China Chip Ban Rule Published

The Department of Defense has published proposed rules prohibiting the acquisition of semiconductor parts and services manufactured by certain Chinese manufacturing concerns.

DoD, GSA, and NASA are considering amending the Federal Acquisition Regulation (FAR) to implement paragraphs (a), (b), and (h) in section 5949 of the James M. Inhofe National Defense Authorization Act for Fiscal Year 2023 that prohibits executive agencies from procuring or obtaining certain products and services that include covered semiconductor products or services effective December 23, 2027.

Congress included a prohibition for certain covered semiconductors in section 5949 of the James M. Inhofe National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2023 (Pub. L. 117-263).

The statute states that “[t]he head of an executive agency may not

1. procure or obtain, or extend or renew a contract to procure or obtain, any electronic parts, products, or services that include covered semiconductor products or services; or
2.  enter into a contract (or extend or renew a contract) with an entity to procure or obtain electronic parts or products that use any electronic parts or products that include covered semiconductor products or services”.

Coered Nations include China, Russia, Iran and the DPRK.

Covered semiconductor products or services include those produced by:

• Semiconductor Manufacturing International Corporation (SMIC)
• ChangXin Memory Technologies (CXMT)
• or Yangtze Memory Technologies Corp (YMTC)

A reasonable inquiry may reasonably rely on the certifications of compliance from covered entities and subcontractors who supply electronic products or services.

This inquiry is not required to include independent third-party audits or other formal reviews but may be required to include other mechanisms of diligence review depending on the facts and circumstances.

Acquisition Regulation: