On December 23, 2022, President Biden signed the James M. Inhofe National Defense Authorization Act for Fiscal Year 2023 into law.  The Act contains two significant prohibitions regarding the procurement and use of semiconductor products and services from specific Chinese companies and other foreign countries of concern that will come into effect in December 2027. 

Part A prohibits the procurement of electronic parts, products, or services that include covered semiconductor products or services.  Part B appears to go a step further by prohibiting the procurement of electronic parts and products that “use” other parts or products that include covered semiconductor products or services.  “Covered semiconductor product or service” is defined as “a semiconductor, a semiconductor product, a product that incorporates a semiconductor product, or a service that utilizes such a product, that is designed, produced or provided by” Semiconductor Manufacturing International Corporation (“SMIC”), ChangXin Memory Technologies (“CXMT”), or Yangtze Memory Technologies Corp (“YMTC”), or any of their subsidiaries, affiliates, or successor entities.  This term is also defined to include any components that are produced or provided by an entity owned, controlled by, or otherwise connected to the government of a foreign country of concern, as determined by the Secretaries of Defense or Commerce, in consultation with the Directors of National Intelligence or Federal Bureau of Investigation. Although many aspects of the prohibitions remain unclear, the legislation portends noteworthy obligations in the coming years for government contractors, their suppliers, and those who may be interested in entering into agreements with the United States.

Additional details on the requirements are available in a Client Alert that we published on January 5, available here.  A timeline of noteworthy events and requirements associated with the Semiconductor Prohibitions is also available here.