July 2023
Ankwei Chen
On April 19, 2023, the Bureau of Industry and Security, U.S. Department of Commerce (“BIS”) reached a settlement (“Settlement and Order”) with Seagate Technology LLC (“Seagate US”) and Seagate Singapore International Headquarters Pte Ltd. (“Seagate Singapore”, collectively with Seagate US, “Seagate”), in which Seagate will pay a US$300 million penalty, among other sanctions imposed, for exporting approximately 7.42 million hard drives to Huawei Technologies Co., Ltd. (“Huawei”) and its affiliates from August 2020 to September 2021 in violation of U.S. export restrictions. While the BIS’ reasoning appears to track very closely to all of its past published guidance regarding the foreign direct product (“FDP”) rule and the Entity List, the Settlement and Order may provide a useful preview into how the BIS will likely decide an alleged violation of the new advanced computing and supercomputer FDP rules.
Background of the U.S. sanctions against Huawei
Huawei and over a hundred of its affiliate entities were added to the BIS’ Entity List in May 2019 for “involvement in activities contrary to the national security or foreign interests of the United States”, and dozens more of Huawei’s non-U.S. affiliates were added in 2020. As a result of the designation to the Entity List, exports, re-exports and transfers (in-country) of all items subject to the Export Administration Regulations (the “EAR”) either to or involving a Huawei entity on the Entity List will require a license from the BIS in advance, in principle denying Huawei access to U.S. products and technology.
This designation was the result of time and circumstance. Ever since the late 2000’s, the U.S. government has held suspicions regarding backdoor connections between Huawei and the Chinese Communist Party. Years of investigations in Huawei culminated in an indictment in 2018 before the U.S. District Court for the Eastern District of New York by the U.S. government accusing Huawei of engaging in long-term espionage, obstruction of justice, trade secret misappropriation and fraud; the indictment was unsealed in January 2019, at a time when the relationship between the two governments was deteriorating under former U.S. President Trump’s trade war, and Huawei was positioning itself as one of the key suppliers of 5G telecommunications equipment worldwide. In this connection, the BIS cited the indictment as a key reason for designating Huawei to the Entity List, namely that it would be an unacceptable risk for a significant portion of the 5G infrastructure in the U.S. to be reliant on an entity whose products contain backdoors that may be exploited by the CCP, so action must be taken to reduce Huawei’s ability to supply the U.S. (or elsewhere) with its 5G products.
However, just placing Huawei on the Entity List did not turn out to be very effective in reducing Huawei’s influence on 5G as originally envisioned. One reason was that the limited scope of the FDP rule at the time made it difficult to restrict Huawei’s access to relevant technology and equipment that were manufactured outside the U.S. This was compounded by the lack of support outside the U.S. for imposing the same restrictions on doing business with Huawei. As a result of such limitation of scope in enforcement, U.S. tech companies complained that their competitiveness was being hampered compared to their foreign counterparts because they were the only ones being restricted from doing business with Huawei. The BIS thus turned its attention to revising the FDP rule.
The FDP rule is No. 3 in the list of “Ten General Prohibitions” under 15 C.F.R. §736[1] and is one of the main ways U.S. export controls exert extraterritorial reach into other countries. Generally, the FDP rule stipulates a prohibition on the export, re-export or transfer (in-country) of certain foreign direct products that are subject to the EAR without a license or license exception, and a foreign direct product becomes subject to the EAR if they are the direct product of technology or software, or if they are the direct product of a plant or major component of plant that is itself the direct product of technology or software. Back in May 2019, the crucial limitation in the scope of foreign-made items (i.e., the “product scope”) that would become subject to the EAR via the FDP rule was that the item in question must be subject to national security controls per the designation in the applicable Export Control Classification Number (ECCN) category in the Commerce Control List; however, the types of semiconductor products and/or components used in 5G telecommunications equipment, which include an assortment of logic ICs, DRAM, NAND, etc. have been widely recognized by many countries, including the U.S., as not sufficiently sensitive to be subject to national security related export controls. Hence, the FDP rule at the time could not be readily applied to the semiconductor products manufactured outside of the U.S. that Huawei needed.
