By Alexandra Alper, Jasper Ward and David Ljunggren
(Reuters) -The U.S. on Friday imposed a $500,000 fine on New York-based GlobalFoundries (NASDAQ:), the world’s third-largest contract chipmaker, for sending chips without permission to a subsidiary of blacklisted Chinese chip maker SMIC.
In a statement, the Commerce Department said GlobalFoundries sent 74 shipments worth $17.1 million to SJ Semiconductor, a subsidiary of SMIC, without applying for a license. Both SMIC and SJ Semiconductor were added to a trade restricted list known as the Entity List in 2020 due to SMIC’s alleged ties to the Chinese military-industrial complex. SMIC has denied wrongdoing.
Exports to companies on the list require a difficult-to-obtain permit, which GlobalFoundries has not applied for, the ministry said.
“We want American companies to be hyper-vigilant when shipping semiconductor materials to Chinese parties,” Assistant Secretary for Export Enforcement Matthew Axelrod said in a statement highlighting GlobalFoundries’ voluntary disclosure of the breach and extensive cooperation with the Commerce Department.
SMIC and SJ Semiconductor did not immediately respond to requests for comment. In a statement, GlobalFoundries said the company regrets “the unintended action, due to a data entry error prior to entity listing,” that caused it to accidentally ship the older chips without a license. “We are committed to, and believe we have, a world-class trade compliance program that sets the standard for the foundry industry,” it added.
U.S. lawmakers have grown increasingly concerned that the Commerce Department, which oversees export policy, may not aggressively enforce its regulations as Washington tries to prevent China from receiving sensitive U.S. technology that could help its military can strengthen.
Influential Democratic Senator Mark Warner criticized the Biden administration for “apparently lax monitoring” of TSMC following revelations that a chip produced by the Taiwanese chipmaker ended up in a product made by China’s heavily sanctioned Huawei, Reuters reported on Thursday.
It also comes as GlobalFoundries, majority owned by Abu Dhabi’s sovereign wealth fund Mubadala Investment Co, is expected to receive around $1.5 billion from the Commerce Department to build a new semiconductor manufacturing facility in Malta, New York , and expand existing operations there and in Burlington. (NYSE :), Vermont.
The subsidy is part of a U.S. program to encourage chip makers to expand production in the United States.
