A Balanced Approach: BIS’ Key Role in Protecting the Semiconductor Industry

As we examined in our last post, Dr. Roslyn Layton’s recent semiconductor analysis concludes by recommending the Balanced Approach.  As she concluded her recent Forbes column, “it is important for Congress to maintain the pressure on the Department of Commerce to fulfill its mandate on export control in a timely and sufficient fashion.  In this post, we will explain how we envisions those next steps taking place.

First, the Bureau of Industry and Security (BIS) of the Commerce Department.  As Dr. Layton’s analysis explains:

  • DOC’s Bureau of Industry and Security (BIS) was established in 2001 ostensibly to align these two missions and to “advance U.S. national security, foreign policy, and economic objectives by ensuring an effective export control and treaty compliance system and promoting continued U.S. strategic technology leadership.” BIS maintains the Entity List which specifies license requirements for transacting with the named entity, person, or firm. In effect, once a firm is added to the Entity List, Americans cannot do business with that company unless they first obtain a license from BIS.

The Entity List is the key designation that can be used to help slow the flow of semiconductor manufacturing equipment to companies with ties to the Chinese military.  The key way to implement the Balanced Approach is to have BIS target these companies. US law must be updated to so that SME does not proliferate to PRC firms. This can be done by naming SMIC, YMTC, CXMT, and other PLA linked fabs to the Entity List.