Research note · Supplier provenance
The Rule That Decides Whether Your Customers Can Buy From You
This law doesn't ask your customer if your parts are clean. It asks if they can prove they checked, and that answer depends entirely on you.
The Law
In December 2022, Congress passed the James M. Inhofe National Defense Authorization Act. Buried inside it: Section 5949.
What It Means
Section 5949 bans federal agencies from buying anything containing a semiconductor from three restricted manufacturers:
- Semiconductor Manufacturing International Corporation (SMIC)
- ChangXin Memory Technologies (CXMT)
- Yangtze Memory Technologies Corporation (YMTC)
Your customers, the manufacturers and integrators who buy from you, have to certify this to the government. They can only do that if you can tell them where your parts actually come from.
The Catch
It's not about the part number. It's about where the actual die was fabricated, and most suppliers can't answer that yet. Packaging, testing, and fabrication are often three different companies in three different countries, and you may be several of those steps removed from the actual fab yourself.
Why This Is Hard
You may buy die, wafers, or finished components from a foundry or distributor yourself, and not fully control where they source from either. Your own upstream suppliers switch fabs, get acquired, and re-source under shortage pressure, often without telling you. And you don't have one customer asking this question, you have several, each wanting it in a different format.
The Timeline
- February 17, 2026: the FAR Council published the rule that starts enforcing this.
- December 23, 2027: enforcement begins, about fifteen months from now, and your customers are already tightening their supplier lists ahead of it.
Getting It Wrong
No answer means no deal, and you usually don't find out why. Some contracts pass real liability down to you if your answer turns out to be wrong, fines, indemnification, even being cut from a customer's qualified-supplier list.
Not a One-Time Fix
Your own suppliers change, your customers keep asking, and an answer given once goes stale fast. This has to be maintained continuously, account by account.
We're Launching Provenance Tracker
That's why we're launching Provenance Tracker. It maps your own component sourcing tier by tier, and gives you one standardized answer you can reuse across every customer who asks.