Authored by: Lou Xianying (Cecilia) , Dai Menghao , Yao Shuang and Ran Fuyan
On October 7, 2022, the Bureau of Industry and Security (“BIS”) under U.S. Department of Commerce announced a series of new export control rules against China under the Export Administration Regulations (“EAR”). The new regulations involve the addition, adjustment, or update, of multiple Export Control Classification Numbers (“ECCNs”), three foreign-direct product (FDP) rules, two restrictions on end users and end uses, 31 Unverified List (“UVL”) and a mechanism for transferring a party from the UVL to the Entity List. This is the largest revision to the EAR since 28 April 2020. From relevant regulations and business practices, its impact on Chinese enterprises is far greater than the revisions to the rules related to China’s military end-users and military end uses that made on April 28, 2020. In particular, according to the announcement on the revision, the new regulations obviously target the advanced computing chips and supercomputers to comprehensively restrict China’s semiconductor industry, especially its ability to build domestic advanced process. Furthermore, given the close ties between the semiconductor industry and other related sectors, the impact is expected to spread to smart cars, data centers, and cloud computing, among others. In this article, we will, based on our years of experience on U.S. export control policies, discuss the possible impact of the revision on Chinese enterprises, hoping that they can have a clear understanding of the new regulations and make a correct judgment in their development.