U.S. Department of Commerce Establishes Export Control Framework Limiting the Diffusion of Advanced Artificial Intelligence and Expands and Clarifies Advanced Computing Controls

Last week, the U.S. Commerce Department, Bureau of Industry and Security (“BIS”) issued two related interim final rules, titled Framework for Artificial Intelligence Diffusion (the “AI Diffusion IFR”) and Implementation of Additional Due Diligence Measures for Advanced Computing Integrated Circuits; Amendments and Clarifications; and Extension of Comment Period  (the “Due Diligence IFR”). Together, the two rules:

• Established a worldwide license requirement for advanced computing integrated circuits (“ICs”) and related items subject to the Export Administration Regulations (“EAR”) and classified under Export Control Classification Numbers (“ECCNs”) 3A090.a, 4A090.a, and corresponding “.z” ECCNs, and associated software and technology, as well as for non-public model weights for certain advanced artificial intelligence (“AI”) models;
• Implemented a three-tiered licensing framework applicable to exports, reexports, and in-country transfers of advanced computing ICs, including new authorization pathways and revisions to existing license exceptions, that (1) allows for the export, reexport, or transfer (in-country) of advanced ICs to a narrow set of U.S. allies and partners, and companies headquartered therein; (2) includes several exceptions and pathways to authorization to facilitate transactions with other countries that do not pose a national security risk, subject to certain conditions and limitations; and (3) maintains the existing strict controls on advanced ICs destined for Macau, China and other U.S. arms-embargoed jurisdictions identified in Country Group D:5 at Supplement No. 1 to EAR Part 740, and entities headquartered in, or whose ultimate parent company is headquartered in, Macau or a Country Group D:5 destination;
• Created a rebuttable presumption that certain advanced logic ICs exported, reexported, or transferred (in-country) by a front-end fabricator or an Outside Semiconductor Assembly and Test (“OSAT”) company are classified under ECCN 3A090.a and designed or marketed for use in datacenters; established a process to overcome this presumption; and imposed certain due diligence and reporting requirements on front-end fabricators;
• Revised the definition of an “advanced-node integrated circuit” to clarify the logic and dynamic random-access memory (“DRAM”) chips covered by that term, effectively expanding certain existing end-use and U.S. person controls;
• Expanded the EAR’s jurisdiction to reach additional advanced computing items, certain AI model weights, and other items destined to facilities in Macau, China, or another destination in Country Group D:5 where the production of logic or DRAM “advanced-node integrated circuits” occurs;
• Added a new compliance red flag for infrastructure-as-a-service (“IaaS”) providers when training advanced AI models; and
• Made certain clarifications and corrections to the interim final rule issued in December 2024 titled Foreign-Produced Direct Product Rule Additions, and Refinements to Controls for Advanced Computing and Semiconductor Manufacturing Items (the “December 2024 IFR”).

The AI Diffusion IFR was effective as of January 13, 2025, but exporters, reexporters, and transferors are not required to comply with the changes made via that rule until May 15, 2025, or until January 25, 2026, for certain security-related commitments applicable to validated end users (“VEUs”) and to exports of model weights under a new license exception.

The Due Diligence IFR was effective as of January 16, 2025, but exporters, reexporters, and transferors are not required to comply with the requirements of that rule until January 31, 2025.

BIS also issued a set of companion advanced computing Frequently Asked Questions (“FAQs”), and designated additional entities to the Entity List.

BIS is seeking public comments on the Due Diligence IFR, as well as the December 2024 IFR, until March 14, 2025. Public comments on the AI Diffusion IFR are due May 15, 2025.

