December 2, 2024, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) has introduced a sweeping set of regulations aimed at curtailing China’s ability to develop advanced-node semiconductors crucial for military modernization, artificial intelligence (AI), and advanced computing. These measures are part of a broader strategy to safeguard U.S. national security by limiting the People’s Republic of China (PRC) from acquiring or producing cutting-edge technologies.

The new rules target critical areas, including controls on semiconductor manufacturing equipment, high-bandwidth memory (HBM), and specialized software tools. They also expand the Entity List, adding 140 companies and modifying 14 existing entries to encompass firms linked to advancing China’s military ambitions.

“This package reflects the Biden-Harris Administration’s commitment to using strategic export controls to address national security threats posed by China’s military modernization,” said U.S. Secretary of Commerce Gina Raimondo. “No Administration has been tougher on preventing the PRC from leveraging advanced technologies against us.”

KEY MEASURES ANNOUNCED

The regulatory package includes:

1. Equipment and Software Controls:

• Restrictions on 24 types of semiconductor manufacturing equipment, including tools for etching, deposition, and lithography.

• New limitations on software for developing advanced-node integrated circuits, targeting tools that enhance the productivity of semiconductor production.

2. High-Bandwidth Memory (HBM):

• Controls on U.S.-origin and certain foreign-produced HBM critical for large-scale AI applications.

3. Entity List Additions:

• Designation of 140 companies, including semiconductor fabs and investment firms, for their role in advancing the PRC’s technology ecosystem.

4. Foreign Direct Product (FDP) Rules:

• New provisions extending U.S. jurisdiction over foreign-produced semiconductor manufacturing equipment with ties to PRC military end-uses.

5. Software Keys:

• Clarified regulations on software keys that unlock access to controlled hardware or software systems.

NATIONAL SECURITY IMPLICATIONS

The rules aim to counter China’s Military-Civil Fusion strategy, which integrates civilian technological advancements into military applications. Assistant Secretary for Export Administration Thea D. Rozman Kendler emphasized the importance of these measures, stating, “Protecting our collective security requires constraining the PRC’s ability to develop technologies that threaten U.S. and allied interests.”

Advanced AI models, a key focus of these controls, have significant military applications, including battlefield analysis, cyberweapon development, and mass surveillance. By limiting China’s access to semiconductor technologies, the U.S. seeks to impede Beijing’s ability to indigenize critical technologies.

COORDINATED GLOBAL EFFORT

The announcement underscores the importance of collaboration with allies to address shared security concerns. National Security Advisor Jake Sullivan highlighted this approach: “We are working proactively with partners to safeguard cutting-edge technologies from being used to undermine global security.”

IMPLEMENTATION AND NEXT STEPS

The rules take effect immediately, with certain compliance deadlines extended to December 31, 2024. BIS encourages public comments on the interim final rule and will continue to refine its strategy to address emerging threats.

This initiative builds on prior BIS actions, including regulatory updates in October 2023 and April 2024, furthering a “small yard, high fence” approach to securing critical technologies.

SOURCE/RECOMMENDED READ: 

• Commerce Strengthens Export Controls to Restrict China’s Capability to Produce Advanced Semiconductors for Military Applications | Bureau of Industry and Security 

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