Implementation of Additional Due Diligence Measures for Advanced Computing Integrated Circuits; Amendments and Clarifications; and Extension of Comment Period

<RULE> DEPARTMENT OF COMMERCE <SUBAGY>Bureau of Industry and Security</SUBAGY> <CFR>15 CFR Parts 734, 736, 740, 742, 743, 744, 748, 762, 772, and 774</CFR> <DEPDOC>[Docket No. 250108-0013]</DEPDOC> <RIN>RIN 0694-AJ98</RIN> <SUBJECT>Implementation of Additional Due Diligence Measures for Advanced Computing Integrated Circuits; Amendments and Clarifications; and Extension of Comment Period</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Bureau of Industry and Security, Department of Commerce. <HD SOURCE="HED">ACTION:</HD> Interim final rule, with request for comment. <SUM> <HD SOURCE="HED">SUMMARY:</HD> BIS is revising the Export Administration Regulations (EAR) in response to requests from the public to provide additional due diligence procedures regarding advanced computing integrated circuits (ICs). This interim final rule (IFR) will protect the national security of the United States and assist foundries and Outsourced Semiconductor Assembly and Test (“OSATs”) companies in complying with provisions of the EAR pertaining to advanced computing ICs in the supply chain. This IFR also revises the EAR to make amendments and clarifications to the EAR for changes made to the EAR in an IFR released by BIS on December 2, 2024, “Foreign-Produced Direct Product Rule Additions, and Refinements to Controls for Advanced Computing and Semiconductor Manufacturing Items,” (FDP IFR), including extending the deadline for written comments for the FDP IFR to March 14, 2025. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> • <E T="03">Effective date:</E> The effective date of this rule is January 16, 2025. • <E T="03">Compliance date:</E> Although this rule is effective January 16, 2025, exporters, reexporters, and transferors (in-country) are not required to comply with the new requirements of this rule until January 31, 2025. This compliance date only applies to EAR text that this rule revises, and does not otherwise impact any provision that was in effect prior to January 16, 2025 or added to the EAR through other rules. For example, under Export Control Classification Number (ECCN) 3A090, this IFR adds new Note 1 to 3A090.a, which, as new text, is subject to this compliance date. This IFR also revises ECCN 3A090.a. Only the new changes to ECCN 3A090.a in this particular rule are eligible for this compliance date. • <E T="03">Comment date:</E> Comments on this IFR must be received by BIS no later than March 14, 2025. • <E T="03">Extension of comment period for FDP IFR:</E> The comment period for the FDP IFR published December 5, 2024, at 89 FR 96790, is extended. Comments must be received on the FDP IFR by BIS no later than March 14, 2025. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Comments on this IFR, including the amendments and clarifications made for the FDP IFR described under section III.G of this IFR, may be submitted to the Federal rulemaking portal at: <E T="03">www.regulations.gov.</E> The <E T="03">regulations.gov</E> ID for this IFR is BIS-2024-0055. Please refer to RIN 0694-AJ98 in all comments. All filers using the portal should use the name of the person or entity submitting the comments as the name of their files, in accordance with the instructions below. Anyone submitting business confidential information should clearly identify the business confidential portion at the time of submission, file a statement justifying nondisclosure and referring to the specific legal authority claimed, and provide a non-confidential version of the submission. For comments submitted electronically containing business confidential information, the file name of the business confidential version should begin with the characters “BC.” Any page containing business confidential information must be clearly marked “BUSINESS CONFIDENTIAL” on the top of that page. The corresponding non-confidential version of those comments must be clearly marked “PUBLIC.” The file name of the non-confidential version should begin with the character “P.” Any submissions with file names that do not begin with either a “BC” or a “P” will be assumed to be public and will be made publicly available at: <E T="03">https://www.regulations.gov.</E> Commenters submitting business confidential information are encouraged to scan a hard copy of the non-confidential version to create an image of the file, rather than submitting a digital copy with redactions applied, to avoid inadvertent redaction errors which could enable the public to read business confidential information. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> • For general questions, contact Regulatory Policy Division, Office of Exporter Services, Bureau of Industry and Security, U.S. Department of Commerce at 202-482-2440 or by email: <E T="03">RPD2@bis.doc.gov.</E> • For Category 3 technical questions, contact Carlos Monroy at 202-482-3246 or by email: <E T="03">Carlos.Monroy@bis.doc.gov.