Dear ERAI Members and Industry Colleagues,

Sadly, this will be our last issue of INSIGHT. While we had a successful seven-year run, we have realized that a format change is necessary. Instead of compiling information useful for our members and the industry as a whole over the course of a quarter, we will instead post articles on the ERAI Blog in order to provide relevant industry news and content in a more timely and up-to-date format. You can expect the same content including updates on federal regulations and pending legislation, ERAI data reports, white paper reviews, counterfeit parts mitigation strategies, and other articles you can’t afford to miss.

If you are not yet an ERAI Blog subscriber, please take a moment to add your email address to our recipients' list so you are notified whenever a new blog is posted.

As always, if you have any topics you would like us to cover, please don’t hesitate to contact me at anne@erai.com.

Hoping that you, your families, and coworkers stay safe and healthy!

Signing off,

Anne-Liese Heinichen


Chin Hua Huang aka Jinee Huang, DES International Co., Ltd., Soltech Industry Co., Ltd.

On November 10, 2020, Chin Hua Huang of Taiwan was charged with participating in a conspiracy to violate the International Emergency Economic Powers Act (IEEPA) and the Iranian Transactions and Sanctions Regulations (ITSRs). Along with Huang, two organizations, DES International Co., Ltd and Soltech Industry Co., Ltd, were charged.

The US Government alleges that starting in November 2011, Chin Hua Huang, also known as Jinee Huang, acted as a sales representative for DES International and Soltech. On November 4, 2011, Huang, acting through DES, provided an Iranian company with purchasing information for a power amplifier for use in electromechanical devices and disclosed that some of the items originated in the United States. In December of 2011, the Iranian company sent a down payment to DES for the power amplifier and some related items. On February 21, 2012, a US company exported the items to Taiwan, believing the end user was located in Taiwan. In March 2012, Huang notified the Iranian company that the goods had arrived in Hong Kong and requested the balance of the payment. Huang indicated the packaging of the goods would be changed and the serial number on the product would be removed to minimize risk that the items could b tracked. The Iranian entity requested the serial number not be removed for warranty and repair purposes; however, on April 3, DES shipped the goods with the serial number removed to the Iranian company.

"The Iranian regime utilizes a global network of companies to advance its destabilizing military capabilities... The United States will continue to take action against those who help to support the regime’s militarization and proliferation efforts."

In June of 2012, a US company exported to DES a source amplifier necessary for the power amplifier to properly function. The source amplifier was subsequently forwarded to Iran around July 16, 2012. No export licenses were obtained for either shipment.

In December of 2015, Huang, acting as a Soltech representative, sought to purchase a one-year subscription of cybersecurity software developed in the US at the request of the Iranian company. Huang and Soltech agreed to download the software onto a computer on behalf of the Iranian company in March of 2016 and subsequently downloaded the software a month later using Soltech’s identity. In 2017, Huang and Soltech again purchased another one-year license without obtaining a required license.

Chin Hua Huang, DES International Co. Ltd. and Soltech Industry Co., Ltd. have been added to the Office of Foreign Assets Control's Specially Designated Nationals and Blocked Persons list ("SDN List"). Generally these entities' assets are blocked and U.S. persons are generally prohibited from dealing with them.

If convicted of the charges, Huang faces a maximum of 5 years’ imprisonment and a fine of up to $250,000. DES International and Soltech each face a fine of up to $500,000.

Further Reading:


On December 22, 2020, eleven Chinese entities and their aliases were added to the Department of Commerce, Bureau of Industry and Security's Entity List which includes persons for whom there is reasonable cause to believe that they have/are involved in activities that are contrary to the national security or foreign policy interests of the United States. The Export Administration Regulations impose additional license requirements on and limits the availability of most license exceptions for exports, reexports and transfers to listed entities.

Department of Commerce, Bureau of Industry and Security
15 CFR Part 744
[Docket No. 201215–0347]
RIN 0694–AI37
Addition of Entities to the Entity List, Revision of Entry on the Entity List, and Removal of Entities From the Entity List
AGENCY: Bureau of Industry and Security, Commerce.
ACTION: Final rule.

Source: https://www.govinfo.gov/content/pkg/FR-2020-12-22/pdf/2020-28031.pdf

Summary: In this rule, the Bureau of Industry and Security (BIS) amends the Export Administration Regulations (EAR) by adding seventy-seven entities, under a total of seventy-eight entries, to the Entity List. These seventy-seven entities have been determined by the U.S. Government to be acting contrary to the national security or foreign policy interests of the United States. These entities will be listed on the Entity List under the destinations of the People’s Republic of China (China), Bulgaria, France, Germany, Hong Kong, Italy, Malta, Pakistan, Russia, and the United Arab Emirates (U.A.E.). This rule also revises one existing entry on the Entity list under the destination of China and one under the destination of Pakistan. Finally, this rule removes a total of four entities under the destinations of Israel and the U.A.E. The removals are made in connection with requests for removal that BIS received pursuant to the EAR and a review of information provided in those requests.

