Moolenaar Demands BIS Restore Chip Export Rule Trump Administration Abandoned

House Select Committee on China Chairman John Moolenaar sent a letter to Bureau of Industry and Security Under Secretary Jeffrey Kessler on August 6 demanding BIS enforce the Foundry Due Diligence Interim Final Rule — a Biden-era export control the Trump administration stopped enforcing in May 2025. The dispute centers on a $500 million wafer order that Chinese chip designer Sophgo placed with TSMC in 2023–2024, which yielded millions of Huawei Ascend 910B AI accelerator dies despite Huawei being on the U.S. Entity List.

The rule was signed January 16, 2025, with compliance required starting January 31. Any foundry or OSAT provider exporting chips fabricated on 14/16nm-class nodes or more advanced must treat those devices as controlled AI processors subject to a worldwide Regional Stability licensing requirement, unless the customer passes a specific exemption check. The rule was a direct response to the Sophgo diversion: Huawei's front company placed orders under its own name, misrepresented end users, and took delivery of unpackaged advanced dies that TSMC had no mechanism to flag under prior controls.

The enforcement gap opened in May 2025 when Commerce announced it would rescind the Biden AI Diffusion Rule, the broader framework governing global access to advanced U.S. computing chips. Without explicit reaffirmation, front-end fabricators remain unclear whether the Foundry Due Diligence requirement survives independently or falls with the parent framework. Foundries had been complying since January; the non-enforcement announcement put that posture on uncertain legal ground.

Moolenaar gave BIS two options. First, issue immediate guidance confirming the worldwide licensing requirement still applies to front-end foundry exports. Second, formally amend §744.23 of the Export Administration Regulations to explicitly restore that requirement for both foundries and OSAT providers — severing it from the rescinded AI Diffusion framework to close the interpretive gap. He asked BIS to brief committee staff by August 31 on its current interpretation and any active investigations into chip diversion linked to failures under the rule.

For infrastructure teams, the compliance surface extends beyond chipmakers. BIS guidance issued in May set the 10 megawatt threshold as a trigger for heightened scrutiny on data centers operating servers with advanced ICs under ECCN 3A090. Any IaaS provider or hyperscaler running GPU clusters above that threshold, procuring hardware touching non-U.S. OSAT providers, or sourcing from foundries using 14/16nm-equivalent or tighter process nodes is explicitly in-scope. BIS also codified red flags companies must catch: sudden order spikes, residential delivery addresses, and data center infrastructure inconsistent with stated compute needs. Missing these now carries aggravating-factor weight in enforcement actions.

Pressure to clarify the rule is bipartisan and accumulating. In June 2025, Sen. Jim Banks (R) and Sen. Andy Kim (D) separately pushed BIS to close the gap on Chinese entities sourcing custom chips through overseas subsidiaries. In July, Rep. Bill Huizenga (R) confronted Kessler over Nvidia Blackwell chips potentially reaching Chinese buyers through smuggling channels. In January 2026, Commerce shifted its licensing stance to allow Nvidia H200 and AMD MI325X exports to China case-by-case — a policy that drew pushback from both parties and resulted in only "very few" chips shipped by mid-July, according to Kessler.

For procurement and compliance teams, the foundry due diligence requirement remains legally intact while the enforcement posture stays unresolved. BIS faces a congressional deadline of August 31 to clarify. Procurement decisions involving advanced fab nodes, OSAT routing, or GPU clusters over 10 MW should not wait for that deadline to start the KYC audit trail.