Amending the FDP rule
Rather than revising the definition of a foreign direct product, the BIS’ approach was to implement a new set of FDP rules for the new “footnote 1” of the Entity List that was being applied to all Huawei entities on the Entity List, so that the definition and scope of the rule may be specifically targeted against Huawei. The BIS then took advantage of another quirk in the modern semiconductor industry: Although the semiconductor foundries operated by companies such as TSMC and Samsung are not located in the U.S., their ability to manufacture the most advanced semiconductor products, ranging from the latest iPhone SoCs to specialized data center processors, depends on obtaining certain equipment that only a handful of companies in the world has the know-how to make, many of which are U.S. based. For example, the term “deposition” in semiconductor manufacturing refers to an early step in the process where the designed transistor circuit is “drawn” on the semiconductor material layer by depositing a thin impurities layer to introduce a conductivity difference, which is a critical part of making semiconductors work. Given the scale of miniaturization for transistors in state-of-the-art semiconductor products (at typically over 100 million transistors per mm2 as of 2023), the equipment depositing the thin layer need to be precise enough to work at nanometer-scale levels, and the only manufacturers of such equipment happen to be American, such as Applied Materials and Lam Research. In other words, semiconductor manufacturing outside of the U.S. can be captured by the U.S.-origin equipment that is used in the process. Accordingly, the amended product scope for the Huawei entities on the Entity List became:
(i) items that are themselves a direct product of technology or software subject to the EAR and specified in [ECCN] 3D001, 3D991, 3E001, 3E002, 3E002, 3E003, 3E991, 4D001, 4D993, 4D994, 4E001, 4E992, 4E993, 5D001, 5D991, 5E001, or 5E991 of the Commerce Control List (CCL)…
and expanded specifically to cover:
(ii) items produced by any plant or a major component of a plant that is located outside the United States…[and] is a direct product of S.-origin technology or software subject to the EAR that is specified in ECCN 3D001, 3D991, 3E001, 3E002, 3E003, 3E991, 4D001, 4D993, 4D994, 4E001, 4E992, 4E993, 5D001, 5D991, 5E001, or 5E991 of the CCL. [emphasis added]
Combined with the revised “end-user” scope (explained further below), the amended FDP rule, which was announced on August 17, 2020,[2] had a large and immediate impact on the tech industry – both companies outside the U.S. and U.S.-based tech companies with manufacturing operations outside the U.S. who were doing business with Huawei were forced to scramble to re-evaluate the feasibility of continuing the business relationship, and in the Settlement and Order, the BIS expressly cited snippets of press release statements from tech companies announcing in their Q3/Q4 2020 earnings calls to suspend business with Huawei indefinitely from September 2020 onward. These included Seagate’s two competing hard drive manufacturers (unnamed in the Settlement and Order but almost certainly referring to Western Digital and Toshiba). Seagate, however, went the opposite way. Per the Settlement and Order, BIS alleged that Seagate actively continued to supply Huawei with hard drives under a mistaken understanding of the FDP rule that only the last step of the manufacturing process mattered for the analysis.
A quick-and-dirty explanation of the technology behind traditional magnetic hard drives is appropriate here: Data on a traditional hard drive unit is stored on one or more round flat surfaces with a diameter of 3.5 inches or 2.5 inches and made of aluminum or glass (appropriately called “platters”). On the platter are very small crystalline structures known as magnetic grains between 10-20 nm in size that are deposited on the platter surface, on which data is represented in binary bits by the magnetic polarity induced on the grains (i.e., a north polarity represents a “1” and a south polarity represents a “0”), so the amount of data a hard drive can hold is defined by how many such magnetic polarities may be stored on the platter(s).[3] The platter must also be spun at a sufficiently high rate to allow the read-write heads to aerodynamically float extremely close (a mere 5-10 nm) above the platter surface to be able to read the data in a way akin to a record player needle; this is the reason any physical contact by the head with the platter while the platter is spinning, such as external shock, is called a “crash” and cause irreversible damage of the platter and data. Given such exacting tolerances, each part of the platter manufacturing process requires highly specialized and equipment – which are again unsurprisingly only manufactured by a limited number of companies in the entire world.
