Sudden! The United States adds 13 mainland companies involved in computing power business to the entity list

On October 17, local time, the U.S. Department of Commerce’s Bureau of Industry and Security published an administrative measure scheduled to be released on October 19 in the Federal Register, preparing to add 13 Chinese companies to the export control list, known as the “Entity List.” ".

According to the reasons for their inclusion, the 13 entities listed this time are all engaged in the development of advanced computing integrated circuits. As described in the upcoming regulatory amendments on advanced computing items and supercomputers and semiconductor end-uses, advanced computing integrated circuits can be used to provide artificial intelligence capabilities to further develop weapons of mass destruction, advanced weapons systems and high technology surveillance applications, thereby raising national security concerns. Such activity is contrary to the national security and foreign policy interests of the United States under Section 744.11 of the EAR. The list of 13 Chinese companies is as follows:

Source: BIS

Tabulation: Global IoT Watch

The Entity List is a trade blacklist established by the Bureau of Industry and Security of the U.S. Department of Commerce. Companies included in the list need to obtain a separate license from the U.S. Department of Commerce to purchase U.S. controlled technology or goods. According to the U.S. Export Administration Regulations, these 13 companies have been marked as footnote 4 and are subject to foreign direct product rules. They are restricted from obtaining U.S. products and technologies involving a total of 18 ECCN codes. They need to apply for a license, but the U.S. licensing policy is presumptive denial.

Footnote 4 FDP Rules

For entities included in the Entity List, the EAR imposes additional license requirements and limits the ability to obtain exemptions for exports, re-exports, and in-country transfers. In most cases, a U.S. export license is required for items subject to the EAR, which covers the export of most U.S.-origin goods, software, and technology, as well as some non-U.S.-origin items with U.S. content. Any application for an export license related to these entities will be subject to the principle of presumption of denial (Presumption of Denial), that is, the applicant must prove the legality of the export behavior, otherwise the export application will be presumed to be rejected.

At the same time, applications for relevant licenses shall be reviewed in accordance with the review standards specified in Part 744 of the EAR, and no license exceptions shall apply to the export or re-export of relevant items to such entities. Footnote 4 FDP rules set stricter restrictions on the entity list. According to the rules, if a foreign product directly adopts technology or software subject to the EAR, or the complete set of equipment or main components of the equipment that directly produces the foreign product directly adopts U.S.-origin technology or software containing specific 18 ECCN codes, then Exporters need to apply for an export license if they know that the transaction falls into one of the following two situations:

(1) Products are used in the assembly, production or development of parts or equipment produced, purchased or ordered by entities listed in footnote 4;

(2) Entities listed in Footnote 4 will participate in product transactions in any form (including situations where they are buyers, intermediaries, final consignees, and end users).

Source: BIS

In addition, the Biden administration also updated the export control regulations for artificial intelligence (AI) chips on the same day. According to the latest rules, Nvidia’s chip exports to China, including the A800 and H800, will be affected. The new rules will take effect after soliciting public opinions for 30 days. In response, NVIDIA said: "We comply with all applicable regulations while working hard to provide thousands of application products that support different industries. Given the global demand for our products, we do not expect (new regulations) to have any impact on our products in the short term. material impact on financial performance.”

After the news was announced, Nvidia's stock price fell 7.8%, the largest intraday drop since December. As of the close of U.S. stocks on October 17, Nvidia was trading at $439.38 per share, a decrease of 4.68%, and its latest total market value reached $1.0853 billion.

According to Reuters, this new regulation will be included in the comprehensive restrictions on the export of advanced chips and chip manufacturing equipment to China announced by the United States in October last year. Reuters cited other people familiar with the matter as saying that updated rules are expected to be released this week, although such timelines are often pushed back. The United States is about to take steps to prevent U.S. chipmakers from circumventing government restrictions on selling semiconductors to China, a U.S. official said, as part of the Biden administration's upcoming move to prevent more exports of artificial intelligence chips.

In 2022, Nvidia was unable to sell its two most advanced AI chips, the A100 and H100, to Chinese customers due to restrictions. These chips have now become industry standards for developing chatbots and other artificial intelligence systems. Subsequently, Nvidia quickly released a "replacement version" of the chip for the Chinese market, thereby bypassing U.S. export controls. It is reported that the computing power of the debugged H800 in some AI tasks is no less than that of the H100.

According to the Science and Technology Innovation Board Daily, in response to the new US export control regulations, the Dutch lithography machine giant ASML said in a statement: ASML needs to carefully evaluate the potential impact. For our business, based on the information we have received so far, we believe that the new regulations will apply to a limited number of mainland China fabs involved in advanced chip manufacturing. From a medium to long-term perspective, these export control measures may affect the distribution of our different machine sales between regions, but we do not expect these measures to have an impact on the company's financial situation in 2023 and our financial performance in November 2022. The long-term outlook for 2025 and 2030 announced at the Investor Day has a significant impact. ASML will provide further clarification to the U.S. government on the scope of these new regulations.

In response to the above news, Biren Technology and Moore Thread responded on the evening of October 17.

Biren Technology stated in a statement that Biren Technology is concerned that the U.S. Department of Commerce has included Biren Technology and other Chinese technology companies on the Entity List. The company expressed strong opposition to the U.S. Department of Commerce’s move and will actively complain to relevant U.S. government departments and call on the U.S. government to re-examine it. With the vision of "intelligent mapping of the world", Biren Technology strictly abides by the laws and regulations of relevant countries and regions, and on this basis, it always operates legally and in compliance with regulations. The company is assessing the possible impact of this incident on the company, preparing response measures, and will actively communicate with all parties.

Source: Biren Technology

Moore Thread stated in a statement that we are concerned about the news that the U.S. Department of Commerce included Moore Thread in the "Entity List" on October 17, local time, and we strongly protest against this. As a leading company in the GPU field in China, Moore Thread focuses on the development and design of full-featured general-purpose GPU chips and is committed to building a meta-computing platform that empowers the next generation of Internet. Since its establishment, Moore Thread has strictly abided by the laws and regulations of relevant countries and regions, always adhered to the legal and compliant corporate culture and management philosophy, and established a complete export control compliance management system and work process guidelines. The company is currently actively communicating with all parties, and we are evaluating the impact of this matter.

Image source: Moore Thread

According to the Financial Associated Press, a number of domestic manufacturers said on the evening of October 17 that they had received the news in advance, and many of them had stocked up on goods in advance. Manufacturers such as Tencent and Baidu also stated that they currently have "ample stockpiles."

At a regular press conference hosted by Foreign Ministry Spokesperson Mao Ning on October 16, a foreign media reporter asked: The United States will take measures to prevent American chip manufacturers from bypassing U.S. government restrictions from selling products to China. This is to block the Some previous bugs. The Biden administration is expected to take steps to restrict more chip sales to China. What is China's response to this?

Mao Ning said in this regard that China has stated its position on the U.S.’s chip export controls to China many times. We believe that the U.S. should stop politicizing, tooling, and weaponizing economic and trade science and technology issues, and stop disrupting the stability of the global production and supply chain. China will pay close attention to relevant developments and resolutely safeguard its own rights and interests.

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Part of the content of this article is compiled from Science and Technology Innovation Board Daily, CCTV News, Reuters, Financial Associated Press, Moore Thread, Biren Technology, etc. It is for communication and learning purposes only. If you have any questions, please contact us at info@gsi24.com .

Editor｜Jessica

Editor｜Valencia