New guidance from the Committee on Foreign Investment in the U.S. signals that the committee is preparing to increase its enforcement efforts, law firms said this week. Companies should expect more scrutiny from the committee, firms said, adding that completing and documenting due-diligence before finalizing an investment transaction is growing increasingly important.
The top Republican on the House Foreign Affairs Committee is asking the Commerce Department to provide its licensing data and communications with chip companies, along with a broad swathe of related information, to make sure the agency is implementing its new China controls “fairly across all market players.”
The Bureau of Industry and Security will likely add more entities involved in China’s supercomputing and semiconductor manufacturing industry to the Entity List, said Thea Kendler, BIS’s assistant secretary for export administration. “We view advanced chip manufacturing and supercomputer activities in China as a national security concern,” Kendler said during a Nov. 2 Information Systems Technical Advisory Committee meeting. “So I expect that there will be Entity List additions.”
Nearly a month after the U.S. announced new export controls on advanced computing and semiconductor equipment destined to China, lawyers and companies are still grappling with what they say is a complex set of regulations and are awaiting clearer government guidance on how and whether their activities are covered. The dense regulations, along with lengthy response times from the Bureau of Industry and Security, have caused firms to delay decisions on shipments until they can better understand their risks and BIS’s due diligence requirements, trade attorneys and industry officials said in recent interviews.
The Bureau of Industry and Security published its first set of frequently asked questions on its new China-related export controls (see 2210070049), covering the definition of semiconductor “facility” and offering guidance on certain U.S. persons requirements, license review policies and more.
New U.S. restrictions on semiconductor exports to China likely will have a “truly devastating impact” on China’s access to advanced semiconductors within the next three years, the Carnegie Endowment for International Peace said in an Oct. 27 report. Even though China has been expecting the controls and has stockpiled some chips and semiconductor manufacturing equipment, those stockpiles will eventually “dwindle” and the country “will likely be forced to step backward in technological time and use less advanced chips that the industry has long since moved past,” the report said.
The Biden administration could soon lift certain sanctions against Venezuela as it recalibrates its strategy toward the country amid global oil shortages, experts said. But they also said it remains unclear if those moves will entice President Nicolas Maduro regime to hold free and fair elections or stop committing human rights violations.
The Federal Maritime Commission should scrap its notice of proposed rulemaking on how it should define certain unreasonable conduct by ocean carriers, the Agriculture Transportation Coalition said in comments to the FMC last week. The group said the NPRM misses congressional intent “by a wide margin” and would not solve the issue of carriers unfairly declining to take exports in favor of imports.
Semiconductor company KLA is expecting the U.S.’s new export controls on China (see 2210070049) to hurt its revenue and is looking at moving its products to customers not subject to the restrictions, CEO Rick Wallace said during an Oct. 26 earnings call. The company is preparing for up to a $900 million revenue hit in 2023, but Wallace also stressed the company is uncertain how much its operations will be affected until it receives more guidance from the Commerce Department.
The Bureau of Industry and Security is confident it will soon convince allies to adopt similar semiconductor export controls on China, Undersecretary Alan Estevez said, adding that he expects some type of “multilateral deal” finalized in the “near term.” Estevez, speaking during an Oct. 27 event hosted by the Center for a New American Security, also said BIS isn’t “done” imposing chip-related controls and said companies should expect new restrictions on emerging technologies, including on biotechnologies, artificial intelligence software and items in the quantum sector.