Four rules, four tests, one bill of materials
Section 5949 asks who designed, produced or provided a chip. 10 U.S.C. 4873 asks where a board was fabricated and what it does. DFARS 252.225-7052 asks where a magnet's material was mined, refined, separated and melted. UFLPA asks whether an input traces to Xinjiang or a listed entity. An item can pass the Section 805 entity screen and still fail any of them.
The rules sit at different stages. The magnets clause is final and already in contracts, with its upstream-origin test starting 1 January 2027. The semiconductor rule is proposed, with the prohibition effective 23 December 2027. The circuit board prohibition applies only after a final DFARS rule, and as of October 7, 2026 that rule was still being drafted. A plan built around one deadline misjudges all three.
What the paper answers
- Which chips does Section 5949 reach, and what exceptions and waivers does the proposed rule carry?
- When is a printed circuit board covered, and when does the prohibition actually apply?
- How does the magnets and specialty-materials clause change on 1 January 2027?
- Where has the statute moved ahead of the clause on molybdenum, gallium, germanium and recycled material?
- What must an importer show to overcome the UFLPA presumption?
- Which relief route applies to which regime, and who has to approve it?
A look inside
The paper's reference table. Each authority has its own covered items, covered source, date and relief.
| Authority | Covered items | Covered source | Effective | Mechanism / waiver |
|---|---|---|---|---|
| Section 5949 (FY23 NDAA) | Products or services containing covered Chinese semiconductors; electronics in critical systems | SMIC, CXMT, YMTC, their subsidiaries, affiliates and successors, and any entity later designated | 23 Dec 2027 | As proposed: products, noncommercial services, and commercial IT and telecommunications services, incl. COTS products and micro-purchases; proposed exceptions and waivers; no-alternative-source exception until 23 Dec 2028; FAR proposed rule 17 Feb 2026 |
| FY2021 NDAA Sec. 841, as amended by FY2022 NDAA Sec. 851 (10 U.S.C. 4873) | Bare or assembled boards of a specified type (10 U.S.C. 4873(c)(6)) that either perform a mission-critical function in a noncommercial product or service, or are a component of a defense security system or of an information-transmitting or -storing system the Secretary identifies as national security sensitive in the contract | Fabricated in China, Russia, Iran, or North Korea | 1 Jan 2027 by statute; applies only to contracts entered into after a final DFARS rule | DOW, at or above the micro-purchase threshold; statutory waiver; proposed rule in drafting after the 2 Jul 2026 advance notice (DFARS Case 2022-D011) |
| Specialty materials / magnets (DFARS; 10 U.S.C. 4872) | SmCo and NdFeB magnets; tantalum metals and alloys; tungsten powder and heavy alloy. Statute also lists molybdenum (not yet in the clause) and adds gallium and germanium effective 18 Dec 2027 | Mined, refined, separated, melted, or produced in China, Russia, Iran, or North Korea; also an end item manufactured there that contains covered material | Melt-or-produce test in force now; expanded test from 1 Jan 2027 | DOW; conditional exceptions for certain COTS items, electronic devices, and U.S.-processed recycled NdFeB magnets; nonavailability determination; separate statutory waivers |
| UFLPA (import; 19 U.S.C. 1307) | Any goods made wholly or in part in Xinjiang or by a UFLPA-listed entity | PRC (Xinjiang) or listed entity | In force since 21 Jun 2022 (continuous) | CBP rebuttable presumption; import barred unless out of scope or the statutory exception is met |
Table 1 from the paper. The 2027 China supply-chain cliff (reference numbers omitted).
What's inside
- A side-by-side table of the four authorities: covered items, covered sources, effective dates and relief.
- A section on each regime covering scope, conditional exceptions and the Government approval each relief route requires.
- How the 2027 rules differ from the Section 805 and 1260H entity screen, and why one item can clear one and fail the other.
- Seven recommendations for decomposing the bill of materials, establishing provenance, re-sourcing and tracking the open rulemakings.
About the author
Chris A. Grable is founder and CEO of Up Doppler Consulting LLC, a Veteran-Owned Small Business in Leonardtown, Maryland. A Navy veteran with more than 45 years in DOW operations and acquisition, he retired from federal service as Senior Experiment Designer at the Naval Air Warfare Center Aircraft Division. UDC helps technology companies find, shape and win DOW work.
Who it's for
- Defense hardware and electronics manufacturers with Chinese content anywhere in the bill of materials.
- Makers of motors, actuators and other products that use rare-earth magnets.
- Contracts and compliance leads who sign representations and write subcontract flow-downs.
- Primes and integrators screening the sources behind their suppliers.
Public sources
These public references support the paper. Some repositories require navigation or an account to reach the specific document.
- FY2023 National Defense Authorization Act, Pub. L. 117-263, Section 5949 (prohibition on certain semiconductor products and services)
- FAR Council proposed rule implementing Section 5949, 91 FR 7223, 17 February 2026
- 10 U.S.C. 4873 (covered printed circuit boards; formerly 10 U.S.C. 2533d)
- DFARS Case 2022-D011, advance notice of proposed rulemaking, 91 FR 40508, 2 July 2026
- DFARS 252.225-7052, Restriction on the Acquisition of Certain Magnets, Tantalum, and Tungsten (MAY 2024)
- 10 U.S.C. 4872 (covered materials; nonavailability waiver at (c)(1); national-security waiver at (e))
- Uyghur Forced Labor Prevention Act, Pub. L. 117-78, Section 3
- UFLPA Entity List additions (43 entities), 91 FR 48913, 3 August 2026
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Questions
- How is this different from Navigating Section 805?
- Section 805 turns on whether a counterparty is on, or controlled by an entity on, the 1260H list. The rules in this paper turn on who made a chip and where a board or material was made, so they reach items Section 805 does not. The two papers are companions, and UDC recommends running both screens in one pass.
- Are the semiconductor and circuit board rules final?
- No. As of October 7, 2026 the Section 5949 FAR rule was proposed and the circuit board rule was in proposed-rule drafting. The magnets clause is final. The paper notes what to confirm when each rule issues.
- Is this legal advice?
- No. It is advisory. Confirm final clause text and consult counsel on the specific facts.
- I already subscribe to Closing Rate. Do I need to buy it?
- No. Paid Closing Rate subscribers get the full PDF with the Closing Rate article.
- Can I talk to someone about a specific opportunity?
- Yes. Contact Up Doppler Consulting.