US fines GlobalFoundries for shipping chips to sanctioned Chinese firm

3:57 pm Friday, November 01st, 2024

By Alexandra Alper

(Reuters) -The U.S. said on Friday it imposed a $500,000 penalty on New York-based GlobalFoundries , the world’s third-largest contract chipmaker, for shipping chips without authorization to an affiliate of blacklisted Chinese chipmaker SMIC.

In a statement, the Commerce Department said GlobalFoundries sent 74 shipments worth $17.1 million to SJ Semiconductor, an affiliate of SMIC, without seeking a license. Both SMIC and SJ Semiconductor were added to a trade restriction list in 2020 over SMIC’s alleged ties to the Chinese military-industrial complex. SMIC has denied wrongdoing.

Exports to firms on the list require a difficult-to-obtain license, which GlobalFoundries did not apply for, the department said.

“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.

SMIC, SJ Semiconductor and GlobalFoundries, which voluntarily disclosed the violation and cooperated extensively with the investigation, according to the Commerce Department, did not immediately respond to requests for comment.

U.S. lawmakers have expressed concern that the Commerce Department, which oversees export policy, may not be aggressively enforcing its regulations as Washington seeks to stop China receiving sensitive technology that could bolster its military.

Influential Democratic Senator Mark Warner criticized the Biden administration for “apparent lax monitoring” of TSMC following revelations a chip produced by the Taiwanese chipmaker ended up in a product made by China’s heavily sanctioned Huawei, Reuters reported on Thursday.

GlobalFoundries, majority owned by Abu Dhabi’s sovereign wealth fund Mubadala Investment Co, is slated to receive around $1.5 billion from the Commerce Department to build a new semiconductor production facility in Malta, New York, and expand existing operations there and in Burlington, Vermont.

The grant is part of a U.S. program to encourage chipmakers to expand production in the United States.

(Reporting by Jasper Ward, David Ljunggren and Alexandra Alper; Editing by David Gregorio and Cynthia Osterman)