Section 744.23 of the Export Administration Regulations requires a Bureau of Industry and Security license before you export, reexport, or transfer items headed for four specific end uses in Macau or a Country Group D:5 country (which includes China): building supercomputers, producing advanced-node integrated circuits, developing certain advanced computing items, and manufacturing semiconductors. The export controls in 15 CFR 744.23 sit alongside the Entity List but work differently: 744.23 targets what an item will be used for, not who is buying it. Willful violations can bring up to 20 years in prison and $1 million in fines per violation.1GovInfo. 50 USC 4819 – Penalties
The Four End Uses That Trigger a License
Section 744.23 is an end-use control. The license requirement attaches to the purpose of the transaction, not to a named party on a list. It applies when the destination is Macau or a Country Group D:5 country.2eCFR. 15 CFR 744.23 – Supercomputer, Advanced-Node Integrated Circuits, and Semiconductor Manufacturing Equipment End Use Controls
Supercomputers. A license is required to export specific integrated circuits, computers, and electronic assemblies (classified under ECCNs including 3A001, 4A003, and 4A994, among others) if they will be used to develop, produce, operate, or maintain a supercomputer in a restricted destination.
Advanced-node integrated circuits. Any item subject to the EAR headed for a facility in Macau or Country Group D:5 that produces advanced-node ICs requires a license. Even if you cannot confirm whether a particular fabrication facility makes advanced-node chips, certain electronics-category items still require a license when shipped to an IC production facility in those destinations. The rule also reaches design: exporting computer-aided design software or related technology, knowing it will be used to design an advanced-node chip produced in a restricted destination, requires a license.
Advanced computing items. Specific high-performance chips and computing components need a license when destined for entities headquartered in, or with ultimate parent companies headquartered in, Macau or Country Group D:5. This applies even when the shipment itself is going to a third country.
Semiconductor manufacturing equipment. Equipment used to fabricate semiconductors in restricted destinations triggers its own license requirement under the same section.
What “Knowledge” Means Here
You don’t need actual certainty that an item will end up in a prohibited end use for 744.23 to apply. If the facts available to you point to a restricted end use, or if you have been told and have no reason to doubt it, the license requirement attaches. Willful blindness is not a defense. This is why the red flags described below matter: once one appears, ignoring it does not preserve your innocence, it establishes knowledge.
How Licensing Works Under 744.23
If a transaction is caught by 744.23, you submit a BIS-748P application through BIS’s electronic filing system, identifying the parties, the items, and the intended end use.3eCFR. 15 CFR Part 748, Supplement No. 1 – BIS-748P Multipurpose Application Instructions
The default review policy for 744.23 transactions is a presumption of denial. BIS will reject the application unless the exporter presents compelling evidence that the transaction serves U.S. interests and poses no diversion risk. The interagency End-User Review Committee, chaired by Commerce and including Defense, Energy, and State as voting members, weighs in on contested applications, which is why sensitive cases can take significantly longer than routine ones.4Bureau of Industry and Security. End-User Review Committee (ERC)
Under 15 CFR 750.4, applications must be resolved or referred to the President within 90 calendar days of BIS registration.5eCFR. 15 CFR 750.4 – Procedures for Processing License Applications Straightforward applications to allied destinations may clear in 30 to 60 days. Applications touching China or Macau for advanced computing items are among the slowest to resolve and routinely exceed the 90-day window.
License exceptions, the general authorizations that let exporters skip the individual application process for lower-risk transactions, are almost never available for 744.23 transactions. Build license lead time into your contract timelines from the start.
One boundary worth naming. Section 744.23 is not the Entity List. The Entity List (Supplement No. 4 to Part 744) names specific foreign parties and, since September 2025, extends to affiliates owned 50 percent or more by listed entities.6Federal Register. Expansion of End-User Controls To Cover Affiliates of Certain Listed Entities A transaction can trigger 744.23, the Entity List, both, or neither, and the analysis for each runs separately.
Penalties for a 744.23 Violation
The Export Control Reform Act of 2018 sets the ceilings, and they are steep.
Criminal penalties. A person who willfully violates the EAR faces up to $1 million in fines and up to 20 years in prison per violation.1GovInfo. 50 USC 4819 – Penalties
Civil penalties. BIS can impose a fine of up to $300,000 or twice the value of the underlying transaction per violation, whichever is greater. BIS can also revoke existing licenses and bar the violator from future export activity.7eCFR. 15 CFR 764.3 – Sanctions
Denial of export privileges. A denial order prohibits a person from participating in any export transaction subject to the EAR, and other companies are barred from doing business with a denied person. That effectively cuts a violator off from U.S.-origin technology.8Bureau of Industry and Security. Penalties
Temporary Denial Orders. BIS can issue these on an emergency basis, without advance notice, to stop an imminent or ongoing violation. They last up to 180 days and are renewable. Where there is a pattern of repeated violations, a TDO can be renewed for up to one year.
For individuals convicted of criminal violations under ECRA, the Secretary of Commerce can deny export privileges for up to 10 years from the date of conviction and revoke any active licenses the convicted person holds.
Red Flags You Cannot Ignore
Because 744.23 hinges on knowledge, BIS’s red flag guidance in Supplement No. 3 to Part 732 does real work in your compliance analysis. Once a red flag appears, you either resolve it through further inquiry, refuse the transaction, or submit a license application.9Bureau of Industry and Security. Supplement No. 3 to Part 732 – BIS Know Your Customer Guidance and Red Flags
- The customer’s business doesn’t logically need the item ordered. BIS’s example: a small bakery ordering sophisticated lasers.
- The buyer avoids answering questions about end use or the final user.
- The customer wants to pay cash when financing would be normal for the transaction size.
- The buyer declines routine installation, testing, training, or maintenance services, especially when included in the price.
- The delivery route is abnormal, the destination is out of the way, or a freight forwarder is listed as the final destination.
- The equipment does not match the destination country’s infrastructure, such as 120-volt equipment ordered for a 220-volt country.
Proceeding past an unresolved red flag is treated as willful blindness, which satisfies the knowledge standard for a 744.23 violation.
Recordkeeping and Voluntary Self-Disclosure
Every export transaction subject to the EAR carries a five-year recordkeeping obligation. Under 15 CFR 762.6, you retain all records for five years from the date of export, any known reexport or in-country transfer, or any other termination of the transaction, whichever is latest.10eCFR. 15 CFR 762.6 – Period of Retention Records include purchase orders, shipping documents, end-use certificates, license applications and approvals, customer correspondence about intended use, and your due diligence on parties and red flags. If a government agency requests specific records, you cannot destroy them until you receive written authorization, even after the five-year period expires.
If you discover a possible violation, BIS treats voluntary self-disclosure to the Office of Export Enforcement as a mitigating factor when setting administrative sanctions. A deliberate decision not to disclose a significant apparent violation is an aggravating factor that can increase penalties.11eCFR. 15 CFR 764.5 – Voluntary Self-Disclosure Disclosure does not guarantee lenient treatment and does not prevent referral to the Department of Justice for criminal prosecution, but companies that disclose promptly and cooperate fully tend to receive significantly lower penalties than those caught through enforcement investigations.