Anticipating a Turning Point in US Export Controls for Tech

“Throw another qubit in the fridge!” might not be something you’d hear at a party, but the concept soon will factor into the ongoing U.S.-China trade war.

Qubit refrigeration is a key element of quantum computing, and along with gate all-around field effect transistor, or GAAFET, technology, reportedly soon will be the subject of new export controls implemented by the U.S. Commerce Department. The anticipated restrictions will be among the first wave of export controls on emerging U.S. technologies that are required under the Export Control Reform Act of 2018, or ECRA, with the likely eventual result that such technologies will be restricted for export to China.

Required Export Controls for Emerging Technologies

So what’s going on here, and what do refrigerators and transistors have to do with it?

The Bureau of Industry and Security, within the U.S. Department of Commerce, administers the Export Administration Regulations, which apply to the export of so-called dual-use items — that is, items with both a potential military and civilian application.

Under the EAR, BIS implements export controls pursuant to U.S. obligations under multilateral export control regimes — such as the Wassenaar Arrangement — as well as unilateral U.S. controls directed at embargoed countries or otherwise based on particular U.S. policy interests.

Over the decades in which the EAR have been in force, the main focus of dual-use export controls has been the prevention of weapons proliferation and of diversion of items for illicit end-uses, such as terrorism or human rights abuses.

The ECRA, however, introduced a new concept — control of the flow of U.S. technology in order to preserve U.S. technological leadership. Specifically, under the ECRA, the U.S. Department of Commerce is required to impose export controls over emerging and foundational technologies. These terms are not defined in the ECRA, leaving BIS considerable discretion (in consultation with other agencies and the public) in crafting the required controls.

In November 2018, BIS issued an advanced notice of proposed rulemaking, or ANPR,[1] identifying, at a high level, the types of emerging technologies that eventually could become subject to the mandatory ECRA controls. The ANPR identified the following technologies:

• Advanced computing
• Advanced materials
• Advanced surveillance
• Artificial intelligence[2]
• Biotechnology
• Brain-computer interfaces
• Data analytics
• Hypersonics
• Logistics
• Microprocessors
• Position, Navigation and Timing (PNT)
• Quantum information and sensing
• Robotics

Since issuance of the ANPR, industry has awaited further indications from BIS regarding which technologies will be in scope of the new rule, with recent reports shedding light on potential areas of focus for BIS.

Focus on Quantum Computing and GAAFET Technology

According to published reports,[3] BIS has focused on quantum dilution refrigerators and GAAFET technology as the types of emerging technologies that warrant control under the ECRA.

Why the focus on these technologies?

First, with respect to quantum dilution refrigerators, such items are essential in keeping qubits — the signature element of quantum computing — near absolute zero temperature. In this regard, a brief explanation of quantum computing is helpful.

In classical computing, a computer processes an input string of binary bits consisting of 0s and 1s, and then renders an output of binary bits. Quantum computing, in contrast, makes use of qubits, which very briefly can take on the value of 0, 1 or both simultaneously, taking advantage of a principle of quantum mechanics known as superposition.[4]

The propensity of a qubit to take on multiple values means that a quantum computer can process enormous amounts of information quickly — reportedly well in excess of the highest-performing classical supercomputers.[5] In order to perform, however, a qubit must be free of disruption from the nonquantum world, meaning that it must be stored at temperatures near absolute zero (colder than outer space!).

That is where quantum dilution refrigerators come in. By controlling this technology, the United States can prevent China and other technological rivals from having access to U.S. technology needed to keep the qubits sufficiently cold to function.

GAAFET technology similarly represents a breakthrough in computing technology. For decades, the building block of modern electronics has been the metal oxide semiconductor field-effect transistor, or MOSFE), in which a gate permits or blocks the flow of electrons between a source and a drain. Manufacturers can improve the performance of the MOSFET (and thus pack more MOSFETs onto a chip) by shrinking the length of the gate.

However, at around 20 nanometers, this process begins to encounter voltage leakage and other short-channel effects. This threatens the continued viability of Moore’s Law, which postulates that the number of transistors in a microchip doubles every two years.

