Semiconductor Industry to Push for Modernization of Electronics Export Controls

Semiconductor industry officials are preparing to push for export control modernization over certain electronics on the Commerce Control List, which they say will help controls avoid unintended consequences on U.S. companies and more accurately reflect national security concerns. The effort, led by the Semiconductor Industry Association, will look to convince the Bureau of Industry and Security to update certain control parameters and definitions, and make technical changes in Category 3 of the CCL, which officials view as out of date.

Semiconductor industry representatives plan to first submit their modernization proposals to BIS’s Information Systems Technical Advisory Committee in the hope that ISTAC members will recommend the changes to BIS leadership. The goal, SIA officials said during an April 28 ISTAC meeting, is for BIS to implement changes as soon as possible and propose some, if not all, of the changes at multilateral export control regimes such as the Wassenaar Arrangement.

Harry Clapsis, SIA’s government affairs manager, said items in Category 3 are “central” to “current national security and foreign policy decisions” and that he hopes the ISTAC can move quickly to recommend the proposals once they are submitted. “There’s never been an effort to seek comments on the whole Category 3,” Clapsis told ISTAC members during the meeting. “We hope you agree there's a particular urgency to beginning this update effort early in the administration to allow time for the process to run its course.”

Clapsis and Kevin Wolf, a trade lawyer who represents the SIA, stressed that the industry’s proposals will not be a “decontrol effort.” They view the recommendations as more of an update to help BIS's controls avoid unintended consequences on U.S. companies and better reflect the evolution of technology. Wolf said the industry wants to submit recommendations “to update, to correct, to reflect the fact that there are technologies that exist now that didn't exist when the [regulations] were written,” an effort that will help improve industry compliance. “Because the technologies in the category move very quickly,” Wolf said during the meeting, “the [regulations] need to keep up just as quickly.”

“The hope is that you all will take seriously the recommendations, ask questions, work it through the process and then make recommendations -- to the extent that you agree with them -- to BIS and the other agencies for submission at Wassenaar,” said Wolf, a former senior BIS official. A BIS spokesperson said the agency and its interagency partners "continually review the Commerce Control List to ensure it meets the national security and foreign policy goals of the United States" and will consider any changes proposed by the TACS.

Semiconductor officials may submit at least one proposal relating to restrictions on compound semiconductors. Those controls were originally imposed to address semiconductors used in space and military applications, said Mario Palacios, a trade policy official at Intel. But Palacios said they’re now commonly used in “terrestrial commercial applications,” including 5G products and some cell phone chargers.

“Where there is no clear design intent for space and military or even missile applications, I think it would be worthwhile for a thorough study between government and industry to really think about just how this control is written,” Palacios, who co-chairs SIA’s export control committee, said during the meeting. The industry hopes BIS will ask for comment on those controls and look for an “opportunity to maybe fine-tune the control to meet certain national security goals that do not impose any threats to our competitiveness worldwide,” he said.

Another potential recommendation would impact 3A001.a.2 on the CCL, which includes an entry for certain chips that can “withstand extreme temperatures,” said Karmi Leiman, vice president of trade policy and compliance at GlobalFoundries. The entry for those chips already contains an exclusion note for certain “commercial auto and railway applications,” Leiman said, but “it may be that there are other purely commercial end uses that could be added to that exclusion list.”

Leiman also said they may propose adding a definition for 3A001.a.9, which includes “neural network integrated circuits.” Leiman said that item is undefined and unclear. “My sense, at least, is that the industry doesn't exactly know what that means,” Leiman, who also co-chairs the SIA’s export control committee, said during the meeting. “At the same time we know that there's a lot of interest in [artificial intelligence], and the concept of neural networks is of course potentially related to that. So maybe there's an opportunity to think about a revision to A9 in the context of advances in artificial intelligence.”

Although the industry officials presented several potential recommendations, they aren’t yet finalized. “Just to be clear, there's no actual ask right now in terms of something to do from the TACs,” Wolf said. “It's just: Be prepared please and take [this] seriously when the comments come in.” Leiman said “these are just ideas. None of them are fully fleshed out. We recognize that a lot more work needs to be done.”

ISTAC Chair Jonathan Wise, the trade policy manager for Keysight Technologies, said the proposals seem “well within” the committee’s scope. “Certainly the TAC is eager to receive and review and comment,” he said. “These are certainly valid ideas that are being raised.”