Revised and Expanded Controls Targeting Advanced Computing ICs

In order to protect U.S. national security and foreign policy interests, BIS and its interagency partners in the U.S. government determined it was necessary to further restrict the export, reexport, and in-country transfer of advanced ICs that are sufficient to train advanced AI models. Building on controls on such ICs that were first established in October 2022, and expanded in October 2023, April 2024, October 2024, and December 2024, last week’s rules revised the existing ECCN entries for advanced computing ICs and related items; expanded the Advanced Computing Foreign Direct Product (“FDP”) Rule to apply to all foreign-produced items that meet the product scope of that rule, regardless of their destination; imposed a worldwide license requirement on the export, reexport, and in-country transfer of such items; and established a tiered framework of license exceptions and authorizations to allow certain transactions that BIS has determined pose a low risk of diversion, or would otherwise advance U.S. national security or foreign policy interests, including technological leadership.

Revisions to the Scope of Advanced Computing ICs

To clarify and expand the advanced ICs that are the subject of various BIS controls, including the EAR’s end-use controls at § 744.23 and U.S. person controls at § 744.6, the Due Diligence IFR revised the definition of “advanced-node integrated circuits” to update the technical parameters for DRAM ICs and added a new definition of “16/14 nanometer node” for logic chips that ties to the Institute of Electrical and Electronics Engineers (“IEEE”) “More Moore” White Paper.

To ensure that front-end fabricators and OSAT companies are able to identify the most sensitive ICs and treat them as controlled, the Due Diligence IFR also created a rebuttable presumption at Note 1 to ECCN 3A090.a that requires “front-end fabricators” and “OSAT” companies, as defined in the EAR, to treat as controlled under ECCN 3A090.a any logic ICs produced at or below a 16/14 nanometer node or using a non-planar transistor architecture, unless the presumption is overcome in one of three ways. Notably, the presumption at Note 1 to ECCN 3A090.a does not apply to items classified under ECCNs 4A003.z, 4A004.z, 4A005.z, or 4A090, such that the presumption is primarily limited to circumstances where a fab or OSAT company is exporting, reexporting, or transferring (in-country) logic ICs.

Front-end fabricators and OSAT companies may overcome the presumption that certain logic chips are controlled under ECCN 3A090.a if:

• The IC designer (i) is either an “approved” or “authorized” IC designer; and (ii) provides the front-end fabricator or OSAT a datasheet or other attestation of the “total processing performance” (“TPP”) and the “performance density,” as those terms are defined in the EAR, indicating that the IC is not specified in 3A090.a;
  • Approved IC designers have been approved by BIS and are listed at Supplement No. 6 to EAR Part 740. Currently, the list consists primarily of Western multinational chip designers. BIS has established an application process to approve additional IC designers with plans to produce ICs classified under ECCN 3A090.a.
  • Until April 13, 2026, “authorized” IC designers are IC designers that: (i) are headquartered in Taiwan or a destination specified in Country Group A:1 or A:5, that are neither located in nor have an ultimate parent headquartered in China, Macau, or another destination in Country Group D:5; and (ii) have agreed to submit applicable information described in EAR § 743.9(b) to the front-end fabricator, which the front-end fabricator must then report to BIS. If such IC designers have not submitted an application to BIS to become an “approved” IC designer by April 13, 2026, the designer will no longer be authorized.
• The IC die is packaged by the front-end fabricator at a location outside of Macau, China, or another Country Group D:5 destination and the front-end fabricator attests that either (a) the “aggregated approximated transistor count,” as defined in the EAR, of the final packaged IC is below 30 billion transistors; or (b) the final packaged IC does not contain high-bandwidth memory (“HBM”) and the “aggregated approximated transistor count” of the final packaged IC is below (i) 35 billion transistors for any exports, reexports, or transfers (in-country) completed in 2027; or (ii) 40 billion transistors for any exports, reexports, or transfers (in-country) completed in 2029 or thereafter; or
• The IC is packaged by an approved OSAT company listed at Supplement No. 7 to EAR Part 740 and the OSAT company makes the same attestation described in the bullet immediately above. As with approved IC designers, approved OSAT companies have been approved by BIS, and BIS has established an application process to approve additional OSAT companies with plans to produce ICs classified under ECCN 3A090.a.

