Foreign Talent, Domestic Risk: Deemed Export Issues in Tech Hiring

U.S. companies hiring foreign national talent in technology, artificial intelligence, advanced computing, semiconductor, and HealthTech sectors face a compliance risk that is often overlooked: deemed exports. In today’s regulatory environment—marked by heightened enforcement, geopolitical tensions, and rapid innovation—routine workplace access to controlled technology can trigger U.S. export licensing requirements. This risk exists even when no physical shipment occurs and no information leaves the United States.

For employers sponsoring H-1B, L-1, O-1, TN, F-1 OPT/STEM OPT, or J-1 workers, export compliance is no longer separate from immigration strategy — it is directly intertwined with it.

What Is a Deemed Export?

A deemed export occurs when controlled technology or source code is released to a foreign national within the United States. The U.S. government treats that release as an export to the individual’s country of citizenship.

Deemed exports are primarily regulated under:

• The Export Administration Regulations (EAR), administered by the U.S. Department of Commerce
• The International Traffic in Arms Regulations (ITAR), administered by the U.S. Department of State

Under these frameworks, providing a foreign national employee with access to controlled source code, technical schematics, encryption architecture, semiconductor fabrication processes, or certain AI model training parameters may require prior government authorization.

Why Technology, AI, and HealthTech Companies Face Elevated Risk

Emerging and dual-use technologies are a core focus of U.S. export enforcement policy. Companies operating in the following areas are particularly exposed:

Artificial Intelligence & Machine Learning

Advanced AI model design, training data frameworks with dual-use potential, and algorithmic architectures.

Semiconductor & Advanced Computing

Chip design IP, fabrication process flows, and electronic design automation (EDA) systems.

Encryption & Software

Proprietary source code, cryptographic systems, and cloud-based development environments.

HealthTech & Biotech

Genomic sequencing tools, advanced medical device prototypes, and controlled bio-manufacturing processes.

In many of these sectors, controlled technology may not appear obviously “military” in nature — but dual-use classifications can still apply, potentially triggering licensing obligations.

The Immigration Filing Trigger: H-1B Export Attestation

When filing an H-1B petition, employers must complete an export control certification within Form I-129. The employer must attest that:

• A license is not required to release controlled technology to the worker; or
• A license is required and will be obtained before access is granted.

This export attestation is not a formality — it creates a documented compliance representation to the U.S. government. Treating this step as a routine checkbox without a substantive regulatory analysis can expose the organization to enforcement risk.

Enforcement Trends & Penalties: What Clients Need to Know

Non-compliance with export control regulations carries significant civil, administrative, and criminal consequences. Penalties under the EAR and ITAR — which also govern deemed exports — can be severe:

Statutory Penalty Ranges

• Civil and administrative fines: Up to the greater of roughly $374,000+ per violation (EAR) or over $1.2 million per violation (ITAR).
• Criminal fines: Up to $1 million per violation for corporations or individuals.
• Imprisonment: Up to 20 years for willful violations.
• Denial or loss of export privileges: Can bar an entity or individual from participating in export-related activities at all.

Recent Enforcement Examples

These cases illustrate the scale and seriousness of modern export control enforcement — even in technology sectors:

• Boeing agreed to pay a $51 million administrative penalty for unauthorized transfers of defense technical data to foreign persons and related export control violations, including ITAR-controlled information.
• In a high-profile commerce enforcement action, Seagate Technology agreed to a $300 million penalty — the largest standalone administrative penalty in agency history — for violations involving shipments to a restricted foreign entity.
• Cadence Design Systems agreed in 2025 to pay over $140 million and plead guilty to export violations related to unlawful sales of chip design tools tied to foreign military applications.

These outcomes underscore how export control enforcement now affects companies operating on the front lines of high-tech innovation, including those in AI, semiconductor, advanced software, and adjacent sectors.

Why Immigration + Regulatory Compliance Is Now Crucial

Traditionally, immigration compliance has focused on:

• Visa eligibility
• Labor Condition Applications
• I-9 employment verification

However, in today’s enforcement climate, immigration compliance cannot be siloed from export and national security regulations. Key driving factors include:

1. Interagency Coordination Is Increasing

Immigration, export control, and national security agencies increasingly share data and collaborate on enforcement, meaning an export compliance lapse associated with an immigration filing can trigger cross-agency scrutiny.

2. Sensitive Technologies Are Priority Enforcement Areas

Regulators have made clear that emerging technology sectors — including AI, advanced semiconductors, dual-use software, encryption, and HealthTech systems — are high priorities for export enforcement.

3. Penalties and Reputational Impact Are Material

Severe penalties can include:

• Large-scale fines
• Criminal exposure
• Loss of export privileges
• Suspension of government contracts
• Damage to investor confidence

4. M&A, Investment, and Funding Due Diligence

Investors and acquirers increasingly evaluate export compliance frameworks as part of diligence, particularly for companies in AI and HealthTech. Export compliance gaps may negatively impact valuations or deal timelines.

Practical Steps for Employers

Employers in technology-driven industries should take proactive measures:

1. Classify Technology & Software
   Assess whether technology, source code, algorithms, or technical data fall under EAR or ITAR control.
2. Assess Nationality-Based Risk
   Evaluate licensing obligations based on the citizenship of each foreign national worker.
3. Implement Access Controls
   Restrict access to controlled resources until licensing determinations are made.
4. Integrate Immigration & Export Reviews
   Align immigration counsel with export compliance specialists before visa petitions or onboarding.
5. File for Licenses When Required
   Obtain any required export licenses before allowing access to controlled technologies.

Bottom Line

For companies in AI, HealthTech, semiconductor, and other cutting-edge technology sectors, deemed export compliance is not a peripheral obligation — it is a central regulatory risk tied to both talent mobility and core business operations. Employers must integrate immigration strategy with export control compliance to safeguard innovation, minimize regulatory exposure, and support long-term growth.

This communication is not intended to create or constitute, nor does it create or constitute, an attorney-client or any other legal relationship. No statement in this communication constitutes legal advice nor should any communication herein be construed, relied upon, or interpreted as legal advice. This communication is for general information purposes only regarding recent legal developments of interest, and is not a substitute for legal counsel on any subject matter. No reader should act or refrain from acting on the basis of any information included herein without seeking appropriate legal advice on the particular facts and circumstances affecting that reader. For more information, visit www.buchalter.com.