On September 6, 2024, the Bureau of Industry and Security (BIS) of the U.S. Commerce Department issued an interim final rule expanding export controls on certain emerging technologies:
- Quantum Computing: Quantum computers, related equipment, components, materials, software and technology that can be used in the development and maintenance of quantum computers.
- Advanced Semiconductor Manufacturing: Tools and machines that are essential for the production of advanced semiconductor devices.
- Gate All-Around Field-Effect Transistor (GAAFET): Technology that produces or develops high-performance computing chips that can be used in supercomputers.
- Additive Manufacturing: Equipment, components and related technology and software designed to produce metal or metal alloy components.
BIS determined these items are “rapidly advancing technologies that pose serious threats to [U.S.] national security when in the wrong hands.” As a result of the expanded export controls, these technologies constitute “critical technologies” for purposes of the Committee on Foreign Investment in the United States (CFIUS), expanding the scope of transactions that require a filing with CFIUS.
Most of the rule’s requirements took effect on September 6, other than supply of newly-controlled quantum items to certain allied countries that does not require a license until November 5, 2024.
What Companies and Investors Should Consider Doing
- Companies in the Semiconductor or Quantum Technologies Sectors: Conduct a thorough review of their development, production and distribution activities to determine if they face additional licensing requirements and to ensure compliance with the new controls.
- Foreign Investors: Evaluate whether the new controls may trigger filing with CFIUS when contemplating acquisition of or investment into U.S. companies that design, fabricate, develop, test, produce or manufacture any item covered by the new rule.
Acting With Allies to Enhance National Security
The new U.S. controls align with those recently implemented by international partners, including the United Kingdom, Australia, Japan, France, Italy, Canada, Germany and Spain.
New Controls
The rule adds 18 export control classification numbers (ECCNs) to the Export Administration Regulations Commerce Control List. It also revises nine existing ECCNs. The new ECCNs and some revised ECCNs have worldwide license requirements and limited license exception availability.
Limited Exceptions to New Controls
- New License Exception Implemented Export Controls (IEC): IEC will authorize supply of newly controlled items to specific countries whose governments have implemented equivalent controls on the same items as the United States.
- General License for GAAFET Technology: To prevent disruptions to ongoing research and development, the new rule includes a general license authorizing supply of GAAFET technology for the development or production of integrated circuits (now controlled under the new ECCN 3E905) to established partners in allied countries when such development or production began prior to September 6, 2024.
- General Licenses for Deemed Exports and Reexports: Deemed exports (i.e., sharing or releasing controlled source code or technology to a foreign person within the United States) and deemed reexports (i.e., sharing or releasing controlled sourced code or technology to foreign national employees by entities outside the United States) are largely exempt from the new controls.Controls apply to deemed exports and reexports of:
- Newly controlled software and technology to citizens or permanent residents of countries, including China and Russia, that the United States deems to be national security threats or that are subject to a U.S. arms embargo, and
- GAAFET technology to foreign persons who were not employees or contractors of the company sharing the technology as of September 6, regardless of a person’s nationality.
The rule recognizes the importance of foreign expertise for the developments in tech, particularly in quantum. The rule includes general licenses that permit certain deemed exports/reexports of quantum computing and GAAFET technologies controlled under the new rule. The general licenses apply only if the recipients of controlled source code or technology are not subject to export sanctions. In addition, for GAAFET technology, recipients must have been employed by the exporting company on September 6, 2024. The exporter must also meet annual reporting requirements.
BIS will accept comments on the new rule through November 5, 2024.