Key Takeaway: BIS’s latest guidance closes an ambiguity created by the AI Diffusion Rule rollback, confirming that the original 2023 license requirement for advanced computing items exported to Country Group D:5 and Macau-headquartered entities remains in full force – regardless of where those entities are physically located.
On May 31, 2026, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) issued guidance clarifying that the license requirement for advanced computing items – first established on November 17, 2023 – continues to apply to entities that are subsidiaries of companies headquartered in Country Group D:5 (i.e., “U.S. Arms Embargoed Countries”) or Macau, even when those entities operate outside of D:5 or Macau destinations. The guidance directly addresses industry confusion following BIS’s May 2025 announcement that it would not enforce the new compliance requirements introduced by the AI Diffusion Rule.
Background: The original license requirement was introduced on November 17, 2023, implemented as an end-user control under § 744.23(a)(3) of the Export Administration Regulations (“EAR”), 15 CFR Parts 730-774. It applied to advanced computing items classified under Export Control Classification Numbers (“ECCNs”) 3A090.a and .b, 4A090.a and .b, and related .z paragraph items. In January 2025, the AI Diffusion Rule transferred the requirement for “.a” items from § 744.23(a) into § 742.6, establishing a new worldwide, destination-based license framework. When BIS announced non-enforcement of the AI Diffusion Rule’s new compliance requirements in May 2025, it created uncertainty in the trade community about whether the underlying, pre-existing entity-based controls had also been suspended.
Scope of BIS’s Guidance: The guidance makes clear that the answer to the suspension question is: no. A license requirement continues to apply under § 742.6(a)(6)(iii)(A) of the EAR to all destinations outside the United States for advanced computing items when such items are destined for entities headquartered in – or whose ultimate parent company is headquartered in – Country Group D:5 or Macau. Because this requirement predates the AI Diffusion Rule, BIS’s non-enforcement policy applies only to destination-based controls for transactions that do not involve such D:5 or Macau-headquartered entities. Exporters should continue to seek BIS licenses for qualifying transactions, unless a license exception under § 740.2(a)(9)(ii) is available. Separately, bona fide data center operators engaged in activities consistent with the EAR are not required to cease ongoing use, storage, disposal, or servicing of advanced computing items on the basis of this guidance, until further notice from BIS.
Exporters of advanced computing items should ensure their compliance programs account for the entity-based nature of this control. This includes conducting rigorous end-user diligence, including ultimate beneficial ownership analysis, to identify D:5 or Macau headquarters structures across their customer base, regardless of where those customers physically operate. License applications should be submitted in accordance with Part 748 of the EAR, and companies assessing potential past non-compliance should evaluate voluntary self-disclosure eligibility under § 764.5 of the EAR.
Crowell will continue to monitor BIS guidance and rulemakings related to advanced computing export controls and their impact on industry.