§ 850.217 Notifiable transaction.

The term notifiable transaction means a covered transaction (that is not a prohibited transaction) in which the relevant covered foreign person or, with respect to a covered transaction described in § 850.210(a)(5), the relevant joint venture: (a) Designs any integrated circuit that is not described in § 850.224(c); (b) Fabricates any integrated circuit that is not described in § 850.224(d); (c) Packages any integrated circuit that is not described in § 850.224(e); (d) Develops any AI system that is not described in § 850.224(j) or (k) and that is: (1) Designed to be used for any military end use (e.g., for weapons targeting, target identification, combat simulation, military vehicle or weapons control, military decision-making, weapons design (including chemical, biological, radiological, or nuclear weapons), or combat system logistics and maintenance); or government intelligence or mass-surveillance end use (e.g., through incorporation of features such as mining text, audio, or video; image recognition; location tracking; or surreptitious listening devices); (2) Intended by the covered foreign person or joint venture to be used for any of the following: (i) Cybersecurity applications; (ii) Digital forensics tools; (iii) Penetration testing tools; or (iv) The control of robotic systems; or (3) Trained using a quantity of computing power greater than 10^23 computational operations (e.g., integer or floating-point operations). Consistent with section 3 of the Order, the Secretary, in consultation with the Secretary of Commerce, and, as appropriate, the heads of other relevant agencies, shall periodically assess whether the criterion described in paragraph (d)(3) of this section is serving to effectively address threats to the national security of the United States described in the Order and make updates, as appropriate, through public notice. Consistent with the definition for develop at § 850.211, to develop an AI system defined at § 850.202(b) in a manner subject to these notification requirements, the relevant covered foreign person or joint venture must engage in the activities enumerated in § 850.211, such as design or substantive modification, with respect to the third-party AI model or machine-based system that is being used by a data system, software, hardware, application, tool, or utility to operate in whole or in part. For purposes of paragraph (d) of this section, a person customizing, configuring, or fine-tuning a third-party AI model or machine-based system strictly for its own internal, non-commercial use (e.g., not for sale or licensing) would not implicate the notification requirements for related transactions solely on that basis unless the person's internal, non-commercial use is for government intelligence, mass-surveillance, or military end use, or for digital forensics tools, penetration testing tools, or the control of robotic systems.