Commerce Bans Exports to Dozens of Companies, Including Chinese Semiconductor, Drone Manufacturers

The U.S. Department of Commerce (Commerce), Bureau of Industry and Security (BIS) announced that it has added Semiconductor Manufacturing International Corporation (SMIC), drone manufacturer DJI, and dozens of other companies and universities to its Entity List. The new designations prohibit exports, reexports, and transfers of U.S. commodities, software, and technology, including common, off-the-shelf electronic components, commercial drones and related software, semiconductors and related manufacturing technology, as well as basic, low-level EAR99 items, without a license. The ban also extends to foreign-made items that contain greater than de minimis controlled U.S. content by value and certain foreign direct products of sensitive U.S. technology. The final rule, which can be found here, is effective immediately.

BIS administers the Export Administration Regulations (EAR), which control exports of commercial, dual-use, and less sensitive military and satellite items. Commerce commented that it added SMIC and ten of its affiliates to BIS’s Entity List because of evidence of activities between SMIC and “entities of concern” in the Chinese military industrial complex as well as concerns over China’s military-civil fusion doctrine more generally. License applications to export items to SMIC that are used to produce semiconductors at advanced technology nodes – 10 nanometers or below – will be subject to a presumption of denial “to prevent such key enabling technology from supporting China’s military-civil fusion efforts.” Previously, SMIC was subject to more limited licensing requirements. According to press reports, BIS had specifically informed U.S. chip companies that they must obtain licenses before exporting certain technology to SMIC. The new Entity List designation results in much tighter restrictions.

Additionally, BIS added DJI, one of the world’s largest manufacturers of unmanned aircraft systems (“UAS” or “drones”), because it “enabled wide-scale human rights abuses within China” and throughout the world through DNA collection and analysis or high tech surveillance. DJI’s designation is just one of several measures the U.S. government has taken to combat human rights abuses by Chinese companies. It is also consistent with rising concerns about Chinese-made drones in the Administration and on the Hill. This year alone, those apprehensions caused the Department of the Interior to halt its robust UAS program due to cybersecurity concerns surrounding its Chinese-made fleet and prompted the Administration to consider a draft executive order that would both prohibit all U.S. government procurement and operation of drones produced by Chinese entities and ban the operation of UAS over federal lands, in light of national security and cybersecurity issues surrounding the products. Most recently, members of Congress sought to incorporate the American Drone Security Act, which would impose many of the same restrictions as the draft executive order, into this year’s National Defense Authorization Act.

In total, BIS added 77 entities to the Entity List, including those that “enable human rights abuses, entities that supported the militarization and unlawful maritime claims to the South China Sea, entities that acquired U.S.-origin items in support of the People’s Liberation Army’s programs, and entities and persons that engaged in the theft of U.S. trade secrets.” While the majority of the entities are Chinese, Commerce also added entities located in Bulgaria, France, Germany, Hong Kong, Italy, Malta, Pakistan, and Russia.

Since the Entity List designation of Huawei back in 2019, the Trump Administration has been increasingly using the Entity List as a tool to target Chinese companies and related entities, including those that are viewed as national security threats or have engaged in human rights abuses in Xinjiang. Wiley continues to closely monitor the U.S. government’s efforts to address China’s military-civil fusion strategy and human rights concerns and the impact of new restrictions on U.S. and non-U.S. companies.

Ofinno, LLC, an innovator of wireless and video communication technologies, announced that it was recognized for the second year in a row as an NVTC Tech 100 honoree.

Each year the Northern Virginia Technology Council acknowledges the top 100 technology companies that have demonstrated dedication, vision and innovation within the region's technology industry. "While this year has presented numerous challenges to every organization and individual, it is encouraging to see so many of the area's tech companies and executives remain resilient and committed to the health and wellbeing of their employees, the success of their companies, and industry advancement. Congratulations to Ofinno for being named a 2020 NVTC Tech 100 honoree and for the positive impact the firm has made in our region." said Jennifer Taylor, NVTC president and CEO.

"Ofinno is proud to be recognized for the second year in a row as one of the top companies shaping the rapidly growing technological landscape in Northern Virginia. It has been especially challenging this year, however we learned to adapt as a team and continued to produce high quality, standard essential patents, while ensuring the upmost safety and wellbeing of our employees," said Esmael Dinan, Founder and CEO of Ofinno.

To see the full list of honorees click here: NVTC Tech100 Honoree List

About Ofinno, LLC

Ofinno, LLC, is a research and development lab based in Northern Virginia, that specializes in inventing and patenting future technologies. Ofinno's research involves video and communication technologies, including 5G and 6G Radio and Core networks, video compression technologies and transport. Ofinno's inventions have an impressive utilization rate and have been adopted by the standards at the center of advancement of these technologies. Our innovators not only create the technologies, they oversee the entire process from design to the time the technology is sold. For more information about Ofinno, please visit www.ofinno.com.