Daily Archives: January 11, 2025

Lithium-Ion Battery Market Forecast 2032 | Share Reach $123.4 Billion, At a CAGR of 4.72%

Lithium-Ion Battery Market Forecast 2032 | Share Reach $123.4 Billion, At a CAGR of 4.72% – Technology Today – EIN Presswire

Public Cloud Market Size Is Likely To Reach a Valuation of Around $1797.32 Billion 2032

Public Cloud Market Size Is Likely To Reach a Valuation of Around $1797.32 Billion 2032 – Technology Today – EIN Presswire

U.S. and China Tighten Respective Export Restrictions on Advanced Technology and Critical Minerals

The United States (“U.S.”) and the People’s Republic of China (“PRC” or “China”) have recently introduced new export restrictions on advanced technologies and critical minerals.

In this alert, we discuss the implications of these new restrictions for businesses and how they might reshape the global supply chain for the semiconductor and mineral industries.

U.S. tightens restrictions on exports of advanced chips technologies

On December 2, 2024, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) announced additional export controls relating to advanced technologies. The new interim final rule was published in the Federal Register on December 5, and effective December 2, subject to potential changes based on the public comment period ending on January 31, 2025. Specifically, the rule does the following:

Adding new controls on 24 types of semiconductor manufacturing equipment (“SME”) and 3 types of software tools used in semiconductor production.
Creating two new foreign direct product (“FDP”) rules and corresponding de minimis provisions:

Semiconductor Manufacturing Equipment FDP: Extends jurisdiction over specified foreign-produced SME and related items if there is “knowledge” that the foreign-produced commodity is destined to Macau or a destination in Country Group D:5 (US arms embargoed countries), including the PRC.
Footnote 5 (FN5) FDP: Extends jurisdiction over specified foreign-produced SME and related items if there is “knowledge” of certain involvement by an entity on or added to the Entity List with a new FN5 designation.  
De minimis: Extends jurisdiction over specified foreign-produced SME and related items described in the above FDP rules that contain any amount of U.S.-origin integrated circuits.

Imposing new restrictions on high-bandwidth memory commodities, which are needed for artificial intelligence (AI) models and supercomputing applications.
Establishing a new License Exception Restricted Fabrication “Facility” (RFF) that allows certain items, including specified SME, to be exported, reexported, exported from abroad, or transferred (in-country) to certain fabrication facilities that are subject to end user-based license requirements but are not currently producing advanced node ICs.
Clarifying controls on certain software keys that allow for the use of items such as software tools.
Adding eight new “red flags” to the BIS Know Your Customer guidance to address compliance and diversion concerns.

In addition, BIS added 140 entities from China, Japan, South Korea, and Singapore to the Entity List, as well as modifying 14 existing Chinese entries, targeting entities that it identified as being involved with the development and production of “advanced-node integrated circuits.”

According to the BIS’s press release, the new rules are designed to further impair China’s capability to produce and use advanced-node semiconductors for advanced weapon systems and in artificial intelligence (AI) and advanced computing, which have significant military applications and pose significant threats to U.S. national security and foreign policy. This rule adds onto BIS’s series of regulations since October 2022 restricting the export of advanced chips and technology to China, with further rules introduced in October 2023 and April 2024. Prior to these regulations, the U.S. was already imposing targeted export restrictions on Chinese telecom giant Huawei in 2019 and 2020, citing national security concerns.

As a result of heightened restrictions on accessing U.S. chips and equipment, Chinese businesses in the semiconductor sector may face operational challenges, including delays in productions and increased costs due to the need to source alternative supplies. This could lead to a greater reliance on domestic alternatives or supply chains that lack US nexus. Chinese businesses should reassess their supply chains and develop risk management strategies to mitigate these potential impacts.

China responds with bans and restrictions on the export of certain critical minerals to the U.S.

