The Department of Commerce fined chipmaker GlobalFoundries $500,000 for violating federal export restrictions, according to a Nov. 1 press release.
The agency’s Bureau of Industry and Security found that GlobalFoundries shipped $17.1 million worth of semiconductor wafers to SJ Semiconductor, a China-based company on the U.S. entity list, a federal lineup of organizations subject to restrictions due to national security concerns. GlobalFoundries failed to get the necessary BIS licenses to legally ship goods to the company.
BIS stated the chipmaker violated export regulations by allegedly sending 74 separate shipments to SJ Semiconductor between February 2021 and October 2022 without U.S. authorization, according to the release.
GlobalFoundries voluntarily disclosed the transactions to BIS on April 8, 2023, and Nov. 30, 2023, and cooperated with the investigation, according to the citation. The company will not appeal the decision, a company spokesperson said in an email to Manufacturing Dive.
SJ Semiconductor is an affiliate of China-based Semiconductor Manufacturing International Corp. The BIS placed the two companies and their other related affiliates on the entity list in December 2020 due to the Chinese Communist Party’s national strategy to strengthen its military by 2049, according to the press release.
The U.S. enacted additional export controls on chips shipped to China in October 2022 in an effort to curtail the technology’s use by the Chinese military.
“We want U.S. companies to be hypervigilant when sending semiconductor materials to Chinese parties,” Assistant Secretary for Export Enforcement Matthew Axelrod said in a statement. “And when, as here, that vigilance falls short and semiconductor materials have gone where they shouldn’t, we want companies to make voluntary disclosures, remediate, and cooperate with us.”
GlobalFoundries began manufacturing semiconductor wafers and die for an unnamed China-based company in 2019. In February 2020, the company notified GlobalFoundries that the wafers and die were being shipped to SJ Semiconductor.
At the time of the violations, SJ Semiconductor was not a direct GlobalFoundries customer, but a third-party outsourced assembly and test service provider. The China-based company was not subject to the entity list at the time, but should have been subject to GlobalFoundries’ transaction screening system given its designation as a third-party customer, according to BIS.
Due to a data entry error, however, the company did not get properly screened.
GlobalFoundries has 30 days to pay the penalty, according to the citation. The company’s voluntary disclosure and cooperation throughout the agency’s investigation resulted in a significant reduction in the monetary penalty, BIS’s Office of Export Enforcement Director John Sonderman said in the release.
“We regret the inadvertent action, due to a data-entry error made prior to the entity listing that caused GF to accidentally ship legacy, mature node, products without a license,” the GlobalFoundries spokesperson said in a statement. “We have a strong relationship with the Department of Commerce and the U.S. government, and a history of exemplary compliance, and those were some of the factors taken into consideration, as this error was assessed.”
