Ex-AMD fab GlobalFoundries has been fined $500K after admitting it shipped $17,000,000 worth of product to a company associated with China’s military industrial complex

Remember GlobalFoundries? AMD’s ex-fab business is still estimated to be the third biggest semiconductor foundry in the world by revenue, thanks to its manufacture of chips for smart mobile devices, automotive, aerospace and defence, IoT and data center uses.

Now the company has fessed up to shipping $17 million worth of products to Chinese company SJ Semiconductor between February 2021 to October 2022 (via The New York Times). The Bureau of Industry and Security says that GlobalFoundries sent 74 different shipments of wafers over the course of this period, and as a result it would impose a fine of $500,000 for breaching the ongoing US-China chip trade restrictions.

SJ Semiconductor was added to the “entity list” of export regulated companies back in December 2020 for its links to Semiconductor Manufacturing International Corporation (SMIC). At the time, the US government said that SMIC was added “as a result of China’s military-civil fusion (MCF) doctrine and evidence of activities between SMIC and entities of concern in the Chinese military industrial complex.”

According to the BIS, GlobalFoundries voluntarily disclosed the breach of restrictions and co-operated with the investigation, and as a result received a relatively small fine. GlobalFoundries is one of the biggest beneficiaries of the CHIPS act, with $1.5 billion awarded to the company earlier this year, alongside $1.6 billion in federal loans.

Assistant Secretary for Export Enforcement Matthew S. Axelrod said: “We want U.S. companies to be hypervigilant when sending semiconductor materials to Chinese parties

“And when, as here, that vigilance falls short and semiconductor materials have gone where they shouldn’t, we want companies to make voluntary disclosures, remediate, and cooperate with us.”

GlobalFoundries might not be the only major semiconductor manufacturer worried about potential breaches of the restrictions. A recent Bloomberg report claims that TSMC has discovered that some of its chips may have ended up in devices made by Huawei, a Chinese telecommunications company that is also on the entity list.

TSMC is said to have halted shipments to a client in mid-October, after learning that chips fabricated for that entity were making their way into Huawei products. The company has reportedly notified both the US and Taiwanese governments of its findings, and is “investigating the matter more thoroughly”, according to Bloomberg’s unnamed source.

While a $500,000 fine might seem like a drop in the ocean for a major semiconductor manufacturer like GlobalFoundries, it seems like the US government may be going easy on the financial penalties in order to encourage companies that find themselves in breach of the restrictions to come forward.

Fess up, pay less seems to be the ethos here, although whether this lenient stance continues into the next administration after the US elections later this week remains to be seen.