Within one day of the new U.S. restrictions, China’s Ministry of Commerce (“MOFCOM”) announced its own restrictions relating to critical minerals originating or exported from China, including a ban on the export of gallium, germanium, antimony, and superhard materials to the U.S. going forward, and tightened scrutiny over end-uses and end-users of graphite related dual-use items to be exported to the U.S., citing national security and nonproliferation goals.

While these minerals had already been subject to existing export restrictions previously introduced by MOFCOM in July 2023 (in respect of gallium and germanium) and in August 2024 (in respect of antimony), this is the first time China has specifically targeted the U.S. in its restrictions and expressly prohibited re-exports (also known as transshipment) of these controlled goods from other countries to the U.S.. The extraterritorial effect of these restrictions is reinforced by the China’s revised export control regime, which became effective on December 1 and prescribed (among others) the extraterritorial application of PRC export controls. For further details about the PRC’s new export control regime, please refer to this separate article written by our Asia team.

China is a major global exporter of gallium, germanium, graphite and antimony, all of which are critical inputs in semiconductor productions. Given the numerous applications of these minerals in key industries including munitions, advanced chips, and electric vehicles, multinational businesses engaged in relevant productions in or for the U.S. relying in relevant inputs from the PRC will need to rapidly secure new sources of supply, or otherwise ensure that their existing ones built with the U.S.’ allies remain intact. In February 2024, the U.S. Department of State hosted the inaugural meeting of the C5+1 Critical Minerals Dialogue with representatives of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan, exploring new partnership and investment opportunities with the region to secure critical minerals supply chains. This will continue to be an evolving space in 2025.

Commercial Impact and Looking Forward

Businesses in the affected industries whose supply chains have a U.S. or China nexus will have to navigate the implications and apply enhanced due diligence in their procurement and distribution arrangements, including ensuring that their new and existing vendors are authorized under a valid license to supply the inputs required, and their customers provide accurate end-use and end-user information for assessment and license applications. 

It is important to note that both the U.S. and China’s export regimes have strong extraterritorial applications, with restrictions on deemed exports, re-exports, and FDP (or equivalent) rules. Consequently, any subsequent transfers of controlled items by non-U.S. or non-PRC entities outside of the U.S. or China, post-export, may potentially remain subject to export controls under such regime.

Further, in anticipation of supply chains disruptions and/or increased costs arising from the need to seek alternative sources or substitute products, ideally as part of a comprehensive trade risk mitigation plan, businesses should actively monitor developments and develop supply chain solutions accordingly.

As 2024 concluded, the U.S. continued to take action by announcing on December 23 a Section 301 investigation into China’s alleged unfair trade practices in the semiconductor industry, which could lead to retaliatory tariffs against Chinese semiconductors, setting the stage for future tariff policies under the Trump administration. Looking ahead, the Trump administration, in its approach to trade relations with China, is likely to continue to prioritize national security and protectionist interests—at least for certain sectors such as advanced technology. In response, China is expected to fully utilize its trade control tools to counter the actions of the U.S.. Just across the Christmas and New Year period, the PRC Government has imposed sanctions against several U.S. companies, as well as designating 10 U.S. companies on its “Unreliable Entity List” and 28 U.S. companies on its “Control List” under its export control regime. The tit-for-tat between the two economic giants is expected to continue in 2025. 

Given this rapidly evolving geopolitical landscape, we expect developments on each side in the areas of export controls, foreign investment, sanctions, and trade remedies to remain frequent and volatile, impacting not only bilateral relations but also the global trading environment. Businesses must closely follow these changes in trade policy and be ready to adapt accordingly.

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FTC Blog Outlines Factors for Companies to Consider About AI — AI: The Washington Report

The FTC staff recently published a blog post outlining four factors for companies to consider when developing or deploying AI products to avoid running afoul of the nation’s consumer protection laws.
The blog post does not represent formal guidance but it likely articulates the FTC’s thinking and enforcement approach, particularly regarding deceptive claims about AI tools and due diligence when using AI-powered systems.
Although the blog post comes just days before current Republican Commissioner Andrew Ferguson becomes FTC Chair on January 20, the FTC is likely to continue the same focus on AI as it relates to consumer protection issues as it has under Chair Khan. Ferguson has voted in support of nearly all of the FTC’s AI consumer protection actions, but his one dissent underscores how he might dial back some of the current FTC’s aggressive AI consumer protection agenda.  