One solution to this has been the development of fin field-effect transistor, or FinFET, technology, which adds a fin to the top of the transistor such that the gate wraps around three-dimensionally, improving performance. The next step beyond this is GAAFET technology, by which gates are installed all around the channel of the transistor, with a gate length (or node) of 3 nanometers possible. Essentially, GAAFET technology figures to extend Moore’s Law and usher in the next generation of high-performing chips.

Practical Impact of New Export Controls

The new ECRA controls clearly are directed at restricting exports of cutting-edge technology to China. Specifically, the ECRA provides that, upon identifying emerging and foundational technology, BIS must impose a licensing requirement for the export of such technology to any country subject to a U.S. embargo, including an arms embargo. Crucially, China is an arms-embargoed country, meaning that a license will be required to export the newly controlled technology to China.

Notably, public reporting indicates that the United States first intends to propose to the 42 participants in the Wassenaar Arrangement — the main multilateral dual-use export control regime — that quantum dilution refrigerators and GAAFET technology be subject to multilateral controls, rather than U.S. unilateral controls.

Adoption of such multilateral controls would ensure a continued level playing field for U.S. manufacturers, which otherwise could be disadvantaged in the marketplace by unilateral U.S. controls. However, in the event that the Wassenaar Arrangement participants reject multilateral controls, then there is a good chance that BIS could implement unilateral controls. In either case, the identified technologies would become subject to controls in mid-2021, at the earliest.

What would this mean for exports of quantum dilution refrigerators, GAAFET technology and other identified emerging and foundational technology? As noted above, the technology would be subject to a licensing requirement for exports to China, and possibly other countries.

In practical terms, focusing on the case of China, this would mean the following:

• Actual shipments to China of quantum dilution refrigerators and GAAFETs would require a license.
• Transmissions to China (whether physical, electronic, oral or otherwise) of technical information related to quantum dilution refrigerators and GAAFETs would require a license.
• A license would be required to release quantum dilution refrigeration and GAAFET technology to Chinese nationals in the United States or (in the case of U.S.-origin technology) abroad, pursuant to the deemed export and deemed re-export rules under the EAR.
• Non-U.S. items incorporating a U.S.-origin quantum dilution refrigerators or GAAFET would be subject to U.S. export controls, and thus potentially restricted for export to China, if the value of the quantum dilution refrigerator or GAAFET is 25% of the value of the non-U.S. item or greater.[6] For example, if a non-U.S. chip incorporates a U.S.-origin GAAFET that comprises 25% of the value of the chip, then the non-U.S. chip will be subject to U.S. export control laws.
• Non-U.S. items that are the direct product of U.S.-origin quantum dilution refrigeration or GAAFET technology potentially could be subject to U.S. export control laws. For example, where a non-U.S. GAAFET is manufactured using U.S.-origin technology, the GAAFET could be subject to U.S. export control laws.
• Foreign investments in U.S. companies that develop or produce quantum dilution refrigerators or GAAFETs will be subject to enhanced scrutiny, and potentially mandatory review, by the Committee on Foreign Investment in the United States.

Conclusion

The eventual imposition of controls over emerging and foundational technology will mark a key turning point in U.S. export controls, as the United States moves toward preserving its leadership over cutting-edge technology. Even as an uneasy truce in the U.S.-China trade war sets in, U.S. efforts to protect critical technology will reverberate throughout the marketplace for years to come.


Mario Mancuso and Anthony Rapa are partners at Kirkland & Ellis LLP.

The opinions expressed are those of the authors and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

[1] See https://www.federalregister.gov/documents/2018/11/19/2018-25221/review-of-controls-for-certain-emerging-technologies.

[2] Notably, BIS recently imposed temporary export controls on software “specially designed to automate the analysis of geospatial imagery”. See https://www.federalregister.gov/documents/2020/01/06/2019-27649/addition-of-software-specially-designed-to-automate-the-analysis-of-geospatial-imagery-to-the-export.

[3] See https://www.reuters.com/article/us-usa-tech-china-exclusive/exclusive-us-finalizing-rules-to-limit-sensitive-tech-exports-to-china-others-idUSKBN1YL1B8.

[4] See https://plus.maths.org/content/how-does-quantum-commuting-work.

[5] See https://www.discovermagazine.com/the-sciences/quantum-computers-finally-beat-supercomputers-in-2019.

[6] Under current law, the so-called de minimis threshold for China is 25%, although reports indicate that BIS is considering lowering this threshold.