Chipmaker Fined for Sending Products To Chinese Company

The U.S. has fined a major American chipmaker for trading with an entity tied to the Chinese military, prompting further scrutiny on technology transfers.

At a Glance

The Biden administration fined GlobalFoundries $500,000 for unauthorized exports.
GlobalFoundries unknowingly shipped $17 million worth of wafers to SJ Semiconductor.
SJ Semiconductor is linked to China’s military and has been on the U.S. entity list since 2020.
An internal data error caused SJ Semiconductor to bypass export controls.
GlobalFoundries, recipient of the CHIPS Act funds, voluntarily reported the error, reducing penalties.

GlobalFoundries Faces Penalty for Export Violations

GlobalFoundries has been fined $500,000 by the Biden administration. They exported semiconductor products to SJ Semiconductor, a Chinese company on a U.S. restricted trade list. This came after shipping over $17 million in wafers, which GlobalFoundries voluntarily disclosed. Data errors in their screening system led to these transactions.

GlobalFoundries played an active role in reporting the mistake, resulting in a reduced punishment. With a global presence in 14 locations and catering to over 200 clients, GlobalFoundries is monumental in the semiconductor industry. It’s a major beneficiary of the CHIPS and Science Act, collecting $3.1 billion in federal support—important for national technology infrastructure.

US fines GlobalFoundries for shipping chips to sanctioned Chinese firm https://t.co/vj5KH8MAY5 pic.twitter.com/5SpFpqNx7E

— Reuters (@Reuters) November 1, 2024

Repercussions and Regulations

The nature of this incident underscores the necessity for American firms to seek special licenses when trading with entities on the restricted list. SJ Semiconductor became part of this list due to affiliations with the Semiconductor Manufacturing International Corporation (SMIC). Such regulations play a pivotal role in safeguarding U.S. technology from unauthorized use by foreign military forces.

The U.S. administration’s penalty emphasizes its resolve to block China’s access to advanced technology and semiconductors, crucial for their military expansions. With this objective, the CHIPS and Science Act comes in as a significant measure to reinforce domestic chip production, ensuring security and reduced reliance on foreign technology.

The Future of Semiconductor Security

The U.S. announcement on November 1, allocating $825 million for new R&D centers, reinforces this ongoing battle. These centers, positioned in Albany and Sunnyvale, aim to bolster U.S. capabilities in chip design and production. The Albany initiative will concentrate on the Extreme Ultraviolet (EUV) Accelerator project, crucial for manufacturing cutting-edge chips, vital for defense technologies.

The Dutch company ASML remains the solitary manufacturer of EUV systems crucial for advanced chip production. Enhancements in this arena are indicative of broader efforts to enhance U.S. prowess in the semiconductor sector. By investing in these technologies, the U.S. aims to secure its technological independence and safeguard against global security threats.