Seagate’s alleged oversight
Accordingly, BIS’ key allegation against Seagate is that Seagate ignored the fact that the equipment it purchased for automating the testing of the hard drive platter surfaces for defects involved testing equipment that are subject to the EAR under ECCN 3B992 (“equipment not controlled by 3B002 for the inspection or testing of electronic components and materials”) and are the direct product of certain U.S.-origin technology under ECCN 3E991 (“technology for manufacturing and test equipment controlled by [ECCN 3B992]”). As “ECCN 3E991” is one of the ECCNs in the aforementioned FDP rule product scope, the platter testing equipment can cause the hard drives made at Seagate’s plants outside the U.S. to become subject to the EAR if it is considered a major component of such plants. As such, the BIS asserted that since “major component” is defined in the EAR as equipment that is “essential” to the production of an item, and it has already explained in the Federal Register announcement of the August 2020 amendment (85 Fed. Reg. 51,601) that “any equipment subject to the [ECCNs in footnote 1] that is involved in any of the production stages is considered essential [emphasis in original],” Seagate’s hard drives are therefore captured under the amended FDP rule. In other words, in a counter-intuitive fashion, the BIS made no attempt to reconcile with the dictionary definition of “essential” – the presence of any equipment that falls within the relevant ECCNs will be automatically considered “essential” and consequently a “major component” of the plant, without needing to substantively assess its actual importance or role in the manufacturing process.
The BIS spent the remainder of the Settlement and Order alleging Seagate of knowingly supplying hard drives to Huawei, and Seagate’s efforts to maintain this exclusive supplier relationship when everyone else dropped out. This included a statement from Seagate US’ EVP and CFO in around early September 2020 that they “don’t see any particular restriction for us in term[s] of being able to continue to keep [Huawei] or any other customers in China. So, we don’t think we now we need to have a specific license…”, a “Strategic Cooperation Agreement” entered between Seagate and Huawei in December 2020 under which Seagate was named Huawei’s “strategic partner” and agreed to provide Huawei with the “newest and most advanced technologies available”, and Seagate extending several credit lines to Huawei during 2021 for Huawei’s purchases of Seagate hard drives. In fact, until about the end of September 2021, the last month that the alleged sales of hard drives from Seagate to Huawei took place, the only bump in the relationship between Seagate and Huawei appeared to be meeting Huawei’s demand for hard drives.
From a legal analysis perspective, the logic of the Settlement and Order is fairly cut and dry because it was a settlement condition for Seagate to accept all the factual allegations therein, which left all the potentially assailable points of the BIS’ reasoning untouched – there was no attempt to contest the definition of “major component”, and there was no dispute over whether the testing equipment is actually a direct product of ECCN 3E991 technology or was actually used by Seagate in its hard drive manufacturing plants located outside the U.S., among others. However, from a compliance perspective, the Settlement and Order is a forceful reminder for the global tech industry of the need for due diligence to ensure compliance with the U.S. export restrictions when doing business with PRC entities, including under the newer Advanced Computing FDP rule and the Supercomputer FDP rule that entered into effect in October 2022, each of which will be discussed in turn.
