Chip maker GlobalFoundries will be fined $500,000 in the U.S. for prohibited business with China’s SH Semiconductor. That gets the company off to a good start, according to US authorities.
GlobalFoundries has violated US-imposed trade sanctions by doing business and supplying chips to SJ Semiconductor (SJS). SJS is part of Semiconductor Manufacturing International Corporation (SMIC). That company is blacklisted by the Americans.
That did not stop GlobalFoundries from shipping 74 shipments of chips between February 2021 and October 2022, without having the correct license to do so. The chipmaker would have produced $17.1 million worth of chips for SJS, on about 5,700 wafers.
Accidentally
GlobalFoundries, however, has been transparent about the illegal trade, saying it only worked with SJS because of an internal error. As a result, SJS was not classified as part of SMIC. The erroneous classicication of SJS as an utsource assembly and test (OSAT) service provider also did not set off alarm bells when SJS was explicitly blacklisted.
In a similar scenario with another company, no mistake happened, and GlobalFoundries did obtain the necessary licenses. This further illustrates how the situation with SJS was inadvertent.
Got away well
The penalties for such export violations are potentially high. The U.S. Department of Commerce can impose up to double the value of the transaction as a penalty. So in this case, GlobalFoundries would have faced a maximum fine of $34.2 billion.
However, U.S. authorities believe GlobalFoundries made its mistake unintentionally. Moreover, because the company came forward with it proactively, and cooperated well with the investigation, it is being fined a correspondingly very small amount.