To give BIS more visibility into the most sensitive ICs produced for authorized IC designers, the Due Diligence IFR also established new quarterly reporting requirements for front-end fabricators producing any IC classified under ECCN 3A090.a (or presumed to be classified under ECCN 3A090.a by Note 1 to that ECCN) for authorized IC designers. New Supplement No. 2 to Part 743 contains a Know Your Customer (“KYC”) Vetting Form that must be completed as part of this reporting requirement. The reporting requirement does not apply for approved IC designers identified at Supplement No. 6 to EAR Part 740 or approved OSAT companies identified at Supplement No. 7 to EAR Part 740, but BIS signaled that in the future it may impose such requirements if the agency determines that such parties present U.S. national security or foreign policy concerns.

Expansion of EAR Jurisdiction

The AI Diffusion IFR also expanded the destination scope of the Advanced Computing FDP Rule to include all destinations worldwide, such that ICs produced outside the United States and described in ECCN 3A090 (as well as related items in ECCN 4A090, the related “.z” entries, and related technology in ECCNs 3E001 (for 3A090) and 4E001 (for 4A090)) will be subject to the EAR when destined anywhere in the world if produced from certain U.S.-controlled software, technology, plants, or equipment. As discussed below, ECCN 3A090.a ICs, and related ECCN 4A090.a and “.z” items, are now subject to a worldwide license requirement.

Additionally, the Due Diligence IFR expanded the scope of end users covered by the Entity List Footnote 5 FDP Rule and corresponding de minimis rule, at EAR §§ 734.9(e)(3) and 734.4(a)(9), respectively, to extend the jurisdiction of the EAR over additional foreign-made items when destined to facilities in Macau, China, or another Country Group D:5 destination where the production of logic or DRAM “advanced-node integrated circuits” occurs or there is knowledge that the items will be for use in such production, regardless of whether an Entity List Footnote 5 party is involved. BIS explained that these revisions were intended to ensure that EAR license requirements apply to certain foreign-produced items when there is “knowledge” that an item is destined for certain entities located at facilities of concern, whether or not they have already been added to the Entity List with a Footnote 5 designation.

Worldwide Licensing Requirement

The AI Diffusion IFR revised the regional stability (“RS”) license requirement at EAR § 742.6(a)(6)(iii)(A) to require a license for the export, reexport, or in-country transfer to or within any destination worldwide of items classified under ECCNs 3A090.a, 4A090.a, and the corresponding “.z” ECCNs—i.e., ECCNs 3A001.z.1.a, z.2.a, z.3.a, and z.4.a; 4A003.z.1.a and z.2.a; 4A004.z.1; 4A005.z.1; 5A002.z.1.a, z.2.a, z.3.a, z.4.a, and z.5.a; 5A004.z.1.a and z.2.a; and 5A992.z.1—as well as the associated software and technology ECCNs. Per EAR § 742.6(a)(6)(iv), this license requirement does not apply to deemed exports or deemed reexports.

Tiered Licensing Framework

In parallel, the AI Diffusion IFR established a three-tiered licensing framework that (1) allows for the export, reexport, or transfer (in-country) of advanced ICs to a narrow set of U.S. allies and partners, and companies headquartered therein; (2) includes several exceptions and pathways to authorization to facilitate transactions with other countries that do not pose a national security risk, subject to certain conditions and limitations; and (3) maintains the existing strict controls on advanced ICs destined for Macau, China, and other Country Group D:5 jurisdictions and entities headquartered in, or whose ultimate parent company is headquartered in, Macau or Country Group D:5. The three tiers of destinations are as follows:

• Tier 1 is the United States and 18 low-risk destinations identified in paragraph (a) to new Supplement No. 5 to EAR Part 740—i.e., Australia, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, the Netherlands, New Zealand, Norway, Republic of Korea, Spain, Sweden, Taiwan, and the United Kingdom.
• Tier 2 is any country not identified in Tier 1 or Tier 3.
• Tier 3 is Macau and the U.S. arms-embargoed destinations identified in Country Group D:5—i.e., China, Afghanistan, Belarus, Burma, Cambodia, the Central African Republic, Democratic Republic of Congo, Cuba, Eritrea, Haiti, Iran, Iraq, North Korea, Lebanon, Libya, Nicaragua, Russia, Somalia, South Sudan, Sudan, Syria, Venezuela, and Zimbabwe.

