On May 13, 2025, the Bureau of Industry and Security (BIS) issued new guidance (the Guidance) highlighting increased scrutiny on AI-oriented semiconductor products made in China and other high-risk locations, effectively requiring a license for any use of or transactions involving these products.
The Guidance focuses on the potential risk of violating the Export Administration Regulation’s (EAR) General Prohibition 10 (GP10) for dealings related to advanced computing integrated circuits (ICs or chips) developed or produced by companies in D:5 countries (i.e., US arms-embargoed countries/destinations), including China and Macau. The Guidance was announced in tandem with the rescission of the Biden-era AI Diffusion Rule (which you can read more about in our blog post) and warns US and non-US companies that such ICs are presumably subject to GP10 restrictions. Accordingly, dealings related to such ICs without BIS authorization may potentially violate the EAR and/or subject companies to BIS enforcement attention.
Executive Summary
BIS’s Guidance serves as notice of US export control risks for dealings related to certain advanced computing ICs (i.e., ICs meeting the parameters for control under Export Control Classification Number (ECCN) 3A090) developed in D:5 countries including China and Macau. The Guidance warns that GP10 prohibits direct and indirect involvement in transactions involving these semiconductors with knowledge or reason to know that a violation of the EAR has occurred, will occur, or is intended to occur in connection with the items. The Guidance specifically names consumer-grade Huawei Ascend 910B, 910C, and 910D processors as advanced computing ICs presumptively subject to GP10 restrictions, though the Guidance broadly covers all D:5- and China-origin 3A090 ICs. The Chinese government denounced the Guidance and invoked its Anti-Foreign Sanctions Law, escalating US-China tensions against the backdrop of vital trade negotiations.
BIS’s New GP10 Guidance on Advanced Computing ICs and “High Probability” Enforcement Regime
GP10 broadly prohibits most transactions involving controlled items with “knowledge” that a violation of export controls has occurred, is about to occur, or is intended to occur. Under GP10, US persons may not “sell, transfer, export, reexport, finance, order, buy, remove, conceal, store, use, loan, dispose of, transport, forward, or otherwise service” any item subject to the EAR. Violations of GP10 can trigger civil and criminal penalties, including for parties beyond the original exporter that indirectly support or facilitate transactions, such as financial institutions.
Leveraging this knowledge requirement, BIS has been increasingly using “is informed” letters to effectively impose individualized license requirements for semiconductor products. For example, earlier this year Nvidia reported that it was informed by BIS that its H20 chips require a license for export to China, and it has been reported that BIS has issued (and rescinded) other “is informed” letters related to chip design.
The Guidance describes a “high probability” enforcement regime—effectively serving as an industry-wide “is informed” letter that companies in D:5 countries like China likely produced or developed ICs under ECCN 3A090 in violation of the EAR. ECCN 3A090 covers specialized chips, often used for AI, that meet or exceed defined thresholds. As such, 3A090 ICs are high-performance chips designed for advanced computing that are particularly useful for AI development and that have potential military end-uses.
The Guidance applies to 3A090 ICs linked to companies in D:5 countries, including China and Macau. As “illustrative” examples of impacted advanced computing ICs, BIS lists Huawei’s Ascend 910B, 910C, and 910D chips.
Potential Impact on AI Ecosystems
To the extent that the Guidance targets reliance on the Huawei Ascend chips and other Chinese 30A90 ICs, it could impact data centers, cloud service providers, and AI hardware vendors, including related suppliers, systems integrators, and software developers. Additionally, even providing financing or services related to such ICs may result in violations, meaning the Guidance could impact logistics providers, financial services, and academic institutions.
Blowback from China and Trade Negotiation Impacts
The new Guidance is the latest in a series of increasingly restrictive US export control measures and other restrictions concerning semiconductor products from China. For example, the new US outbound investment regime, which took effect in January 2025, includes a prohibition on US person investments in Chinese companies involved in certain semiconductor-, quantum computing-, and AI-related activities (see our blog post). China has voiced strong opposition to the Guidance and its targeting of Huawei ICs.
In response to the Guidance and other new US restrictions, China invoked its Anti-Foreign Sanctions Law, warning that individuals and entities who implement or assist with the implementation of the Guidance’s “discriminatory restrictive measures” could face legal and administrative consequences in China. China’s latest response is against the backdrop of other sectoral and trade-related countermeasures. For example, on May 18, 2025, China’s Ministry of Commerce released the final determination of its anti-dumping investigation into copolymer polyoxymethylene imports from the United States, the European Union, Japan, and Taiwan (with the United States facing 74.9% duties compared to those on other regions, which range from 3.8% to 35.5%).
Such tit-for-tat trade restrictions have been a focal point of US-China trade talks. Though final terms have not been released, a formal trade deal signed on June 24, 2025, is expected to provide the United States with a supply of Chinese rare earth and critical minerals exports despite Beijing’s supply dominance and tightened export controls. The Chinese government announced the deal will also address stringent license requirements and approval processes for US exports to China, which were another a sticking point during negotiations.
Depending on implementation, the deal may alleviate certain trade tensions in the short term. Still, the Guidance stands as the latest installment in a series of increasingly restrictive export control and investment measures that mark a path towards near-prohibitive trade barriers between the US and China in key strategic sectors. Further, reports indicate the deal might not do much to address broader trade imbalances or tariffs escalations.
How Companies Can Respond to This Potential Risk
The Guidance warns that use of or transactions involving Chinese 3A090 ICs without proper export authorization likely violates the EAR and may trigger enforcement actions, including potential imprisonment, fines, and loss of export privileges.
To address the tightening restrictions under the Guidance and mitigate risks of enforcement action, companies might consider reviewing due diligence procedures related to the origin and compliance status of any advanced computing ICs in their supply chains, training employees accordingly, and reviewing internal policies given the heightened risk of enforcement actions for noncompliance. Additionally, companies could proactively assess whether any existing or planned activities involving these chips require a waiver or license from BIS, or other steps to mitigate the potential exposure to BIS enforcement risk.
