Today, the U.S. Bureau of Industry and Security (BIS) announced that it is adding 77 entities to the Entity List. The entities are from 10 different countries, but significantly, the entities include Chinese drone manufacturer DJI and Semiconductor Manufacturing International Corporation (SMIC) and 10 SMIC-related entities.
The new restrictions and license requirements apply to exports, re-exports, and in-country transfers to the listed entities of all items (i.e., products, material, equipment, software, and technology) subject to the Export Administration Regulations. The specific restrictions are on an entity-specific basis, but many entities are subject to a “Presumption of Denial” license review policy for all items. SMIC is subject to a “Presumption of Denial” for license requests on items required for the production of semiconductors at advanced technology nodes and a case-by-case license review policy for all other items. The scope of items subject to the Presumption of License denial is not clear and the licensing requirement for all other items could lead to a surge in license applications.
The Federal Register notice is scheduled to be published on December 22, but goes into effect on December 18. There is a savings clause for shipments that are en route as of the publication of the Federal Register notice. The pre-publication draft can be reviewed here.
Companies transacting with related entities that are not directly included on the Entity List need to ensure that they have effective screening and end-use/user restrictions and documentation in place to protect against diversion.