US fines GlobalFoundries for shipping chips to blacklisted firm

The US government has imposed a USD 500,000 penalty on contract chipmaker GlobalFoundries for shipping chips without authorization to an affiliate of blacklisted Chinese firm SMIC, according to a report by Reuters.

The Commerce Department said GlobalFoundries sent 74 shipments worth USD 17.1 million to SMIC affiliate SJ Semiconductor without seeking a license. SMIC and SJ Semiconductor have been part of a trade restriction list since 2020.  

Exports to companies that are on the list require a special license that GlobalFoundries did not apply for. 

“We want US companies to be hypervigilant when sending semiconductor materials to Chinese parties,” Assistant Secretary for Export Enforcement Matthew Axelrod said in a statement.  

In a statement, GlobalFoundries, majority owned by Abu Dhabi’s sovereign wealth fund Mubadala Investment Co, said the company regretted “the inadvertent action” and attributed it to a “data-entry error made prior to the entity listing.”

“We strive to, and believe we have, a world-class trade compliance program that sets the standard for the foundry industry,” GlobalFoundries said.

Last week, Democratic Senator Mark Warner criticized the Biden administration for “apparent lax monitoring” of TSMC, according to an earlier Reuters report, following revelations a chip produced by the Taiwanese chipmaker ended up in a product made by China’s Huawei.

“TSMC’s production of chips for Huawei has serious implications for US national security,” Warner, who chairs the Senate Intelligence Committee, said in the letter to President Joe Biden, as per the Reuters report. “I urge you to swiftly take immediate steps to assess and strengthen the efficacy of existing controls.” 

GlobalFoundries, the world’s third-largest contract chipmaker, is slated to receive around USD 1.5 billion from the Commerce Department to build a new semiconductor production facility in New York, and expand existing operations there and in Vermont.