SIA Comments: Export Controls Should Protect National Security Without Undermining Innovation

SIA has long supported export control policy that safeguards national security without unduly harming the commercial innovation that is essential to America’s economy, national security, and technological leadership. Consistent with these longstanding efforts, SIA recently submitted detailed public comments regarding significant new semiconductor export control rules released on Oct. 7 by the Bureau of Industry and Security (BIS).

U.S. semiconductor companies are dependent on a “virtuous cycle” of innovation that includes large investments into research and development and access to global markets. Historically, U.S. semiconductor companies have consistently invested about one-fifth of their revenues in research and development, among the highest shares of any industry. As such, it is important to ensure export controls are aligned with the “small yard, high fence” paradigm. Therefore, the most effective export controls are those that are narrowly tailored to specific items and adopted on a multilateral basis, and which incorporate sufficient industry input before implementation, including on issues of foreign availability.

While SIA and its member companies fully understand targeted export controls are necessary to safeguard national security, the Oct. 7 export control rules are unprecedented in scope and detail, and create new challenges for the global semiconductor ecosystem. The SIA comments emphasize the following recommendations regarding the Oct. 7 export control rules:

• BIS should consider the unnecessarily harmful impacts of regulatory complexity, uncertainty, and burden in this action and future rules, which can lead foreign companies to design out U.S.-origin or branded content to “de-risk” their supply chains.​ Over-control risks harming the U.S. industrial base, particularly where there is foreign availability of competitive technology, software, components, and equipment.
• BIS should return to regular rulemaking order by publishing significant new actions as proposed rules first and seek input from relevant technical advisory committees and industry. This could prevent the unintended consequences experienced by many companies due to the complex technological and supply chain issues affected by these controls.
• BIS should continue to do everything possible to make these rules plurilateral by reaching a deal with allied partner nations. Unilateral export controls place U.S. companies on an unequal playing field. They can also threaten U.S. technological leadership by allowing international competitors who are not subject to the same controls to invest in research and development efforts and outcompete affected companies.
• BIS should issue a temporary general license for the four multinational semiconductor fabs operating in China. This action would significantly reduce uncertainty and enable more effective business planning.
• BIS should issue an affirmative list of semiconductor fabrication facilities that engage in covered development or production. Establishing such a list will ease the compliance burden on companies and ensure equal market access.

Finally, SIA’s comments seek clarifications on specific provisions of the rule to facilitate industry compliance and avoid unnecessary business interruptions. SIA appreciates the opportunity to submit these comments and will continue to promote dialogue between the government and private sector.