GlobalFoundries, an ex-AMD fab, has been fined 500K dollars after admitting that it shipped $17,000,000 in product to a Chinese company linked to the military industrial complex.

Remember GlobalFoundries? AMD's former fab business is still ranked as the third largest semiconductor foundry by revenue in the world, thanks to its manufacturing of chips for smart phones, automotive, aerospace and defense, IoT, and data centers.

The New York Times reports that the company has admitted to shipping $17m worth of products to SJ Semiconductor in China between February 2021 and October 2022. GlobalFoundries has been fined $500,000 by the Bureau of Industry and Security for sending 74 different shipments of Wafers during this time period.

SJ Semiconductor's links to Semiconductor International Corporation (SMIC) led to its inclusion on the "entity lists" of export-regulated companies in December 2020. The US government stated that SMIC's inclusion was "as a consequence of China's MCF doctrine and evidence of SMIC's activities with entities of concern within the Chinese military industrial system."

GlobalFoundries, according to the BIS received a relatively low fine because it voluntarily disclosed and cooperated with the investigation. GlobalFoundries was one of the largest beneficiaries of the CHIPS Act, receiving $1.5 billion earlier this year along with $1.6 billion of federal loans.

Matthew S. Axelrod, Assistant Secretary for Export Controls, said: "We expect U.S. companies be hypervigilant in sending semiconductor materials to Chinese parties."

"When, as in this case, that vigilance fails and semiconductor materials are found in places they shouldn't be, we want companies make voluntary disclosures and remediate the situation, and work with us."

GlobalFoundries may not be the only major manufacturer of semiconductors concerned about possible breaches of the restrictions. Bloomberg reported that TSMC had discovered that some of their chips may have been used in devices made by Huawei. Huawei is a Chinese telecommunications firm that is also listed on the entity list.

TSMC reportedly halted shipments in mid-October after learning that chips manufactured for this entity were being used in Huawei products. Bloomberg's anonymous source claims that the company has informed both the US government and the Taiwanese government of its findings and is "investigating this matter more thoroughly".

While a $500,000 penalty might seem like a small amount for a major manufacturer of semiconductors like GlobalFoundries it appears that the US government is being lenient with the financial penalties to encourage companies who are in violation to come forward.

This seems to be the motto: fess up and pay less. However, it remains to be determined whether this lenient approach will continue into the next administration following the US elections this week.