Quantum Industry Warns BIS Against Future Deemed Export Controls
U.S. quantum technology companies and industry groups urged the Bureau of Industry and Security to maintain the set of deemed export control exclusions outlined in its September rule on certain advanced technologies (see 2409050028), saying that without them the American quantum industry could lose top talent and cede technological leadership to other countries.
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Connecticut-based Quantum Circuits said the deemed export controls would affect about 10% of its employees. Microsoft said the controls would be “devastating” to the company’s work in the quantum industry. The Quantum Economic Development Consortium (QED-C), which represents more than 250 companies in the quantum sector, said a portion of its members employ at least one foreign national from a country that would require a license, including China and Iran.
BIS announced the interim final rule in September, imposing new controls on quantum computing, semiconductor manufacturing, 3D printing and other critical technologies that BIS said foreign militaries could use to harm U.S. national security. The rule notably featured certain exclusions for deemed export control requirements, which usually requires companies to apply for a license before sharing certain controlled items, software or technologies with a foreign person on U.S. soil if a license would normally be required for the person's country.
But the agency also used the rule to ask for public comments about the potential impact of deemed export controls on the quantum industry, including how it would affect U.S. quantum innovation. In its comments last month, QED-C said there would be a chilling effect within the industry around hiring some of the world’s most experienced and qualified workers. It added that deemed export controls are “extremely complicated,” especially for smaller businesses and startups, which may choose to “over-comply” with any new rules for fear of enforcement risks.
“The available penalties for even inadvertent, well-intentioned noncompliance are severe,” QED-C said.
The consortium said it recently surveyed 35 companies in the industry and found that nearly half employ at least one foreign national from D:1 or D:5 countries subject to certain BIS export licensing requirements for national security- and nuclear-related reasons. Those foreign employees make up an average of 9.4% of their organization’s quantum workforce, QED-C said, and China has “the greatest representation among those employees.”
The American quantum industry relies on the “best and brightest talent from all over the world to function,” QED-C said, but new license requirements could cause them to put certain work on “indefinite hold” while they wait for license approvals, which it said can take months.
“These interruptions could severely hinder the technological progress made by many U.S. quantum computing companies,” it said. “Moreover, those qualified workers who do not find employment in U.S. companies will likely take jobs at companies elsewhere, with a very real risk of ceding technological leadership to other countries that do not have such controls in place, including geopolitical adversaries like China.”
Microsoft also said it “strongly” encourages BIS to keep the deemed export control provisions, including for future rules on emerging technologies. It specifically mentioned the deemed export control grandfathering clause introduced in the BIS rule, which allows certain foreign person employees and contractors to continue to access certain controlled technology and software if those employees or contractors already had access to that technology and software and were employed as of Sept. 6.
“Narrowing these general licenses or otherwise requiring licenses or prohibiting access for these professionals would be devastating to Microsoft and our peer companies’ ability to support U.S. advantage in quantum development, and our shared commitment to ensuring that this technology benefits everyone around the world,” the company said.
If BIS were to put in place new deemed export controls, Quantum Circuits said, it wouldn’t have the staff “with appropriate training” to manage those licenses. The company said it expects that a “significant fraction” of its new hires in the sector would be from export-controlled countries, “and having to implement deemed export controls would significantly and negatively affect our ability to recruit new employees.” The company said that would hurt its research and development.
Any new rules could require it to “either obtain numerous licenses for exemption, or institute separation protocols for staff members, designs, and documentation, in an existing well integrated team that has worked closely together for years,” Quantum Circuits said.
The Council on Governmental Relations, which was writing on behalf of more than 200 research universities, academic medical centers and research institutes, also said it is “concerned” about the possibility of new quantum-specific deemed export controls. It said widely sharing research and hiring global talent helps develop technologies that “benefit the security and health” of the U.S.
“It is our belief that this would unnecessarily muddy the deemed export and reexport process,” it said.