resources · referenceNDAA Section 5949 covered semiconductors
What Section 5949 of the FY2023 NDAA prohibits, the three named Chinese semiconductor manufacturers it covers, its December 2027 effective date, and the proposed FAR rule's reasonable-inquiry standard.
Section 5949 of the FY2023 NDAA (Pub. L. 117-263, signed December 23, 2022) bars federal agencies from procuring, or contracting with an entity that uses, "covered semiconductor products or services" — designed, produced, or provided by Semiconductor Manufacturing International Corporation (SMIC), ChangXin Memory Technologies (CXMT), Yangtze Memory Technologies Corp (YMTC), or any of their subsidiaries, affiliates, or successors. The prohibition takes effect December 23, 2027, five years after enactment. The FAR Council published its proposed implementing rule on February 17, 2026 (comment period closed April 20, 2026); as of this page's last review, that rule remains proposed and has not been finalized.
What "covered semiconductor products and services" spans
The statute doesn't stop at a bare chip sold on its own. A covered semiconductor product or service is a semiconductor, a semiconductor product, any product that incorporates a covered semiconductor product, or a service that uses one — as long as it traces to SMIC, CXMT, or YMTC. That reach extends the prohibition to electronic products and services built around a covered chip, not only to a component purchased in isolation.
The proposed FAR structure
The FAR Council's proposed rule would implement Section 5949 through a new FAR section and a paired solicitation-provision-and-clause set, the same pattern Section 889 uses today.
Proposed clause numbers
- FAR 40.20X — the new FAR section carrying the prohibition's policy.
- FAR 52.240-XX — the solicitation provision: an offeror's certification.
- FAR 52.240-YY — the contract clause: the prohibition itself.
These are the placeholder numbers used in the February 2026 proposed rule; final numbering may change once the rule is finalized.
The proposed "reasonable inquiry" standard
Under the proposed rule, an offeror would be expected to conduct a reasonable inquiry — before submitting an offer — into whether the electronic products or services it's offering the government include covered semiconductor products or services. That inquiry would draw on information the offeror already has plus information available from external sources: consulting the Department of Commerce's list of covered entities, and checking supplier and manufacturer documentation for the semiconductors inside a given product. The proposed rule would also expect offerors to require supplier certifications and to conduct a closer inquiry when a supplier's answers don't add up.
Effective date and a proposed phase-in
December 23, 2027 is the statutory date the prohibition takes effect. The proposed rule would allow a limited, one-year exception for certain commercial products — delaying the prohibition to December 23, 2028 — where no alternative source is available as of the statutory effective date. This is proposed-rule detail, not yet settled: it could change before a final rule issues.
How this compares to Section 889
Section 5949 follows a structure the FAR Council already built once, for Section 889: name specific foreign entities, prohibit both direct procurement of covered products and a contractor's own unrelated use of them, and implement through a paired certification-and-prohibition clause set. It isn't identical — Section 5949 reaches semiconductors embedded across a broad category of electronic products and services rather than a defined equipment class, and unlike Section 889 (settled law since 2019 and 2020), its implementing rule is still proposed rather than final. A contractor that has already built a Section 889 compliance process is tracking the same kind of supply-chain question Section 5949 will require answered again, for a different component category, on a rule that has not yet taken its final form.
Which companies are covered under Section 5949?
Three named Chinese semiconductor manufacturers: Semiconductor Manufacturing International Corporation (SMIC), ChangXin Memory Technologies (CXMT), and Yangtze Memory Technologies Corp (YMTC) — plus their subsidiaries, affiliates, and successors, and any entity the government determines is owned, controlled by, or connected to the government of a covered foreign country.
When does the prohibition take effect?
December 23, 2027 — five years after the FY2023 NDAA was signed into law on December 23, 2022. As of this page's last review, the FAR Council's implementing rule is still a proposed rule, not final: it was published February 17, 2026, and its public comment period closed April 20, 2026.
What counts as a "covered semiconductor product or service"?
More than a bare chip: the statute reaches a semiconductor, a semiconductor product, any product that incorporates a covered semiconductor product, or a service that uses one — as long as it's designed, produced, or provided by SMIC, CXMT, YMTC, or their affiliates.
Is Section 5949 already being enforced today?
No. The statutory prohibition doesn't take effect until December 23, 2027, and the FAR rule that would operationalize contractor certification (proposed FAR 52.240-XX and 52.240-YY) has not been finalized as of this page's last review. Contractors aren't yet required to certify compliance under it.