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U.S. export control is mainly implemented in accordance with the *Export Control Regulations* ("EAR") formulated by the Bureau of Industry and Security, United States Department of Commerce ("BIS"). Its core lies in imposing export controls of varying degrees and in different forms on various products or services subject to the EAR when they are exported to different countries or regions. The definition of "subject to the EAR" under the EAR is extremely broad. It covers not only products or services located within the territory of the U.S., or owned or produced by U.S. individuals or entities, but also: all items currently located within the territory of the U.S. regardless of their origin or destination; items of U.S. origin regardless of their current location; products that contain or use U.S.-origin components or technologies exceeding a specified threshold (the threshold is 10% for most items or services, and 25% for some categories of items or activities); products embedded with U.S. software; and products directly produced by using U.S. technologies, software or equipment (see Article 734 of the EAR).

As the United States possesses leading technologies in various high-tech industries, particularly in the semiconductor sector, and holds core production equipment and software, while the semiconductor industry, which involves complex production processes, multiple types of production equipment and components, has an extremely lengthy production chain, semiconductor chips per se, as well as a large number of equipment, raw materials, components and technologies related to chip production, can therefore be easily deemed to be subject to the regulation of the EAR.

Once an item is determined to be subject to the regulation of the Export Administration Regulations (EAR), no person may, without license or exemption, export, reexport or transfer abroad specified items subject to EAR regulation or engage in specified activities subject to EAR regulation to specified countries, specified users or for specified end uses in a manner violating Part 774 of the EAR and the provisions for corresponding items under the Commerce Control List ("CCL") in Annex 1 to Part 774, nor may any such item be exported or reexported via specified countries. The CCL in Annex 1 to Part 774 explicitly lists 10 specific categories of items and activities that fall under EAR jurisdiction and are restricted from being provided to specified countries, specified users or for specified end uses. For each specific item, the CCL specifies its Export Control Classification Number ("ECCN"), and stipulates reasons for control of the relevant item (there are 14 possible control reasons in total, namely Counter-Terrorism, Chemical and Biological Weapons, Crime Control, Chemical Weapons Convention, Encryption Items, Arms Convention, Missile Technology, National Security, Nuclear Nonproliferation, Regional Stability, Short Supply, United Nations Embargo, Significant Items, and Surveillance), control methods, countries subject to export control, control exceptions, license exceptions and other relevant contents. Export control target countries specified in Annex 1 to Part 738 of the EAR may be divided into a maximum of three control groups under each control reason. Finally, the United States imposes export controls on all items subject to export control based on the control reasons specified in the CCL, in accordance with the specific control methods set out in the CCL, and targeting different export control target countries under the export control target country groups listed in Annex 1 to Part 738 of the EAR.

Where an item subject to export control under the Export Administration Regulations (EAR) is to be exported, the relevant entity shall submit an application to the Bureau of Industry and Security (BIS) through the Simplified Network Application Process - Redesign (SNAP-R) system in accordance with the procedures set out in Article 748 of the EAR. With respect to export-controlled items that are listed on the Commerce Control List (CCL), destined for China, have a total value exceeding 50,000 US dollars and require an export control license, the exporter shall additionally provide a declaration specifying the name of the end user and the purpose of end use, the names of the import and export traders, the name and number of the contract, as well as the description and quantity of the products (see Articles 748.10(a) and 748.10(c) of the EAR). The specific license examination and approval for export control shall be conducted by the BIS in accordance with the procedures and standards prescribed in Article 750 of the EAR, and responses to all applications shall be given within 90 days.

For semiconductor enterprises in China and companies in the industry that involve various items subject to U.S. export controls (given the extremely broad scope of the Commerce Control List (CCL), there may actually be a large number of such companies), not only are many imported semiconductor-related equipment, materials and other products potentially subject to the Export Administration Regulations (EAR), but their finished products may also be listed on the CCL after being subject to EAR supervision, and thus are similarly subject to the long-arm jurisdiction of the United States when sold to all parts of the world. As part of the compliance process, major enterprises in China shall, before purchasing relevant raw materials, first conduct careful verification and inspection to ensure that relevant products will not be barred from being imported into China due to EAR restrictions, or require the exporter to file an export license application to the Bureau of Industry and Security (BIS) in a timely manner if such problems exist; when exporting any products, they shall at all times ensure that relevant products comply with the restrictions and provisions of the EAR to avoid unnecessary losses and sanctions arising from violation of the EAR.