On June 27, 2025, the U.S. Department of Commerce’s Bureau of Industry and Security (“BIS”) issued a final order resolving administrative enforcement proceedings against Alpha and Omega Semiconductor Incorporated (“AOS”), a publicly traded designer and supplier of power semiconductors headquartered in Sunnyvale, California. The agency concluded that AOS committed fifteen violations of the Export Administration Regulations (“EAR”) between May and November 2019 by exporting a range of EAR99-designated items—namely smart power stages, power controllers, and related accessories—from the United States to Huawei Technologies Co., Ltd. (“Huawei”), a foreign company designated on the Entity List. Of the fifteen discrete violations, BIS determined that eleven were undertaken with actual knowledge, or at minimum, a reason to know, that the conduct in question contravened U.S. export control requirements. The enforcement action culminated in a civil penalty of $4.25 million, payment of which is now a condition for the maintenance or renewal of any export license or privilege granted to AOS.

Huawei was added to BIS’s Entity List on May 16, 2019, following a determination by the multi-agency End-User Review Committee that the company had been involved in activities contrary to the national security or foreign policy interests of the United States. As a result of its designation, a license requirement was imposed for the export, reexport, or in-country transfer of all items subject to the EAR to or involving Huawei and its listed affiliates. This prohibition extended to all U.S.-origin items, items exported from the United States, and certain foreign-produced items incorporating controlled U.S. content. AOS was promptly made aware of these restrictions and had retained outside counsel to assess their implications in relation to the company’s efforts to qualify as a digital power supplier to Huawei through its then-recently established Digital Power business unit based in Austin, Texas. Despite these safeguards, AOS proceeded to export from the United States approximately 1,650 components intended for evaluation and end use by Huawei, failing in the process to obtain the required authorization from BIS.

The facts underlying the enforcement action reveal a troubling disregard for compliance protocols despite early recognition of regulatory risks. Although AOS engaged outside counsel to evaluate whether it could transact with Huawei following the latter’s Entity List designation, those communications focused primarily on whether products manufactured, tested, and packaged in China could be lawfully transferred. Crucially, AOS withheld material facts from its legal advisors, failing to disclose that it was shipping physical samples from the United States to Huawei through its affiliated facilities in China. Outside counsel provided a legal memorandum on or about May 18, 2019, indicating that authorization from BIS would not be required for products of foreign origin lacking de minimis U.S.-origin content. However, the memorandum included an important caveat: if AOS remained uncertain as to whether the specific products were subject to the EAR, it should halt shipments to Huawei until further analysis was conducted. AOS did not follow that recommendation. Instead, just ten days later—on May 28, 2019—AOS executives met with Huawei representatives in China and subsequently authorized the export of 200 smart power stage samples from the United States to an engineer in Shenzhen for Huawei’s evaluation. Additional shipments followed over the next ten days, totaling approximately 600 components, all routed through China for ultimate delivery to Huawei.

The violations worsened in both frequency and severity following a second legal memorandum delivered by outside counsel on or around June 16, 2019. This second round of guidance, issued at AOS’s request, clarified unequivocally that any item “originating from the United States, being supplied or transferred from the United States, or otherwise transiting through the United States” could not be lawfully provided to Huawei without a license—even if the item would not otherwise be subject to the EAR. Nonetheless, AOS failed to disseminate this guidance internally or implement any meaningful controls to prevent further exports. Instead, the company continued shipping hardware from the United States to its Chinese affiliate on at least eleven additional occasions between June 26 and November 22, 2019, including demo boards, evaluation boards, PMBus dongles, and cables—all of which were ultimately transferred to Huawei. BIS concluded that AOS either knew or had ample reason to know that its conduct constituted a violation of U.S. law, citing the company’s ongoing legal consultations and receipt of formal guidance that expressly prohibited the activities in question.

Each of the fifteen charged violations corresponded to a specific export transaction detailed in the agency’s Schedule of Violations, with the first four charges predicated on unauthorized exports in violation of 15 C.F.R. § 764.2(a), and the remaining eleven grounded in knowledge-based violations of 15 C.F.R. § 764.2(e). The civil penalty of $4.25 million imposed under the terms of the settlement agreement reflects the significant compliance failure at issue, though BIS did not impose a denial of export privileges in light of AOS’s cooperation and agreement to resolve the matter administratively. Nonetheless, the penalty’s enforceability is augmented by a provision making timely payment a condition of the continued validity of any export licenses or related privileges held by the company. Should AOS fail to remit the penalty in full within 30 days of the order, BIS reserves the right to impose a one-year denial of export privileges under the EAR.

This enforcement action reinforces the imperative that exporters—particularly those operating in highly technical, globally integrated industries—must implement and enforce strong internal compliance protocols that extend beyond surface-level consultation with legal counsel. While AOS sought advice regarding its ability to transact with Huawei, it failed to disclose critical details and disregarded explicit warnings concerning the export of items from the United States. The company’s continued shipments, despite possessing sufficient knowledge to trigger a duty to halt and seek BIS authorization, reflect a breakdown in the internal controls necessary to ensure EAR compliance. That the items were classified as EAR99 did not absolve AOS of its regulatory obligations once a listed end-user was involved. BIS’s decision to impose a $4.25 million civil penalty—absent any evidence of willful misconduct—demonstrates that even inadvertent or negligent violations will yield serious consequences when exporters fail to observe clear legal boundaries imposed by Entity List restrictions.