibited end use, a license would be required for the portion or percentage of the items for which there is “knowledge” that those items are destined for use in a prohibited end use. A license could be required even if the production technology node of the “facility” at which they will be used is unknown. (See Topic 46.)
  • For example, even for upstream distributors who may not be able to keep track of all their exports, BIS confirmed that an exporter, reexport, or transferor who has positive “knowledge” that their Category 3B/C/D/E items are directly used by some entities in a prohibited end use (i.e., not incorporated into foreign-made items), but do not know what percentage of their product is used for the prohibited end use, is required to obtain a license for 100% of the items, unless the exporter can determine which items will not be used in the “development” or “production” of ICs in Macau or D:5 destinations. (See Topic 47.)
  • BIS clarified that even if the exporter cannot confirm whether the semiconductor fabrication facility in China is producing products that meet the definition of “advanced-node ICs,” if the exporter has “knowledge” that the specified item will be used in “development” or “production” of ICs in Macau or D:5 destinations, a license is required. (See Topic 47.)

Final Thoughts
The 2024 IFR does not appear to widely expand license requirements, as the 2022 and 2023 IFRs did. Rather, the 2024 IFR appears to generally consist of refinements and the notable changes described above appear to be clarifications of BIS’s interpretations of the existing rules.

Notably, the IFR does not address the use of Infrastructure as a Service (IaaS) to access “supercomputers” through the rental or leasing of IaaS platforms. It is possible this could be the subject of a separate rulemaking in the future.