The chairman of the U.S. House Select Committee on China has asked the Commerce Department to strengthen enforcement of a rule that makes foundries and packaging companies responsible for proving who buys advanced logic chips before production begins.

Rep. John Moolenaar (R-MI) sent an Aug. 6 letter to Under Secretary for Industry and Security Jeffrey Kessler, urging the Bureau of Industry and Security (BIS) to close regulatory ambiguity that could let restricted technology companies buy advanced AI chips through third-party intermediaries or shell companies.

The rule — known as the Foundry Due Diligence Rule — treats advanced logic chips as restricted by default and requires semiconductor fabs to thoroughly vet their customers. It places the burden of proof on chip fabricators and packaging companies to verify buyers before chips are made.

Moolenaar, whose committee leads House oversight of U.S.–China technology competition, laid out two paths for BIS to resolve what he called damaging ambiguity.

Two options for BIS

First, BIS could issue targeted guidance clarifying that the worldwide regional stability license requirement remains in effect for exports from front-end fabricators. Moolenaar pointed to the agency's May 31 guidance covering entities headquartered in country group D:5 and Macau as a template.

"This is not a new action — many in the semiconductor industry already appear to have adopted this interpretation — but it would prevent the semiconductor industry as a whole from adopting the highly damaging alternative interpretation… or using it as cover against any future enforcement actions," he wrote.

The congressman's framing suggests compliance practices vary across the industry. If major foundries already treat advanced logic as presumptively restricted, formal guidance would lock in that behavior and remove a potential defense against enforcement for any that do not.

Alternatively, Moolenaar suggested BIS could publish a rule formally rescinding the AI Diffusion Interim Final Rule to re-establish a separate worldwide license requirement for exports from front-end fabricators. That would be a more comprehensive regulatory action than a clarification memo.

Briefing and diversion investigations

Moolenaar also requested a staff-level briefing by Aug. 31. He wants BIS to detail its plans for clarifying the Foundry Due Diligence Rule and to report on investigations into potential chip diversion caused by non-observance of the rule — including whether BIS has uncovered any confirmed instances of diversion.

The request for information on diversion cases signals congressional interest in whether shell-company procurement channels have actually moved restricted AI chips to blocked buyers. The letter does not cite specific cases.

"Your plans to grow our enforcement capabilities are necessary and welcome," Moolenaar wrote. He added that the Chinese Communist Party "will exploit every gap in our export control regime to steal our lead in the AI race, and BIS enforcement officers are the most important obstacles standing in their way."

Stakes for foundries

The rule matters commercially because it shifts compliance risk onto foundries and outsourced packaging houses, which must know their end customers before committing wafers. For fabs serving global customers through distributors and design houses, customer vetting becomes a condition of doing business in advanced logic rather than a back-office formality.

Moolenaar's letter argues the current ambiguity cuts both ways: compliant firms bear diligence costs while others could adopt a looser reading of the rules as cover. Clarification — whether through guidance modeled on the May 31 D:5 memo or a formal rulemaking replacing the AI Diffusion Interim Final Rule — would set a single standard.

BIS now faces an Aug. 31 deadline to brief committee staff on its clarification plans and its record on diversion investigations. The answer will determine whether foundries face tightened, uniform due-diligence requirements for advanced logic exports — and how aggressively BIS pursues cases where chips reached restricted buyers through intermediaries.