BIS Foundry Due Diligence After AI Diffusion Non-Enforcement
How BIS's AI Diffusion non-enforcement affects foundry due diligence, the ECCN 3A090.a presumption, D:5 and Macau headquarters checks, and IC designer status.
Primary lensExport controls
Sub-topicDiffusion rule
Evidence base8 records used
Use caseExport-control exposure
BIS's AI Diffusion rollback left semiconductor foundries with a mismatched rulebook. In its BIS May 13, 2025 AI Diffusion non-enforcement announcement, the agency directed enforcement officials not to enforce the AI Diffusion Rule and said a later regulation would formalize its rescission. The relevant text still appears in the EAR. The separate foundry due-diligence architecture also remains: an ECCN 3A090.a classification presumption, three specified ways to overcome it, approved and authorized party pathways, and quarterly reporting for certain foundry work.
That mismatch is now an official oversight issue. In the , Chairman John Moolenaar asked BIS either to clarify that the foundry rule remains in effect or to formally rescind the AI Diffusion rule and rebuild an independent worldwide license hook. The request changes no legal obligation. It identifies the part of the current record that BIS has not publicly resolved.
For a live transaction, the safest current answer is narrower than either side of the policy debate. A front-end fabricator or OSAT still has to test the ECCN 3A090.a presumption and keep the associated evidence and reporting paths separate. The BIS May 31, 2026 guidance on advanced-computing controls for D:5 and Macau-headquartered entities expressly says the preexisting license requirement continues for specified advanced-computing items when those items are for an entity headquartered in Country Group D:5 or Macau, or whose ultimate parent is headquartered there. Outside that headquarters control and any other preexisting destination, end-user, end-use, or party-based EAR control, the public record reviewed here does not settle enforcement of the FDD-linked worldwide RS consequence. A company should document the residual ambiguity and obtain transaction-specific advice rather than treat silence as authorization.
How the rollback split the compliance analysis
The word "rescission" has obscured the sequence. The May 2025 BIS announcement directed enforcement officials not to enforce the AI Diffusion Rule and promised a future regulation to formalize rescission. No amendatory rule accompanied that announcement.
The current EAR section 742.6 advanced-computing license requirements still include the worldwide language that the 2025 AI Diffusion rule placed in section 742.6(a)(6)(iii)(A). Yet the foundry framework does more than point to that license provision. It also changes how a front-end fabricator or OSAT classifies certain logic ICs and what evidence can rebut the classification presumption.
That leaves four questions which should not be answered with one yes-or-no field:
1. Does the item and actor fall within the foundry presumption? 2. Has the fabricator or OSAT used one of the three permitted evidence paths to overcome it? 3. What license requirement is BIS publicly committed to enforce for this buyer, destination, and parentage? 4. What reporting, recordkeeping, and party-status duties continue even if the license consequence is uncertain?
The first two questions concern classification and proof. The third concerns licensing and enforcement. The fourth concerns the compliance system around the transaction. A broad non-enforcement announcement does not make those questions interchangeable.
What the 16/14 nanometer threshold requires the file to prove
The BIS Foundry Due Diligence IFR, 90 FR 5298 applies a presumption when a front-end fabricator or OSAT seeks to export, reexport, or transfer an "applicable advanced logic integrated circuit." That defined term covers logic ICs produced at a 16/14 nanometer node or below, or with a non-planar transistor architecture. The presumption is that the item is specified in ECCN 3A090.a and designed or marketed for data-center use.
Node is therefore an entry point into the proof system. It is not, by itself, a universal prohibition on every chip produced at that node. Note 1 to ECCN 3A090.a identifies three ways a covered fabricator or OSAT can overcome the presumption.
The first route depends on the designer. An approved or authorized IC designer can provide the specified datasheet or attestation addressing total processing performance and performance density. The second route depends on packaging by the front-end fabricator outside Macau or Country Group D:5 and on the specified packaged-chip transistor-count and high-bandwidth-memory evidence. The third uses comparable evidence from an approved OSAT. A customer statement outside these routes is not enough merely because it looks plausible.
The practical distinction is important. A procurement file that records only "16nm" or "customer says not 3A090" has not answered the regulatory question. The file needs the identity and status of the designer, the party packaging the die, the packaging location, the technical measure used, the attestation owner, and any unresolved KYC red flags.
The foundry transaction file
The following four-gate record converts the rule structure into a review sequence. It is not a substitute for classification or legal advice. Its purpose is to prevent one favorable fact from standing in for the whole transaction.
Gate
Question
Evidence to retain
Operational result
Scope
Is the reviewing party a front-end fabricator or OSAT handling an applicable advanced logic IC?
Process node or non-planar architecture, die description, actor role, export, reexport, or transfer path
If no, document why the Note 1 presumption is not the controlling path. If yes, continue.
Presumption
Which of the three Note 1 routes is being used?
Designer status and performance attestation, or qualifying front-end packaging evidence, or approved OSAT evidence
Do not accept a bare customer classification outside the specified route. Escalate incomplete proof before fabrication or shipment.