The rules create two types of Data Center VEU authorizations that broadly permit exports, reexports, and transfers to VEUs identified in Supplement No. 7 to EAR Part 748 at the locations specified in that supplement, provided that the items are not for end use in any of the activities described in EAR Part 744. Where a VEU authorization does not apply, certain license exceptions and specific licensing may be available. Following the description of the VEU authorizations and license exceptions added or revised in the AI Diffusion IFR, Table 1 below summarizes the available license exceptions and license review policy for exports, reexports, or transfers to or within countries in each tier.

The Data Center VEU authorizations are as follows:

• Universal Validated End User (“UVEU”) authorization will allow certain companies headquartered in, or whose ultimate parent company is headquartered in, a Tier 1 destination that have undergone a rigorous application and vetting process to receive items to build datacenters anywhere in the world except for China, Macau, or other Country Group D:5 destinations, including ECCN 3A090.a, 4A090.a, and related hardware, software, and technology. UVEUs are subject to certain geographic allocations for their aggregate AI computing power, measured as the aggregate TPP of ICs that meet or exceed the scope of ECCN 3A090.a and are owned by the UVEU and all its subsidiary and parent entities. If the operator of the advanced ICs differs from the owner of the advanced ICs, both the owner and operator must obtain a UVEU authorization. Such authorizations also impose certain BIS notification and reporting requirements. Items exported, reexported, or transferred (in-country) pursuant to UVEU authorizations do not count toward the country-wide TPP licensing allocations described below.
• National Verified End User (“NVEU”) authorization will allow certain companies headquartered in, or whose ultimate parent is headquartered in, Tier 1 or Tier 2 destinations that have undergone a rigorous application and vetting process to receive large amounts of advanced ICs, up to an installed based TPP cap. The NVEU TPP allocation applies on a per-company and per-country basis, and is measured by the collective computing power of items subject to ECCNs 3A090.a, 4A090.a, and corresponding “.z” ECCNs. Multiple NVEUs may operate in a single country, with each NVEU subject to the NVEU TPP allocations, which do not count towards country-wide TPP allocations for specific licensing purposes.

The VEU Program imposes a number of requirements on parties seeking to obtain or maintain VEU status related to ownership security, baseline security of chips and data, software and network security, and supply chain security. To obtain Data Center VEU status, the planned owner of the advanced ICs must undergo an application process, including certification(s) that the applicant and any other parties involved in datacenter operations—e.g., datacenter owners, datacenter operators, physical security providers, and logical security providers—will adhere to security guidelines outlined in Supplement No. 10 to EAR Part 748. Notably, these guidelines include a prohibition on training advanced AI models that meet the parameters specified in ECCN 4E091 outside of Tier 1 destinations, or as IaaS for entities headquartered outside of Tier 1 destinations, absent BIS authorization. In some cases, NVEU status will not be granted until there is a government-to-government assurance in place between the United States and the government of the country in which the applicant wishes to operate.

The new and revised license exceptions are as follows:

• License Exception Artificial Intelligence Authorization (“AIA”) at EAR § 740.27 authorizes exports, reexports, and in-country transfers to parties located in Tier 1 destinations that are headquartered in, and do not have an ultimate parent company headquartered outside of, Tier 1 destinations of items classified under:
  • ECCNs 3A001.z.1.a, z.2.a, z.3.a, z.4.a; 4A003.z.1.a, z.2.a; 4A004.z.1; 4A005.z.1; 4A090.a; 5A004.z.1.a, z.2.a; and associated software and technology ECCNs; and
  • ECCNs 3A090.a; 5A002.z.1, z.2.a, z.3.a, z.4.a, z.5.a; and 5A992.z.1, in each case if designed by an approved or authorized IC designer, as well as corresponding software and technology ECCNs.

