[News] GlobalFoundries Fined by U.S. for Supplying Chips to Affiliate of China’s SMIC

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Ahead of the upcoming presidential election and shortly after the TSMC-Huawei investigation, U.S.-based GlobalFoundries, the world’s third largest foundry company, was fined by the U.S. government for USD 500,000 for unauthorized shipments of chips to SJ Semiconductor, an affiliate of blacklisted Chinese chipmaker SMIC, according to a report by Reuters.

According to a press release by the Bureau of Industry and Security (BIS), GlobalFoundries made 74 shipments, valued at USD17.1 million, to SJ Semiconductor, an SMIC affiliate, without obtaining the required license. “We want U.S. companies to be hypervigilant when sending semiconductor materials to Chinese parties,” said Assistant Secretary for Export Enforcement Matthew S. Axelrod in the press release.

The report by Reuters notes that both SMIC and SJ Semiconductor were placed on the Entity List, which is a trade restriction list, in 2020 due to SMIC’s alleged ties to China’s military-industrial complex. SMIC has denied any wrongdoing, according to Reuters.

According to BIS’ explanation, GlobalFoundries understood that shipments of items subject to the Export Administration Regulations (EAR) to SJS required a BIS license. Although SJS was not a direct customer of GlobalFoundries, it was the designated third-party outsource assembly and test service provider (OSAT) for one of GlobalFoundries’ customers, which meant it should have been screened by GlobalFoundries’ transaction screening system.

Citing a statement by GlobalFoundries, the report by Reuters states that the foundry giant expressed regret for “the inadvertent action, which was the result of a data-entry error made prior to the entity listing,” leading to the unintentional shipment of legacy chips without a license.

It is worth noting that Washington seems to be gradually enhancing its regulatory strength on preventing China from accessing leading-edge semiconductors recently. Just a weeks ago, foundry leader TSMC has been amidst the storm when its chips were found on Huawei’s Ascend910B. The Taiwan-headquartered foundry giant reportedly notified the U.S. afterwards about chips fabricated for a potential Huawei proxy, Sophgo, as well as halting the supply.

According to Reuters, this development also coincides with GlobalFoundries set to receive approximately USD 1.5 billion from the Commerce Department to establish a new semiconductor manufacturing facility in Malta, New York, and to expand its existing operations in Burlington, Vermont.

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(Photo credit: GlobalFoundries)