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BIS Issues Interim Final Rule on Advanced Computing Integrated Circuits, Providing Long-Awaited Guidance on Due Diligence Procedures
On January 15, 2025, the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) released an interim final rule (IFR) updating export controls on advanced computing semiconductors. This IFR seeks to ensure that customers of “front-end fabricators” and Outsourced Semiconductor Assembly and Test (OSAT) companies cannot evade controls on advanced computing ICs by misrepresenting the performance capabilities of their integrated circuit (IC) designs.
The new rule is intended to supplement and clarify the rules first implemented in October 2022 (and later revised and expanded) to restrict China and other “countries of concern” from acquiring certain advanced computing ICs. (See our earlier posts here, here and here.)
The application of the advanced computing regulations depends to a great extent on determining whether designs will result in ICs that will have specifications that are captured by the restrictions. This aspect of the regulations raised questions about how companies could ensure they undertook appropriate due diligence to ensure the representations of their business partners were accurate. The IFR addresses this issue by providing explicit instructions on how the due diligence requirements can be met, including by creating lists of trustworthy companies. It also establishes new reporting requirements and makes certain adjustments to the scope of covered items. The IFR went into effect on January 16, 2025, but exporters, reexporters, and transferors (in-country) are not required to comply with the new requirements of this rule until January 31, 2025.
License Requirement Presumption for Front-End Fabricators and OSAT
The IFR revises ECCN 3A090.a to provide that when front-end fabricators and OSAT companies export, reexport or transfer an “applicable advanced logic integrated circuit,” there is a presumption that the item is 3A090.a and designed or marketed for datacenters imposing a worldwide license requirements, unless the presumption can be overcome in one of three ways:
- If the designer of the “applicable advanced logic integrated circuit” is an approved or authorized IC designer (listed in new Supplement No. 6 to Part 740).
- If the integrated circuit is packaged by an approved OSAT (listed in new Supplement No. 7 to Part 740) who attests that:
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- the “aggregated approximated transistor count” of the final packaged IC is below 30 billion transistors, or
- the final packaged IC does not contain high-bandwidth memory and that the “aggregated approximated transistor count” of the final packaged IC is below (i) 35 billion transistors for exports, reexports, or transfers completed in 2027, or (ii) 40 billion transistors for any exports, reexports, or transfer completed in 2029 or after.
- If the IC die is packaged by the “front-end fabricator” outside of Macau or a Country Group D:5 destination, and it attests that:]
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- the “aggregated approximated transistor count” of the final packaged IC is below 30 billion transistors, or
- the final packaged IC does not contain high-bandwidth memory and that the “aggregated approximated transistor count” of the final packaged IC is below (i) 35 billion transistors for exports, reexports, or transfers completed in 2027, or (ii) 40 billion transistors for any exports, reexports, or transfer completed in 2029 or after.
The IFT includes the following new defined terms:
- “Aggregated approximated transistor count,” is the sum of the “approximated transistor counts,” as defined in Note 1 to 3A090.a, of each “applicable advanced logic integrated circuit” die within the final package fabricated using a “16/14 nanometer node” or below, or using a non-planar transistor architecture.
- “Front-end fabricator,” is the company that provides front-end fabrication services to produce an integrated circuit, creating circuits on the surface of a wafer through processes such as photolithography, etching, and deposition.
- “Outsourced Semiconductor Assembly and Test (OSAT),” is a company that provides third-party manufacturing and testing services to semiconductor businesses. OSAT companies are responsible for assembling, packaging and testing ICs and other semiconductor devices.
Authorized and Approved IC Designers
To be added to the list of approved IC designers, an IC designer with plans to produce one or more ICs classified under ECCN 3A090.a must submit an advisory opinion request to BIS that includes the information in new Supplement No. 4 to Part 748. BIS will follow the interagency process for review of Validated End-User requests. Approved IC designers will be listed in Supplement No. 6 to Part 740.
To apply to be added to the list of approved OSAT companies, § 748.16 specifies that an OSAT company with plans to test, assemble, or package one or more items exceeding the technical thresholds of 3A090.a designed by the approved IC designer must submit an advisory opinion request to BIS. BIS will follow the interagency process for review of Validated End-User requests. Approved OSATs will be listed in supplement no. 7 to part 740.
Entities headquartered or having an ultimate parent headquartered in Macau or a destination in Country Group D:5 will not be eligible for either of the above lists.
To give industry time to adapt, ICs designed by approved IC designers may also qualify for the exception prior to April 2026.
Prior to April 13, 2026, authorized IC designers include all IC designers that are headquartered in Taiwan or Country Group A:1 or A:5 destination, that are neither located in nor have an ultimate parent headquartered in Macau or a Country Group D:5 destination. Authorized IC designers must agree to submit applicable information described in § 743.9(b) to the “front-end fabricator,” which the “front-end fabricator” must then report to BIS.
After April 13, 2026, authorized IC designers include any IC designer that both meets those criteria and has submitted an application to become an approved IC designer. However, any company deemed an authorized IC designer after April 13, 2026, will cease to be an authorized IC designer 180 days after the submission of its application to become an approved IC designer.
Relatedly, the IFR amends License Exceptions Artificial Intelligence Authorization (AIA) and Advanced Compute Manufacturing (ACM) by adding a requirement for ECCNs 3A090.a; 5A002.z.1.a, z.2.a, z.3.a, z.4.a, z.5.a; and 5A992.z.1, providing that these ECCNs are eligible for this license exception only if they are designed by an approved or authorized IC designer.
Reporting Requirements
The IFR adds new reporting requirements for “front-end fabricators” producing any IC specified in ECCN 3A090.a for authorized IC designers. Because only a small number of “front-end fabricators” are capable of producing ICs specified in ECCN 3A090.a, BIS believes the reporting requirement will impact a smaller set of “front-end fabricators,” who will consolidate and verify the much wider sets of IC designers and OSAT companies with which they work. These new reporting requirements are intended to provide the U.S. government with visibility into companies that are not listed on the initial approved IC designer list.
Required reports must be submitted quarterly, and the first report must be submitted by May 31, 2025. This first report shall cover any exports, reexports, and transfers (in-country) during the time between January 31 and April 30, 2025.
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