  This license exception is subject to certain limitations and requirements, including (i) a prior ultimate consignee certification requirement that, among other things, requires the ultimate consignee to agree not to train AI models specified in ECCN 4E091 for entities headquartered or located, or with ultimate parents headquartered, outside of Tier 1 destinations, and (ii) a BIS reporting requirement for orders for large quantities of eligible items.

• License Exception Advanced Compute Manufacturing (“ACM”) at EAR § 740.28 authorizes the export, reexport, and in-country transfer of eligible items to a “private sector end user” for the development, production, or storage (in a warehouse or other similar facility) of the eligible items, provided that (i) the private sector end user is located in a Tier 1 or 2 destination and is not headquartered in, and does not have an ultimate parent headquartered in, a Tier 3 destination; and (ii) the items produced are ultimately destined for customers outside Tier 3 destinations (unless otherwise authorized). Eligible items are classified under:
  • ECCNs 3A001.z; 3A090.b, c; 4A003.z; 4A004.z; 4A005.z; 4A090; 5A002.z.2; 5A004.z; 5A992.z.2; and associated software and technology ECCNs;
  • ECCNs 3A090.a; 5A002.z.1.a, z.2.a, z.3.a, z.4.a, z.5.a; and 5A992.z.1, in each case if designed by an approved or authorized IC designer, as well as corresponding software and technology ECCNs.

  A “private sector end user” is either (i) an individual who is not acting on behalf of any government (other than the U.S. government); or (ii) a commercial firm (including its subsidiary and parent firms, and other subsidiaries of the same parent) that is not wholly owned, or otherwise controlled, by any government (other than the U.S. government). License Exception ACM is not available if the end use of the items is training an AI model or any activity not related to the development, production, or storage of the eligible items. The private sector end user must maintain certain records accounting for the number of controlled items transferred to, and subsequently out of, the facility, with records updated at least every six months.

• License Exception Low Processing Performance (“LPP”) at EAR § 740.29 authorizes the export and reexport directly to any single ultimate consignee located in a Tier 1 or 2 destination that is not headquartered in, and does not have an ultimate parent headquartered in, a Tier 3 destination of a small volume of commodities classified under ECCNs 3A090.a, 4A090.a, and corresponding “.z” ECCNs up to a cumulative TPP of 26,900,000 per year per ultimate consignee. An “ultimate consignee” for purposes of License Exception LPP means the ultimate parent entity that will have ultimate ownership over the eligible items. License Exception LPP does not authorize exports or reexports through distributors or any in-country transfers. Items exported or reexported pursuant to License Exception LPP do not count toward country-wide TPP allocations, but such transactions are subject to certain certification, reporting, and notification requirements.
• License Exception Advanced Computing Authorized (“ACA”) was revised to reflect the new worldwide license requirement applicable to items classified under ECCNs 3A090.a, 4A090.a, and corresponding “.z” and software and technology ECCNs. Provided the other conditions of License Exception ACA are met, it authorizes exports and reexports of eligible items—i.e., items classified under ECCNs 3A090 (except for 3A090.c), 4A090, 3A001.z, 4A003.z, 4A004.z, 4A005.z, 5A002.z, 5A004.z, 5A992.z, 5D002.z, or 5D992.z, except for items designed or marketed for use in a datacenter and meeting the parameters of 3A090.a—to any destination except for a Tier 3 destination or an entity wherever located that is headquartered in, or whose ultimate parent company is headquartered in, a Tier 3 destination, as well as in-country transfers of eligible items within Tier 3 destinations.
• License Exception Notified Advanced Computing (“NAC”) was revised to expand the information required to be submitted as part of the notification process under which License Exception NAC authorizes certain exports and reexports to Tier 3 destinations of 3A090, 4A090, and related “.z” items unless they are marketed or designed for use in a datacenter and meet the parameters of 3A090.a. For example, exporters and reexports are required to include in their notifications certain information regarding License Exception NAC and license approvals involving the same end user in the last year, the memory bandwidth of the items requested, and whether the items are destined to be aggregated into a datacenter or computing cluster.

