China hits back as US adds 140 companies to Entity List targeting chip-making technology
China announced new restrictions on dual-use exports to the US, responding to Washington’s addition of 140 companies to its Entity List over advanced semiconductor technology concerns.
The Chinese reaction came after the US Department of Commerce’s Bureau of Industry and Security (‘BIS’) announced it is adding 140 companies to the Entity List, targeting entities involved in advanced semiconductor development and China’s military modernisation. The changes align with the US national security and foreign policy interests under § 744.11 of the Export Administration Regulations (‘EAR’).
‘These entities support the development or production of integrated circuits (ICs) for military end use,’ the 2 December notice states. Included are entities from China, Japan, South Korea and Singapore, with nine receiving the special ‘Footnote 5’ designation, extending US export controls to certain foreign-produced items.
The notice said the affected entities contribute to the development of ‘advanced-node integrated circuits’ or semiconductor manufacturing tools and support China’s Military-Civil Fusion (‘MCF’) strategy. The new rule also modifies 14 existing Entity List entries to include Footnote 5 restrictions and removes three entities from the Validated End-User (‘VEU’) programme.
Further, BIS introduced two new Foreign Direct Product rules (‘FDPs’). The first imposes controls on foreign-produced semiconductor manufacturing equipment (‘SME’) destined for Macau or Country Group D:5. The second applies to entities listed with Footnote 5, restricting their ability to acquire items derived from US technology. ‘The SME FDP and FN5 FDP rules ensure that critical U.S. technologies remain controlled when used abroad for purposes contrary to U.S. security interests,’ BIS explained in two related notices.
BIS also created a new Export Control Classification Number (ECCN 3A090.c) to regulate high bandwidth memory (‘HBM’) with a density over 2 GB/s per square millimetre. A corresponding Licence Exception HBM will allow exports to certain US and allied facilities.
The changes became effective on 2 December, with a compliance deadline of 31 December 2024, for certain Entity List-related requirements. BIS estimates that the expanded controls will generate approximately 200 additional licence applications annually.
Meanwhile, China said it ‘has lodged serious protests with the US for once again updating the export controls on semiconductors and sanctioning Chinese companies, and maliciously suppressing China’s technology progress.’ Foreign Ministry Spokesperson Lin Jian added: ‘Such practices gravely disrupt the international economic and trade order, destabilise global industrial and supply chains and harm the interests of all countries. China calls on the US to respect the laws of market economy and the principle of fair competition. We will do what is necessary to firmly safeguard our security and development interests.’
His comments, 3 December, coincided with a notice from the Ministry of Commerce (‘MOFCOM’) hitting back with China’s own export controls, which ‘Prohibit the export of dual-use items to U.S. military users or for military purposes.’
‘In principle, the export of dual-use items such as gallium, germanium, antimony and superhard materials to the United States will not be permitted; for the export of dual-use items such as graphite to the United States, stricter end-user and end-use reviews will be implemented,’ it said, warning that anyone ‘from any country or region that violates the above provisions and transfers or provides relevant dual-use items originating in the People’s Republic of China to organisations or individuals in the United States will be held accountable according to law.’
https://www.fmprc.gov.cn/eng/xw/fyrbt/lxjzh/202412/t20241203_11537550.html
https://www.mofcom.gov.cn/zwgk/zcfb/art/2024/art_3d5e990b43424e60828030f58a547b60.html