</E> • For Category 5 technical questions, contact Aaron Amundson at 202-482-0707 or <E T="03">RPD2@bis.doc.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> <HD SOURCE="HD1">I. Background</HD> On October 7, 2022, BIS issued the first of a series of rules that restricted the ability of the People's Republic of China (PRC) and other countries of concern to obtain certain advanced computing ICs ( <E T="03">i.e.,</E> ICs exceeding specified performance thresholds) and related items (October 7 IFR). The controls in the October 7 IFR and the controls in the subsequent related rules were designed to prevent malicious state and non-state actors in the PRC and elsewhere from obtaining critical technology that they could use to threaten U.S. national security and foreign policy objectives. Today, through this IFR, BIS is updating the EAR to enhance the effectiveness of these controls. This IFR aims to address a common request from public comments on the October 7 IFR controls and subsequent related rules for more detailed guidance on how to conduct due diligence to confirm that an IC does not exceed the performance thresholds specified in EAR controls. In particular, this IFR focuses on providing “front-end fabricators” with objective, bright-line rules designed to assist in better identifying transactions with potential risk for diversion in a manner contrary to U.S. national security and foreign policy interests; enhancing due diligence procedures to ensure that new customers are appropriately vetted by “front-end fabricators” prior to providing ICs that may meet the advanced computing control levels; and improving reporting for transactions involving newer customers who may pose a heightened risk of diversion. <HD SOURCE="HD2">A. Semiconductors Are Central to the PRC's Technological and Military Ambitions</HD> The PRC seeks to use advanced computing ICs and supercomputing capacity in the development and deployment of advanced computing systems and artificial intelligence (AI) models to further its goal of surpassing the military capabilities of the United States and its allies. Advanced or frontier AI capabilities such as large AI foundation models can lead to improved design and execution of weapons of mass destruction (WMDs), autonomous weapons, and advanced conventional weapons. Military decision-making aided by these AI models can improve speed, accuracy, planning, and logistics. Advanced computing ICs are necessary for the development of these capabilities, because of the high processing power needed. The use of advanced computing ICs in development and deployment of PRC AI models would further the PRC's goals of surpassing the military capability of the United States and its allies, a goal noted in the February 6, 2023, Annual Threat Assessment of the U.S. Intelligence Community (see <E T="03">https://www.dni.gov/files/ODNI/documents/assessments/ATA-2023-Unclassified-Report.pdf</E> ). That same report indicated that the PRC “is rapidly expanding and improving its artificial intelligence (AI) and big data analytics capabilities, which could expand beyond domestic use,” including to export its digital authoritarian ecosystem to assist in surveillance and to facilitate its transnational repression overseas. Such activities by the PRC are contrary to U.S. national security and foreign policy interests as set forth in the Export Control Reform Act of 2018 (ECRA) (codified, as amended, at 50 U.S.C. 4801-4852), which directs BIS to control items subject to the jurisdiction of the United States when those items could be used in “military programs that pose a threat to the security of the United States or its allies,” could lead to “the proliferation of weapons of mass destruction or of conventional weapons,” or could undermine the “foreign policy of the United States, including the protection of human rights and the promotion of democracy” (50 U.S.C. 4811(2)). <HD SOURCE="HD2">B. Export Controls on Advanced Computing ICs</HD> Accordingly, on October 7, 2022, BIS released the IFR, “Implementation of Additional Export Controls: Certain Advanced Computing and Semiconductor Manufacturing Items; Supercomputer and Semiconductor End Use; Entity List Modification” (October 7 IFR) (October 13, 2022, 87 FR 62186), which amended the EAR to implement controls on certain ICs, computer commodities that contain such ICs, and certain semiconductor manufacturing items, and to make other EAR changes to implement appropriate related controls, including on certain “U.S. person” activities. The October 7 IFR explained that these controls were aimed at limiting the PRC's ability to engage in activities that would pose significant threats to U.S. national security and foreign policy. BIS determined that advanced computing ICs and related computing items—many of which originated in the United States or were produced with U.S. technology, software, or tools—could enab ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 190k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━