Where a VEU authorization or license exception is not available, specific licensing may be sought. License applications for shipments to end users located, headquartered, or with an ultimate parent headquartered, in Tier 1 destinations will be reviewed under a presumption of approval. License applications for shipments to or within Tier 2 destinations will be reviewed under a presumption of approval, up to a per-country cumulative TPP installed base of 790,000,000 for the period from 2025 to 2027 (to be updated annually thereafter). Once the country-wide TPP allocations are met, license applications will be reviewed under a policy of denial. If a Tier 2 country provides a government-to-government assurance regarding a commitment to protect advanced ICs consistent with U.S. national security interests, and if the U.S. government determines that such commitments are appropriate, BIS will list that country in paragraph (b) to Supplement No. 5 to Part 740 and the country-wide TPP allocation applicable to that country may be increased up to 100%. License applications for shipments to or within, or to entities headquartered in or with an ultimate parent company headquartered in, Tier 3 destinations will continue to be reviewed under a presumption of denial.

The following table summarizes the license exceptions that may be available for exports, reexports, or transfers within each destination tier, along with the applicable license review policy presumptions. The table does not address VEU authorizations, which are available only for specific end users.

Table 1: Summary of Advanced Computing IC Licensing Requirements and Exceptions

New Controls on Closed AI Model Weights

New ECCN 4E091

The AI Diffusion IFR added new ECCN 4E091 to control model weights—the numerical “parameters” within an AI model that help determine the model’s outputs in response to inputs—for advanced AI models, which are defined as having been trained utilizing 10²⁶ or more “operations.” The term “parameters” is defined as “any value learned during training (e.g., network weights, biases, etc.),” while “operations” is defined as “any subsequent training, such as fine-tuning the pre-trained model, but does not include the collection and curation of the input training data.”

ECCN 4E091 excludes from the control any “published,” as defined in EAR § 734.7(a), open-weight models, as well as closed-weight models that are less powerful than the most powerful open-weight model, as determined by the AI Safety Institute and the U.S. Department of Energy. To determine whether AI model weights are excluded from ECCN 4E091, an exporter can either self-classify its model or obtain guidance from BIS.

The new ECCN 4E091 is subject to a worldwide RS license requirement pursuant to EAR § 742.6(a)(13). This license requirement does not apply to deemed exports or deemed reexports for permanent regular employees of entities headquartered in or with an ultimate parent headquartered in the United States or a Tier 1 destination. License applications for ECCN 4E091 model weights will be reviewed under a presumption of denial for end users headquartered outside or with an ultimate parent headquartered outside of Tier 1.

License Exception AIA

The only license exception available for new ECCN 4E091 is License Exception AIA at EAR § 740.27, which authorizes the export, reexport, and in-country transfer of 4E091 technology to entities headquartered in, or whose ultimate parent company is headquartered in, Tier 1 destinations that are located outside of Tier 3 destinations. To rely on this license exception, the exporter, reexporter, or transferor must receive a prior compliance certification from the ultimate consignee, and the technology must be stored in a facility that complies with the security requirements at paragraphs 14, 15, and 18 of the guidelines outlined in Supplement No. 10 to Part 748 of the EAR, regardless of whether the facility is designated as a VEU.

AI Model Weights FDPR

The AI Diffusion IFR also created a new AI Model Weights FDP Rule at EAR § 734.9(l), which makes subject to the EAR foreign-produced model weights described in ECCN 4E091 when destined to any location worldwide if produced from advanced ICs or related items that are subject to the EAR and classified under ECCN 3A001.z, 3A090, 4A003.z, 4A004.z, 4A005.z, 4A090, 5A002.z, 5A004.z, or 5A992.z.

New Compliance Red Flag

The IFR also adds a new red flag to BIS’s “Know Your Customer” Guidance and Red Flags at Supplement No. 3 to EAR Part 732, alerting providers of IaaS products or services, or other computing products or services, that assisting in training an AI model with model weights specified in ECCN 4E091 for an entity headquartered in, or whose ultimate parent is headquartered in, any destination outside of Tier 1 “creates a substantial risk that such AI model weights, due to their digital nature, will be exported or reexported to a destination for which a license is required and, if a license is not obtained, that the IaaS provider will have aided and abetted in a violation of the EAR.” To avoid aiding or abetting an EAR violation, “the IaaS provider should inquire if the customer intends to export the model and if so, apply for a license as required or inform the customer of their obligation to do so prior to export.”