Compliance under the current Entity List FDP Rule
Pursuant to the October 2022 implementation of the new semiconductor export restriction rules, the BIS applied the same product scope and end-user scope framework of the footnote 1 Entity List FDP rule to the new “footnote 4” Entity List FDP rule, which put the PRC entities newly designated under footnote 4 on the Entity List under the same tech blockade regime as Huawei.[4] As a result, virtually all of the same Entity List FDP rule compliance practices applicable to Huawei are also applicable to the new wave of footnote 4 PRC entities – and it has been a veritable wave of additions, with over one hundred PRC entities added to the Entity List under footnote 4 since October 2022.
As discussed in the Seagate decision, for the product scope part, the “major component” of a plant wording places the onus on the exporter to carefully review every piece of equipment used in the entire manufacturing process of the product at question to determine whether any piece would be a direct product of any of the specific ECCNs listed. It should be noted that whether the equipment is manufactured in the U.S. or elsewhere, whether the manufacturer/supplier of the equipment is a U.S. entity, where the equipment is manufactured, or whether the equipment is jointly manufactured, are irrelevant in this inquiry; the only concern is identifying the “technology” or “software” involved. This determination may not always be an easy task, especially for highly technical equipment. However, the exporter may request such information from the manufacturer of the equipment, and on occasion, like in the case with Seagate, the manufacturer/supplier may expressly proactively notify the exporter in advance that the equipment is the direct product of an ECCN category, because the end-use scope element (as discussed below) provides an incentive for the manufacturer/supplier of the equipment to disclose such information to buyers of their equipment.
Although no analysis was necessary in the Seagate decision, the Entity List FDP rule (and all the other PRC-related FDP rules) has an “end-user” scope element that defines the kind of end-uses of the foreign direct product (as well as by whom) that are restricted. A key part of such end-user scope is whether the seller/exporter had “knowledge” that the product is destined for such restricted end-use (or used by a restricted end-user). “Knowledge” in double quotes is specifically defined in the definitions section of the EAR (15 C.F.R. §742) as “…not only positive knowledge that the circumstance exists or is substantially certain to occur, but also an awareness of a high probability of its existence…[it can also be] inferred from evidence of the conscious disregard of facts known…[as well as] from a person’s willful avoidance of facts.” The concepts behind the above definition are repeatedly found in guidance materials published by the BIS, such as its “Know Your Customer Guidance” article regarding the appropriate extent of due diligence under the “knowledge” standard. The general gist of the “Know Your Customer Guidance” article is that the exporter should carefully evaluate whether the transaction contains any “red flags” that would indicate a possible risk of running afoul of the EAR if the transaction is proceeded. Some of the examples of “red flags” provided by the BIS include but are not limited to:
- The customer or purchasing agent is reluctant to offer information about the end use of the product;
- The customer is not as familiar with the product’s performance specifications or applications as would be expected of a bona fide customer for such product, but still expresses a strong desire to purchase the product; or
- The use of abnormal shipping routes or a freight forwarding firm’s address as the final destination.
The “Know Your Customer Guidance” also raises two other important points: The exporter is not obliged to go beyond the call of duty and dig deep behind a customer’s representations for evidence of inconsistency if there does not appear to be a “red flag” issue, but the exporter may not “self-blind” and avoid liability either by intentionally ignoring known red flags, nor should the exporter, in desiring to continue doing business with the relevant customer, avoid taking action that is likely to uncover “bad” information about the customer, such as telling the sales team to avoid asking the customer questions about the end use of the product. However, without guidance from actual cases, it will remain difficult to discern the extent an exporter should conduct the “know your customer” inquiry, due to its fact-intensive nature – if a customer on the Entity List managed to obfuscate its identity and/or end-use to cause the exporter to consummate a transaction that would violate the Entity List FDP rule, how much of it was because the exporter company ignored red flags that are objectively discernible, or that the reasonable due diligence conducted by the exporter company could not have uncovered the Entity List customer’s scheme?
