Chinese semiconductor equipment maker Advanced Micro-Fabrication Equipment (AMEC) sued the Pentagon last week for wrongly designating the firm as a Chinese military company. AMEC claimed that its designation violates the Administrative Procedure Act, the National Defense Authorization Act for Fiscal Year 2021 and the U.S. Constitution (Advanced Micro-Fabrication Equipment v. United States, D.D.C. # 24-02357).

Canada is considering new measures to strengthen its export controls, tariffs and other trade-related enforcement powers as it analyzes whether it has tools powerful enough to protect against threats to its economic and national security.

Silvaco Group, a California-based company that provides software solutions for semiconductor design, received a cautionary letter from the Office of Foreign Assets Control after disclosing possible sanctions violations involving Russia.

Although U.S. officials say export controls on advanced semiconductors and related equipment are designed to slow Chinese technological innovation, those controls have so far hurt American toolmakers the most, a technology policy expert said.

EU countries need to do more to track China’s progress in semiconductors, electric vehicles, solar panels and other technologies, European researchers said last week, warning that Beijing is increasingly turning to export controls to test where it can best “exploit dependencies” by other major economies that are imposing their own technology trade restrictions against China. They added that China’s export licensing decisions have so far been “highly opaque” and sometimes appear biased, generating fear among western countries that the controls are solely being used as a trade retaliation tool.

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Recently issued guidelines by the White House’s Office of Science Technology Policy could raise export compliance stakes for universities and research institutions, law firms said, especially for researchers that receive semiconductor-related federal funding under the Chips Act.

Trade groups, lawyers, investment firms, technology companies and foreign governments suggested a range of changes to the Treasury Department’s proposed outbound investment rules (see 2406210034), echoing calls last year for more clarity surrounding the due-diligence steps that will be required of deal-makers and warning that the U.S. risks chilling a broad range of U.S. ventures in China (see 2310050035). Several commenters also urged the Biden administration not to finalize the new prohibitions without similar buy-in from allies, with at least one group suggesting the U.S. is further from coordinating the rules among trading partners than it has let on.

A new U.S. rule expected this month could expand restrictions on foreign exports of certain chip equipment to China but exclude chipmakers in the Netherlands, Japan and South Korea, Reuters reported July 31.

Companies should expect the Treasury Department to aggressively penalize violators of its upcoming outbound investment prohibitions relatively soon after those rules are finalized, lawyers with Kirkland & Ellis said this week. They also said American chip companies and other technology firms are considering inserting new outbound investment-related warranties in their contracts and may start pulling out of existing investment deals that could soon be captured by the new prohibitions.