The FTC staff in the Office of Technology and the Division of Advertising Practices in the FTC Bureau of Consumer Protection released a blog outlining four factors that companies should consider when developing or deploying an AI-based product. These factors are not binding, but they underscore the FTC’s continued focus on enforcing the nation’s consumer protection laws as they relate to AI.
The blog comes just under two weeks before current Republican Commissioner Andrew Ferguson will become the FTC Chair. However, under Ferguson, as we discuss below, the FTC will likely continue its same focus on AI consumer protection issues, though it may take a more modest approach.
The Four Factors for Companies to Consider about AI
The blog post outlines four factors for companies to consider when developing or deploying AI:

Doing due diligence to prevent harm before and while developing or deploying an AI service or product   

In 2024, the FTC filed a complaint against a leading retail pharmacy alleging that it “failed to take reasonable measures to prevent harm to consumers in its use of facial recognition technology (FRT) that falsely tagged consumers in its stores, particularly women and people of color, as shoplifters.” The FTC has “highlighted that companies offering AI models need to assess and mitigate potential downstream harm before and during deployment of their tools, which includes addressing the use and impact of the technologies that are used to make decisions about consumers.”  

Taking preventative steps to detect and remove AI-generated deepfakes and fake images, including child sexual abuse material and non-consensual intimate imagery   

In April 2024, the FTC finalized its impersonation rule, and the FTC also launched a Voice Cloning Challenge to create ways to protect consumers from voice cloning software. The FTC has previously discussed deepfakes and their harms to Congress in its Combatting Online Harms Report.  

Avoiding deceptive claims about AI systems or services that result in people losing money or harm users   

The FTC’s Operation AI Comply, which we covered, as well as other enforcement actions have taken aim at companies that have made false or deceptive claims about the capabilities of their AI products or services. Many of the FTC’s enforcement actions have targeted companies that have falsely claimed that their AI products or services would help people make money or start a business.  

Protecting privacy and safety   

AI models, especially generative AI ones, run on large amounts of data, some of which may be highly sensitive. “The Commission has a long record of providing guidance to businesses about ensuring data security and protecting privacy,” as well as taking action against companies that have failed to do so.  

While the four factors highlight consumer protection issues that the FTC has focused on, FTC staff cautions that the four factors are “not a comprehensive overview of what companies should be considering when they design, build, test, and deploy their own products.”
New FTC Chair: New or Same Focus on AI Consumer Protection Issues?
The blog post comes under two weeks before President-elect Trump’s pick to lead the FTC, current FTC Commissioner Andrew Ferguson, becomes the FTC Chair. Under Chair Ferguson, the FTC’s focus on the consumer protection side of AI is unlikely to undergo significant changes; Ferguson has voted in support of nearly all of the FTC’s consumer protection AI enforcement actions.
However, Ferguson’s one dissent in a consumer protection case brought against an AI company illuminates how the FTC under his leadership could take a more modest approach to consumer protection issues related to AI. In his dissent, Commissioner Ferguson wrote: 
The Commission’s theory is that Section 5 prohibits products and services that could be used to facilitate deception or unfairness because such products and services are the means and instrumentalities of deception and unfairness. Treating as categorically illegal a generative AI tool merely because of the possibility that someone might use it for fraud is inconsistent with our precedents … and risks strangling a potentially revolutionary technology in its cradle.
Commissioner Ferguson’s point seems well taken.Less clear is where he would draw the line.Moreover, as a practical matter, his ability to move the needle would likely need to wait until President Trump’s other nominee, Mark Meador, is confirmed, as expected, later this year.
Matthew Tikhonovsky also contributed to this article.