Given the above, one of the compliance challenges specific to the Entity List FDP rule is the potential breadth of the customer due diligence involved for the end-user scope element. At first glance, compliance with the Entity List FDP rule may appear relatively uncomplicated given that the Entity List and other export restriction lists are easily searchable via the Consolidated Screening List maintained by the U.S. International Trade Administration, but as the end-user scope for the Entity List FDP rule can cover situations that go significantly beyond a simple transaction of the foreign direct product to the customer on the Entity List (e.g., the foreign direct product of the exporter is sold to a supplier not on the Entity List who will combine the foreign direct product with its own separate product to make the completed product that is subsequently purchased by the ultimate end-user, who is on the Entity List), including all the aforementioned uncertainties and judgment calls involved in the “know your customer” inquiry, the overall customer due diligence can be a much more time-consuming and unpredictable task in practice.
Finally, it should be further noted that in BIS’ FAQ (last updated October 2021) for the footnote 1 Entity List FDP rule, the question was again posed as to what kind of “[semiconductor manufacturing] back-end assembly, testing and inspection equipment” are considered essential and thus a “major component” of a plant. While the BIS still refused to provide express examples of equipment that would be considered essential, in a curious shift, the BIS also stated that “…parties producing items should assess the function of equipment in the production process and determine whether it is essential…”, meaning the BIS seemed to still consider the dictionary meaning of “essential” as applicable to the “major component” analysis. Furthermore, this response is fully applicable to the footnote 4 FDP rule as well. Consequently, exporter companies dealing with the current Entity List FDP rule are advised to still consider conducting a qualitative analysis on whether the equipment is “essential” to the manufacturing process of the foreign-produced item, even if the equipment is determined to not fall within any of the relevant ECCNs.
The Advanced Computing FDP rule
Born out of the October 2022 semiconductor export restrictions that sought to block off the PRC’s access to advanced semiconductor products that may be used for the purpose of “military modernization” and “WMDs”, the Advanced Computing FDP rule specifically restricts foreign-produced items that fall under the new ECCNs that describe high-performance “integrated circuits” (3A090), technology used to manufacture 3A090 integrated circuits (3E001), computers, assemblies and components that use 3A090 integrated circuits (4A090) and technology used to manufacture such computers, assemblies, etc. (4E001), as well as other items not in the four aforementioned ECCN categories that meet the 3A090 performance parameters, from entering into the PRC, while maintaining the same “direct product of technology or software” or “product of a plant or a ‘major component of a plant” framework as in the Entity List FDP rule. An easy way to think about the Advanced Computing FDP rule is by comparing its scope with that of the Entity List FDP rule: (i) A narrowing of the product scope to cover only certain ECCNs; as an example, even though hard drives may be manufactured at a plant whose major component is a direct product of specific U.S.-origin technology, it would no longer be fall within the product scope of the Advanced Computing FDP rule because hard drives do not fall under any of the aforementioned new ECCN categories; and (ii) a broadening of the end-user scope to “knowledge” that the product is “destined to the PRC or Macau” or will be incorporated into any part, component, computer or equipment “destined to the PRC or Macau”, so the “end-user” scope is more appropriately called a “destination” scope here.[5] Since “the direct product of technology or software” and “the product of a plant or major component of a plant” conditions have already been discussed in detail, those considerations will not be further repeated here.
While the “destination scope” is no longer limited to specific entities, under the same “knowledge” standard, it can be less of a compliance burden compared to the end-user scope under the Entity List FDP rule due to the minimal room for uncertainty as to the destination of a shipment containing the foreign direct product in ordinary commercial transactions, assuming the use of reputable shippers with properly prepared waybills/bill of lading. Even in instances where the exporter company is providing the advanced semiconductor foreign direct product for incorporation into a part, component, computer or equipment by a third party, the due diligence on such third party with respect to the risk of covert transportation of such part, component, etc. to the PRC or Macau would still likely be easier compared to identifying the end user entity. Furthermore, the advanced technology level of the product may make the red flags easier to spot.
