The U.S. Department of Commerce, Bureau of Industry and Security (“BIS”) recently published an interim final rule imposing export controls on additional technologies that satisfy the criteria pertaining to emerging and foundational technologies under the Export Control Reform Act of 2018 (“ECRA”).[1]   

The new export controls, which were identified during the December 2021 plenary meeting of the multilateral Wassenaar Arrangement, apply to:  (i) two substrates of ultra-wide bandgap semiconductors (Gallium Oxide and diamond); (ii) Electronic Computer Aided Design (“ECAD”) software specially designed for the development of integrated circuits with any Gate-All-Around Field-Effect Transistor (“GAAFET”) structure; and (iii) pressure gain combustion (“PGC”) technology for the production and development of gas turbine engine components or systems.

To implement these new controls, BIS revised export control classification numbers (“ECCNs”) 3C001.d.-f., 3C005.a. and b., 3C006, and 3E003 for the Gallium Oxide and diamond  substrates and 9E003.a.2.e. for the PGC technology, and added ECCN 3D006 for software for ECAD for the development of integrated circuits with GAAFET to the Commerce Control List under the Export Administration Regulations (the addition of 3D006 becomes effective October 14, 2022).[2]

Not only are the above-described items now subject to more stringent export controls, but they also are considered critical technologies for purposes of the Committee on Foreign Investment in the United States (“CFIUS”) mandatory notification requirements.  As a result, foreign investments in U.S. businesses that produce, design, test, manufacture, fabricate, or develop such items could require a mandatory pre-closing CFIUS notification and 30-day waiting period.[3]   Of course, even if the U.S. business does not engage in activities involving these newly controlled items, given the recent CFIUS, legislative, and other focus on investments in the semiconductor industry (e.g., the CHIPS Act), foreign investors should carefully consider the extent to which CFIUS could be interested in an investment into a U.S. business in the semiconductor industry from a national security perspective.

The interim final rule demonstrates that BIS continues to focus on imposing new export controls through multilateral fora such as the Wassenaar Arrangement and the Australia Group rather than unilaterally imposing new export controls.  We will continue to monitor developments relating to efforts to identify and control emerging and foundational technologies pursuant to the ECRA.

[1] We previously wrote about the process of identifying and imposing export controls on emerging and foundational technologies under the ECRA, as well as the steps taken in furtherance of that process, here, here, here, and here.

[2] BIS requested public comment on its implementation of controls on the ECAD software (i.e., 3D006).  In particular, BIS stated that it is “particularly interested in description of software features or functions that assists the designer to optimize interconnects, synthesis, placements & routes, multicorner multi-mode, timing/clock-tree, power and thermal, or signal integrity necessary for GAAFET circuits.”  BIS also invited comments on license exception eligibility, notes that might clarify the scope of the control, recommendations to overcome compliance challenges, and suggestions for future revisions to reflect technological advancements.  Comments regarding the implementation of ECCN 3D006 must be received by BIS no later than September 14, 2022.

[3] We previously summarized the scope of the CFIUS mandatory notification requirements here.