ERC Entity List Decisions | Additions to the Entity List

Under § 744.11(b) (Criteria for revising the Entity List) of the EAR, entities for which there is reasonable cause to believe, based on specific and articulable facts, that the entities have been involved, are involved, or pose a significant risk of being or becoming involved in activities that are contrary to the national security or foreign policy interests of the United States, and those acting on behalf of such entities, may be added to the Entity List. Paragraphs (b)(1) through (5) of § 744.11 provide an illustrative list of activities that could be considered contrary to the national security or foreign policy interests of the United States.

This rule implements the decision of the ERC to add seventy-seven entities under a total of seventy-eight entries, to the Entity List; one of these entities is being added under two entries. These seventy-seven entities will be listed on the Entity List under the following destinations, as applicable, China, Bulgaria, France, Germany, Hong Kong, Italy, Malta, Pakistan, Russia, and the U.A.E. The ERC made the decision to add each of the seventy-seven entities described below under the standard set forth in § 744.11(b) of the EAR.

The ERC determined that the seventy-seven subject entities are engaging in or enabling activities contrary to U.S. national security and foreign policy interests, including:

Semiconductor Manufacturing International Corporation Incorporated (SMIC)

is added to the Entity List as a result of China’s military-civil fusion (MCF) doctrine and evidence of activities between SMIC and entities of concern in the Chinese military industrial complex. The Entity List designation limits SMIC’s ability to acquire certain U.S. technology by requiring exporters, reexporters, and incountry transferors of such technology to apply for a license to sell to the company. Items uniquely required to produce semiconductors at advanced technology nodes 10 nanometers or below will be subject to a presumption of denial to prevent such key enabling technology from supporting China’s military modernization efforts.

This rule adds SMIC and the following ten entities related to SMIC:

Semiconductor Manufacturing International (Beijing) Corporation
Semiconductor Manufacturing International (Tianjin) Corporation
Semiconductor Manufacturing International (Shenzhen) Corporation
SMIC Semiconductor Manufacturing (Shanghai) Co., Ltd.
SMIC Holdings Limited
Semiconductor Manufacturing South China Corporation
SMIC Northern Integrated Circuit Manufacturing (Beijing) Co., Ltd.
SMIC Hong Kong International Company Limited
SJ Semiconductor
Ningbo Semiconductor International Corporation (NSI)

The ERC determined to add

ROFS Microsystems
Tianjin Micro Nano Manufacturing
Tianjin University
and the individuals Chong Zhou; Huisui Zhang; Jinping Chen; Wei Pang; and Zhao Gang

because there is reasonable cause to believe that these individuals, in coordination with Tianjin University through its College of Precision Instruments and Optoelectronic Engineering Tianjin Micro Nano Manufacturing, and ROFS Microsystems, systematically coordinated and committed more than a dozen instances of theft of trade secrets from U.S. corporations. On April 1, 2015, those five individuals were indicted on thirty counts including conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets, economic espionage, aiding and abetting and theft of trade secrets. The indictment stated that individuals associated with ROFS and others developed a scheme by which the sources and origins of the trade secrets stolen from Avago and Skyworks would be disguised and the technology contained within those trade secrets be used by entities in the PRC to develop products for civilian and military use. Pursuant to § 744.11(b) of the EAR, the ERC determined that the conduct of these entities raise sufficient concern that necessitates prior review of exports, re-exports or transfers (in-country) of items subject to the EAR involving these persons and companies.

The ERC determined to add the entities

Zigma Aviation Services
France Tech Services
Maintenance Services International GmbH
Satori Corporation

to the Entity List on the basis of actions and activities they have engaged in that are contrary to the national security and foreign policy interests of the United States. Specifically, these companies provided aircraft parts, without the necessary licenses, to one entity—Mahan Air—that is listed as a Specially Designated National per the U.S. Department of Treasury’s Office of Foreign Assets Control.