On the other hand, it is generally very difficult for an exporter who is not the manufacturer of the item to determine without help that the item falls under the new advanced computing ECCNs, especially ECCN 3A090 products. 3A090 integrated circuits are determined according to their non-cache bidirectional transfer rate (GB/s) and processing performance, the latter of which is based on “TOPS” (Tera Operations per Second), but neither threshold is readily assessable without a computing environment that is powered by such integrated circuit. The Advanced Computing FDP rule is therefore the only one among the PRC-related FDP rules that contain an extra paragraph (15 C.F.R. §734.9(h)(3)) allowing an exporter, re-exporter and transferor to obtain a written certification statement from the supplier of the item stating that the item would be subject to the EAR if the aforementioned destination scope is met in a future transaction – in effect simultaneously confirming that the item falls under one of the new ECCNs – to assist the exporter, re-exporter and transferor in conducting its due diligence. A model certification is provided in supplement 1 to 15 C.F.R. §734 that describes the declarations and signatures required in the document. However, the exporter is not obliged to obtain such certification to demonstrate that it has performed the necessary due diligence, nor is the supplier obliged to issue it to the exporter upon the exporter’s request. If no certification is available, the exporter still needs to conduct all necessary due diligence, and even if the exporter obtained the certification, the certification is not meant to constitute the entirety of the exporter’s due diligence under the Advanced Computing FDP rule. As an alternative in the absence of such certification (or in addition to it), the technical notes for ECCN 3A090 provides that the highest performance specifications the manufacturer has claimed in a manual or brochure for the integrated circuit product may be taken at face value for the purposes of determining whether the item falls within the 3A090 performance thresholds.
The “Supercomputer” FDP rule
Just like the Advanced Computing FDP rule, the “Supercomputer” FDP rule also aims to delay as much as possible the PRC’s progress to catch up to the U.S. in computing technology for national security purposes, here by retarding the development and operation of both existing and new supercomputers in the PRC, who is actually in the lead for the number of supercomputers in the TOP500[6] ranking as of the December 2022. The term “supercomputer” is currently defined in the EAR on the theoretical ability of the computing system to achieve a certain performance threshold (100 FP64 petaflops[7]) within a limited amount of space (41,000 cubic feet = 6400ft2 x 6.5ft);[8]while the notes to the definition describe the typical form of a “supercomputer” being racks and racks of compute processors linked as a parallel network to perform difficult computation tasks, the physical form of the supercomputer and how the compute processors are networked together are not relevant to the term as used in the EAR.
The product scope and end-use scope follow the same concepts as those seen in the Entity List FDP rule and the Advanced Computing FDP rule. There is no specific requirement for the item to fall within certain ECCNs like in the Advanced Computing FDP rule, as it is again determined by whether the item is a direct product of technology or software, or of a plant or a major component of plant that is the direct product of technology or software. However, the end-use scope covers a broad cross-section of activities in relation to supercomputer(s) in the PRC or Macau, including design, development, operation, maintenance or refurbishment, as well as incorporating or using the items that meet the product scope in the development or production of any part or component destined for such supercomputers in the PRC or Macau. As such, computing products made outside the U.S. with supercomputer applications (including GPU accelerators, processor interconnect technologies) are being restricted from becoming involved in any meaningful activity in relation to PRC supercomputers without a license from the BIS.
One issue presents itself in this Goldilocks mix of the specificity of the Entity List and the broad target of the Advanced Computing FDP rule: How can an exporter determine that a product subject to the FDP rule is destined specifically for “supercomputers in the PRC or Macau”? There may be instances where the relevant specifications of the product and/or the quantity involved are clear giveaways that supercomputers are involved, but even those may be attributable to more innocuous (i.e., non-supercomputer) purposes; a bulk order for hard drive storage may serve just as well as parts of a data server instead of a supercomputer cluster. It may not be possible from the exporter’s side to resolve such ambiguity in all but the most blatant of cases. In this connection, one may also wonder whether the Supercomputer FDP rule is needed when the Entity List FDP rule already exists and can be used to target the supercomputer designer, operator or maintainer directly once they are identified.
