Chipmaker GlobalFoundries has been fined $500,000 in the US for prohibited deals with China’s SH Semiconductor. According to American authorities, this means that the company is doing well.

GlobalFoundries violated U.S.-imposed trade sanctions by conducting business and supplying chips to SJ Semiconductor (SJS). SJS is part of Semiconductor Manufacturing International Corporation (SMIC). This company is on the American blacklist.

However, this did not stop GlobalFoundries from sending 74 shipments of chips between February 2021 and October 2022 without having the appropriate license. The chipmaker is said to have produced chips worth $17.1 million for SJS on around 5,700 wafers.

Inadvertently

However, GlobalFoundries has been transparent about the illegal trade, saying that it only worked with SJS due to an internal error. As a result, SJS was not classified as part of SMIC. Due to the misclassification of SJS as an Outsource Assembly and Test (OSAT) service provider Even when SJS was specifically blacklisted, alarm bells did not ring.

In a similar scenario with another company, no error occurred and GlobalFoundries obtained the necessary licenses. This further illustrates how the situation with SJS arose unintentionally.

I got away well

The penalties for such export violations are potentially high. The US Department of Commerce can impose penalties of up to twice the transaction value. In this case, GlobalFoundries would have faced a maximum fine of $34.2 billion.

However, US authorities believe that GlobalFoundries made its mistake unintentionally. In addition, a very small fine was imposed because the company was proactive and cooperated well with the investigation.