License
Are the items for an entity headquartered in Country Group D:5 or Macau, or whose ultimate parent is headquartered there, and what other EAR controls apply?
Ownership map, headquarters and ultimate-parent check, destination, end use, classification, exception analysis, license or written advice
The May 2026 guidance confirms this headquarters and ultimate-parent license floor. Screen every other destination, end-user, end-use, and party control separately.
Status and reporting
Is the designer approved, authorized, both, or neither, and who owns the reporting clock?
Track supplement 6 designer status and, when the approved OSAT route is used, supplement 7 OSAT status. If authorized designer status ends without approved status, stop using the designer-status rebuttal route and reassess the transaction. A denied application does not by itself create a new license requirement.
Keep this record with the transaction. The relevant facts can change between design acceptance, wafer start, packaging, and shipment. A designer's status can change. The packaging party can change. An ownership check can identify a different ultimate parent. Each change can move the transaction to another path.
The headquarters hook in the May 2026 guidance
BIS has given one clear enforcement answer since the rollback. Its May 2026 guidance says a license continues to be required for relevant advanced-computing items when the entity, or its ultimate parent, is headquartered in Country Group D:5 or Macau, even if the entity itself is elsewhere. BIS explained that this requirement dates to November 2023 and therefore predates the AI Diffusion Rule. The non-enforcement policy reaches section 742.6(a)(6)(iii)(A) only to the extent the transaction is not for such an entity.
That guidance resolves a buyer and parentage issue. It does not answer the entire foundry problem. The foundry presumption was designed for a different risk: a fabricator may not be able to rely on a customer's description of chip performance, packaging, or ultimate use. Even when neither the relevant entity nor its ultimate parent is headquartered in D:5 or Macau, the foundry proof file can remain incomplete. Clearing the headquarters test does not rebut the ECCN presumption, resolve a KYC red flag, or eliminate reporting.
The difference explains why the House request matters without making the letter law. The committee is asking BIS to connect two public records that currently operate at different levels. One record states a narrow, preserved license consequence. The other contains a wider classification and due-diligence system whose enforcement boundary has not been publicly drawn after the rollback.
The December 31 IC designer transition
BIS's 2026 deadline extension confirms that the foundry status framework remains operative. In 91 FR 17851, the authorized IC designer deadline extension, the agency moved the relevant date in ECCN 3A090.a Note 1 to December 31, 2026. BIS said the extension gives companies more time to apply for approved IC designer status and gives the agency more time to process applications.
The date governs status. It does not suspend the presumption, reporting, or recordkeeping system until year-end. Before the transition, a designer must still satisfy the Note 1 criteria for authorized status. The amended Note 1 makes December 31 the transition date. After that date, a designer that still meets the Note 1(a)(2) criteria and has submitted an application may qualify as authorized, but that status ends 180 days after submission. A calendar entry without an owner is not enough. The transaction file should capture application receipt, the 180-day end date, any BIS decision, and the transaction consequence if approved status does not follow. A denial must be read on its own terms; section 748.16 says denial alone does not create a new license requirement or make the applicant ineligible for license approval.
The current EAR section 743.9 front-end-fabricator reporting rule also remains written as an active quarterly obligation for production of 3A090.a ICs for authorized designers. The required information includes customer identity, the KYC vetting form, product details, and quantities. A stated exclusion applies when the counterparty is both approved and authorized. This is another reason not to use "approved" and "authorized" as synonyms.
Current transaction decisions
The decision belongs at the fabrication-and-packaging-path level. A company-wide conclusion that the rule is either alive or dead cannot resolve the evidence, licensing, and reporting questions for a specific order.
Classify the actor before classifying the evidence. Identify the front-end fabricator, OSAT, designer, consignee, end user, and ultimate parent. - Name the exact Note 1 rebuttal route. Do not combine fragments from different routes into an informal fourth option. - Keep classification and licensing in separate fields. A rebutted presumption does not clear other EAR controls, and an uncertain enforcement position does not erase the classification file. - Put a dated ownership check beside the technical attestation. The May guidance makes the headquarters of the entity for which the items are intended, and the headquarters of its ultimate parent, decisive facts for the preserved control. - Assign the reporting and status clocks. Record who files under section 743.9, who monitors supplement 6 and supplement 7 status, and who stops work if a 180-day period ends. - Escalate the residual enforcement question. After clearing every preexisting destination, end-user, end-use, and party-based control, ask counsel or BIS how the FDD-linked worldwide RS consequence applies to the actual facts rather than relying on the press-release label.
Those four fields also define the update triggers. A formal AI Diffusion rescission or replacement rule could move the license hook. An amendment to section 742.6, section 743.9, section 744.23, or ECCN 3A090 Note 1 could change the transaction sequence. So could a public BIS response to congressional oversight, a foundry-related enforcement action, or another change to the December 31 transition. Until then, the record supports a split conclusion: the foundry proof system is visible and current, while the FDD-linked worldwide RS consequence outside other preserved controls remains publicly unresolved.
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