The Due Diligence IFR contains two savings clauses:

• Shipments of items removed from eligibility for a license exception or export, reexport, or transfer (in-country) without a license as a result of the Due Diligence IFR that are en route aboard a carrier to a port of export, reexport, or transfer (in-country) on January 31, 2025, pursuant to actual orders for export, reexport, or in-country transfer to or within a foreign destination may proceed to that destination without a license through March 3, 2025.
• If, in the twelve months prior to January 16, 2025, BIS exempted exports, reexports, or transfers (in-country) of an item from a licensing requirement imposed pursuant to BIS’s “is-informed” authority under EAR §§ 744.11(c) or 744.23(b), then exports, reexports, or transfers of that item are, absent further action from BIS, indefinitely exempt from any license requirement imposed by the Due Diligence IFR.

Additionally, shipments of items removed from eligibility for a license exception or export, reexport, or transfer (in-country) without a license as a result of the AI Diffusion IFR that are en route aboard a carrier to a port of export, reexport, or transfer (in-country) on May 15, 2025, pursuant to actual orders for export, reexport, or transfer (in-country) to or within a foreign destination may proceed to that destination without a license through June 16, 2025.

BIS further issued two rules on January 15, 2025, that together designated 27 entities to the Entity List effective January 16, 2025. One of the rules added 11 entities in China (such as Beijing Keyi Hongyuan Optoelectronics Co., Ltd., Beijing Lingxin Intelligent Technology Co., Ltd., Beijing Yuanyin Intelligent Technology Co., Ltd., and Beijing Zhipu Future Technology Co., Ltd.) to the Entity List for advancing China’s military modernization through the development and integration of advanced AI research and, in the case of one entity, co-developing lithography technology for advanced-node fabrication facilities in China. A license is required for all items subject to the EAR, with a license review policy of a presumption of denial. Additionally, this rule modified an existing Entity List entry under the destination of India for the Department of Atomic Energy to remove certain entities and retain the entities of concern.

The other rule added 14 Chinese entities (such as Chengdu Suanze Technology Co., Ltd., Fujian Sophon Technology Co., Ltd., and Sophgo Technologies Ltd.) and two Singaporean entities to the Entity List with a Footnote 4 designation, such that certain foreign-produced items are subject to the EAR pursuant to the Footnote 4 Entity List FDP rule at EAR § 734.9(e)(2) when there is knowledge of a sufficient nexus to these entities. These entities were designated for their involvement in supporting or directly contributing to the development of advanced computing ICs that further China’s development of advanced weapons systems, weapons of mass destruction, and high-tech surveillance applications, as well as for supplying Chinese public security end users and pose a risk of diversion to Chinese telecommunications company Huawei, which with many of its affiliates is already on the Entity List. A license is required for all items subject to the EAR, with a license review policy of a presumption of denial.

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We are closely monitoring developments concerning U.S. export controls and will issue further updates in the event of material developments. In the meantime, we would be happy to address any questions you may have.

Covington’s International Trade Controls team—which includes lawyers in the firm’s offices in the United States, London, and Frankfurt—regularly advises clients across business sectors, and would be well-placed to provide support in connection with these new and proposed export controls developments, or to assist with comments on these proposed rules. Our trade controls lawyers also work regularly with Covington's Global Public Policy team—consisting of over 120 former diplomats and policymakers in the United States, Europe, the Middle East, Latin America, Africa, and Asia—many of whom have had substantial government experience in sanctions and export controls matters, and who regularly advise our clients on emerging sanctions policy matters and related engagements with government stakeholders. 

If you have any questions concerning the material discussed in this client alert, please contact the members of our International Trade Controls practice.