Furthermore, the aforementioned 100 petaflops performance threshold for the term “supercomputer” would apparently exclude all but one of the PRC supercomputers on the latest TOP500 ranking,[9] making the rule oddly forward-looking at the moment. One possible explanation is that it is an “open secret” the PRC possesses more powerful supercomputers than those it allowed to be submitted to the TOP500 project for ranking, and the U.S. government is primarily concerned about the PRC’s ability to further develop those unlisted supercomputers for military purposes. Hence, instead of targeting the supercomputers with known specs and operators, the Supercomputer FDP rule is intended for restricting those non-public, higher performance supercomputers operated by unconfirmed entities. However, even if that were true, it is still unclear how an exporter can be expected to discover through due diligence that the transaction counterparty is involved in or associated with such “secret” supercomputers in the PRC or Macau.
Conclusion
Aside from the political theater in the unprecedented effort by the U.S. to ward off a rival power by openly obstructing its “tech tree” progression, the PRC-specific FDP rules have introduced significant complications to the continued operation of the global tech industry’s supply channels, due to the important roles played by the PRC in that aspect. If there is one takeaway theme regarding best practices by exporters for compliance with the PRC-specific FDP rules, it would be “proactive communications” with the relevant parties: It is key to ascertaining the presence of U.S. “DNA” in the technology, software and equipment for the product scope part of the FDP rules, which Seagate failed to do due to its misconception of how the footnote 1 Entity List FDP rule worked; and although not covered by the Settlement and Order, engaging in proactive communications is also the linchpin of the “knowledge” standard for the end-use scope in each of the FDP rules. It is, however, not quite feasible to give a one-size-fits-all answer for “how proactive?” or “how much do we need to ask?” which can vary wildly depending on the facts involved, so that judgment call must be left to the discretion of the exporter acting in good faith[10].
As for the immediate near future, it should be worth observing whether or how the BIS would adjust the Advanced Computing and Supercomputer FDP rules in the coming months based on the feedback and/or performance benchmarks it has received so far on those new rules.
[1] The actual FDP rule provisions have been consolidated into its own dedicated section in the EAR as 15 C.F.R. §734.9 since early 2022.
[2] The amendment first appeared as an interim rule on May 15, 2020 with slight differences not relevant to the Seagate case.
[3] Consumer-level hard drives since the 2020’s are generally made up of 500 GB, 1 TB or 2 TB platters, which would be equivalent to 4-16 trillion bits (8 bits per byte).
[4] While the license requirements, the relevant ECCNs that the direct product came from , and the review policies for Huawei entities under footnote 1 are slightly different from those for the PRC entities under footnote 4, the differences are not relevant with respect the determination of whether a foreign-produced item would be subject to the EAR via the Entity List FDP rule.
[5] There is a niche “end use scope” for the Advanced Computing FDP rule: “Knowledge” that the item is a technology developed by a foreign subsidiary of a PRC entity that are used for the production of a mask, IC wafer or die.
[6] TOP500 is an ongoing project starting in 1993 that ranks the top 500 most powerful supercomputers in the world and publishes the results twice a year.
[7] 1 Petaflops = 1015 floating point operations per second.
[8] For reference, the fastest supercomputer at the time of this writing, “Frontier” at the Oak Ridge National Laboratory in the U.S., packs about 1,200 FP64 petaflops into about 7,300 ft2 floor space. Its predecessor “Summit” reached about 200 FP64 petaflops in 2018, and “Titan” before that in 2012 only attained about 18 FP64 petaflops.
[9] Sunway TaihuLight (神威 太湖之光), the fastest supercomputer in the PRC on TOP500, is rated at just around 100 FP64 petaflops.
[10] With the help of attorneys, of course.
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