BIS's FAQs Highlight the Complexity of the AC/S IFR

Jan. 9, 2024
By: Marvin E. McPherson

BIS issued an updated set of Frequently Asked Questions, addressing key aspects of two Interim Final Rules: "Export Controls on Semiconductor Manufacturing Items" (IFR) and "Implementation of Additional Export Controls: Certain Advanced Computing Items; Supercomputer and Semiconductor End Use; updates and corrections" (AC/S). While the FAQs offer valuable insights, it's crucial to note the recurring nature of questions and responses during the public comment period. This repetition underscores the complexity of the new regulations.

The FAQs cover essential information, including details on the AC/S IFR, performance parameters of controlled chips, license exception NAC (Notified Advance Computing), end use restrictions, U.S. Persons activity controls, and Regional Stability (RS) controls for .z items.

One commenter during the comment period emphasized the complexity of the October 7 IFR, suggesting that only a select group with extreme expertise in the EAR and semiconductors can fully comprehend the rulemaking. The concern raised is that businesses, especially smaller enterprises and foreign multinationals less familiar with these details, may struggle to navigate the rules, leading to either unknowing non-compliance or an excess of caution resulting in over-compliance.

Despite such concerns, BIS responses maintain that the changes to the October Semiconductor rule are not overly complex and are more targeted. However, we share the commenter's perspective on the intricacy of the AC/S and IFR. The AC/S IFR introduces a new structure and updates technical parameters for identifying items controlled under ECCN 3A090, ensuring control over ICs for AI training. Notably, the October 2022 IFR introduces a catch-all criteria or see through encompassing items “identified elsewhere on the CCL that meet or exceed the performance parameters of ECCNs 3A090 or 4A090.” Additionally, it imposes licensing requirements for end users headquartered in, or whose ultimate parent entity is headquartered in, either Macau or a D:5 country.

Stay informed about these regulatory updates for compliance in the evolving landscape. If you have any questions surrounding the AC/S IFR please contact any attorney at Barnes Richardson and Colburn.