The Government of Canada has announced new export and technology transfer controls on quantum computing and semiconductors that will come into effect on July 20, 2024. This announcement was made through a Notice to Exporters No. 1129 (June 19, 2024), describing the addition of five new controls under Item 5505 of the Export Control List ("ECL"). An export permit will now be required to export or transfer these items from Canada to any destination other than the United States.
Global Shift Towards Quantum Computing and Advanced Semiconductors Controls
This move is in line with the recent global shift towards tightening controls on transfers of advanced quantum computing and semiconductor technologies across the world. In efforts to curb the development of these technologies in countries and regions with divergent geopolitical views and agendas, as well as to avoid potential national security threats, major tech-exporting countries have been imposing various regulatory measures. Given the current geopolitical tensions and the rapidly changing environment, the introduction of coordinated restrictions through existing multilateral export controls regimes, such as the Wassenaar Arrangement, is a rather unattainable goal. Instead, the United States, the United Kingdom, as well as several EU member states, such as the Netherlands, Spain, and France, have started to put various unilateral measures in place to control the emerging technologies.1
Canada has followed suit by implementing these new controls as a unilateral measure under the ECL. In doing so, Canada has emphasized the urgent need to ensure that there are no regulatory gaps in the export control framework that could be exploited by countries and entities of concern to gain access to and compromise sensitive information in Canada's possession or to threaten national and international peace, security and stability.2 Quantum computing represents a groundbreaking leap forward in computational capabilities, but it also raises concerns relating to its use in compromising existing cryptographic systems and disrupting current security measures. Advanced semiconductor technologies are also triggering national and international security concerns, especially with their application in advanced military systems and weapons of mass destruction.
The Newly Added Controlled Items
Group 5 of the ECL captures miscellaneous goods and technology, used by Canada to implement unilateral controls purported to protect Canada's economic or national security interests. The Order Amending the Export Control List adds a new item to Group 5 of the ECL - Item 5506 titled "Other Strategic Goods and Technology (All Destinations Other than the United States)".
Item 5506 encompasses two new categories of controls: controls related to quantum computers and controls related to semiconductors.
The new controls related to quantum computers capture systems, equipment, and components, other than those referred to in Group 1, that are:
- Quantum computers with the capability to confine, control, measure and process the quantum information embodied in 34 or more physical qubits with a small margin of error, as well as related software, technology, electronic assemblies, and components, including circuits and devices specially designed for quantum computers, such as certain components and devices made to control and measure these quantum computers;
- Cryogenic Complementary Metal Oxide Semiconductor (CryoCMOS) integrated circuits designed to operate at a temperature of 4.5 Kelvin (-268.65°C) or below.
The new controls related to semiconductor technologies capture the following technology and equipment, and their components, other than those referred to in Group 1:
- Technology for the development or production of semiconductor devices or microchips using Gate-All-Around Field Effect Transistor (GAAFET) structures, e., nanosheet, nanowire, and gate-all-around transistor technology;
- Equipment designed or modified for isotropic and anisotropic dry etching, which is critical in the making of GAAFET structures;
- Advanced Scanning Electron Microscope (SEM) equipment for imaging semiconductor or integrated circuits, or to perform chip design recovery meeting a specific set of metrics. This includes, inter alia, a field-of-view overlap of less than 5% in horizontal and vertical directions and the collection and storage capacity of images having more than 200 megapixels, which allows for high-resolution and large area images.
Next Steps
Those in the semiconductor or quantum technologies sectors should be conducting a thorough review of their design, research and development, production, and distribution activities to determine if their businesses are affected and to ensure adherence to these new controls.
As is the case with all export and other trade controls, companies need to be especially diligent regarding the potential for intangible exports or transfers of controlled items. These include cross-border transfers of technology that occur during phone discussions, teleconferencing, in-person meetings, email and text transmissions, the provision of services or training, as well as file sharing, server uploads and downloads and cloud access.
Footnotes
1 See The Export Control (Amendment) Regulations 2024; Compilation of national control lists under Article 9(4) of Regulation (EU) 2021/821 of the European Parliament and of the Council of 20 May 2021 setting up a Union regime for the control of exports, brokering, technical assistance, transit and transfer of dual-use items.
2 See the Regulatory Impact Analysis Statement to Order Amending the Export Control List, SOR/2024-112.
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