Global Foundries fined $500K for unlicensed exports

Bureau of Industry and Security (BIS) imposed a civil penalty of $500,000 against GlobalFoundries U.S. Inc., a semiconductor wafer manufacturing company headquartered in Malta, New York, and its subsidiary, GlobalFoundries U.S. 2 LLC (collectively, “GlobalFoundries”).

The penalty relates to GlobalFoundries’ shipments of semiconductor wafers valued at approximately $17.1 million to SJ Semiconductor (SJS), a company on the BIS Entity List, without the requisite license or other authorization from BIS.

GlobalFoundries voluntarily disclosed the conduct to BIS, cooperated with the investigation by BIS’s Office of Export Enforcement (OEE), and took remedial measures after discovering the conduct at issue, which resulted in a significant reduction in the penalty.

Between February 2021 and October 2022, the firm exported approximately 5,697 silicon wafers, items subject to the EAR and valued at approximately $17,101,679, to SJ Semiconductor ("SJS"), a company listed on the BIS Entity List.3 GlobalFoundries reported those transactions to BIS in voluntary self-disclosure submissions dated April 8, 2023 and November 30, 2023.

“We want U.S. companies to be hypervigilant when sending semiconductor materials to Chinese parties,” said Assistant Secretary for Export Enforcement Matthew S. Axelrod. “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’ voluntary self-disclosure (VSD) and extensive cooperation throughout the investigation resulted in a significant reduction in the monetary penalty, which is the main incentive of our VSD policies,” said OEE Director John Sonderman.

As alleged in the Proposed Charging Letter (PCL), between February 2021 and October 2022, GlobalFoundries violated the Export Administration Regulations (EAR) by sending 74 separate shipments of semiconductor wafers, collectively valued at approximately $17.1 million, to SJS without the requisite license or other authorization from BIS.  

At the time of the violations, GlobalFoundries was aware that shipments to SJS of items subject to the EAR required a BIS license.

While SJS itself was not a GlobalFoundries customer, SJS was the third-party outsource assembly and test service provider (“OSAT”) designated by a GlobalFoundries’ customer and, as a result, should have been screened by GlobalFoundries’ transaction screening system.

Due to a data entry error, however, SJS was not properly identified in GlobalFoundries’ transaction screening system and consequently was not screened.

GlobalFoundries reported in its April 8, 2023 and November 30, 2023 voluntary self-disclosure submissions that, as part of its Export Management and Compliance Program ("EMCP"), all export transactions are screened through GlobalFoundries' Oracle Global Trade Management ("GTM") module in order to assure that no party to any export transaction is included on any of the United States Govemment's lists of prohibited and restricted parties, including the Entity List.

The "sold to" and "ship to" parties for each export transaction are, therefore, automatically screened by the GTM module against the various lists of prohibited and restricted parties.

Due to a data entry error, which occurred prior to the Entity List listing of SJS, when the ultimate buyer was entered into the GlobalFoundries Oracle system, that company, rather than SJS, was identified in that system as the "ship to"

As a result of that data entry error, SJS was not identified in the transaction screening of any transaction involving the shipment of semiconductor wafers and die to the customer, in care of SJS. Notably, SJS' name and the address associated with SJS were identified in the address field in the Oracle system for all of the exports at issue in this letter.

In June 2021 Global foundries applied for, and received, a License from BIS for shipments to SJS on behalf of another customer. 

"Thus, at the same time GlobalFoundries was making shipments to SJS on behalf of Company 2 pursuant to authorization from BIS because it was aware that SJS had been added to the Entity List, it was also making unauthorized exports toSJS on behalf of Company 1, due to the data entry error," the charging letter reads.

SJS is a Semiconductor Manufacturing International Corporation (SMIC)-related party. SMIC and its related entities – including SJS – were added to the BIS Entity List in 2020 as a result of China’s military-civil fusion doctrine and evidence of activities between SMIC and entities of concern in the Chinese military-industrial complex.

The full order, settlement agreement, and PCL are available online here. This case was investigated by OEE’s Boston Field Office.