OOO Sovtest Comp
Cosmos Complect
Multi Technology Integration Group EOOD (MTIG)
and four associated individuals Dimitar Milanov Dimitrov; Ilias Kharesovich Sabirov; Mariana Marinova Gargova; and Milan Dimitrov

to the Entity List on the basis of their attempts to procure and re-export U.S.-origin items, for activities contrary to the national security and foreign policy interests of the United States. The ERC determined that there is reasonable cause to believe, based on specific and articulable facts, that OOO Sovtest Comp and Cosmos Complect used MTIG as a front company to acquire both radiation-hardened parts and other sensitive electronic components and reexport those U.S.-origin components to Russia without required licenses. The ERC determined these entities are engaging in conduct that poses a risk of violating the EAR such that, pursuant to § 744.11(b)(5) of the EAR prior review of exports and re-exports involving these parties, and the possible imposition of license conditions or license denial, enhances BIS’s ability to prevent violations of the EAR.

ERAI recommends US-based organizations consult an export control/regulations professional prior to shipping product to any of the above-named entities.


Intellectual Property: CBP Has Taken Steps to Combat Counterfeit Goods in Small Packages but Could Streamline Enforcement

Why you should read it: Since 2013, CBP has reported that the number of small packages entering the country has more than doubled. Often times, these small packages contain counterfeit goods that threaten consumer safety and harm the nation’s economy. Controlling the entry of counterfeits through small packages being imported into the US through express carriers and streamlining the identification of counterfeit goods is crucial to CBP’s enforcement approach.

ERAI Insight: This GAO report features a review of intellectual property enforcement practices in Europe compared to those in the US to determine if CBP could apply any effective practices being used by European authorities. The report compares both the EU and US approaches, describes enforcement challenges posed by small packages and outlines the steps taken by CBP to address these challenges. The report concludes by urging CBP to develop a streamlined approach to combat the import of counterfeit goods in small packages as current resource-intensive processes may be insufficient.

Click here to open:

China Task Force Report

Why you should read it: The China Task Force, a committee in the US House of Representatives, issued a policy blueprint to address threats posed by the Chinese Government. While not focused solely on technology, six key areas are covered including: ideological competition, supply chain security, national security, technology, economics & energy, and competitiveness.

ERAI Insight: The goal of this report was to create a comprehensive report and action plan that demonstrates the dangers posed by the Chinese Government. The paper presents 82 key findings and more than 400 recommendations, over half of which are bipartisan and more than one-third of which have already passed either in the House or Senate. With regard to technology, key recommendations include: providing tax incentives to accelerate R&D and advanced semiconductor manufacturing; development of a national security strategy for the defense industrial base; increase industry-government intelligence sharing programs; use of DoD’s Cybersecurity Maturity Model Certification (CMMC) program; passing the CHIPS for America Act; as well as direct and indirect government investment in semiconductor and component assembly to meet the needs of defense and crucial infrastructure systems. Additionally, with regard to critical telecommunication technologies, the task force recommends the implementation of the Secure 5G and Beyond Act of 2020; funding of the Secure and Trusted Communications Networks Act of 2020; pass the NETWORKS Act; the implementation of updates to the Export Administration Regulation to bar any companies on the Entity List from purchasing sensitive American technologies and barring the use of Huawei and ZTE telecommunications and surveillance equipment.

Click here to open:

Building a Trusted ICT Supply Chain (CSC White Paper #4)

Why you should read it: The U.S. Cyberspace Solarium Commission provides five key and eight supporting recommendations to build trusted supply chains for critical information and communications technologies (ICT) by bringing together US Government, partner nations and industry to form a comprehensive strategy to ensure a trustworthy ICT supply chain.

ERAI Insight: The US Government is acknowledging their supply chain dependence on China and its lack of alignment between industry and government to provide a strategic plan to secure the nation’s ICT supply chain. While several government initiatives and proposals have been proposed and are under review, the lack of a comprehensive national plan hampers efforts for the US to domestically produce essential technologies. The paper specifies a strategy to build trusted supply chains by identifying key technologies and equipment, ensuring minimum viable manufacturing capacity, protecting supply chains from compromise, stimulating a domestic market through infrastructure investment, and ensuring global competitiveness of trusted supply chains. Through strategic cohesion, the US can begin to eliminate Chinese technologies in critical systems and increase its competitiveness in the global marketplace.

Click here to open:

ERAI, Inc.
A: ANYONE. Membership to ERAI is not required.

We have made the process as simple as possible by offering two ways to report parts:

1. Report a part online at: https://www.erai.com/submit_high_risk_part_public
2. Or even simpler, email your report to reportparts@erai.com

Please note that you can report parts anonymously. We will not include your company name on an alert. You do not have to report the supplier that shipped you counterfeit devices unless you choose to. The major benefit to the industry at large is knowing there is a suspect counterfeit part out there.


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