A major U.S. chipmaker just got slapped with a $500,000 fine for accidentally aiding China’s military. You won’t believe how it happened.
At a Glance
- GlobalFoundries fined $500,000 for shipping $17.1 million in chips to firm linked to the Chinese
- 74 different shipments made due to error with screening data and not direct sales
- U.S. seeks to prevent military advancements by CCP by tightening semiconductor exports
- $825M committed by Biden administration toward research and development
Honest Mistake Leads to Huge Fine
An honest mistake has become very expensive for a U.S.-based tech firm. GlobalFoundries, a chip manufacturer based in New York, received a $500,000 fine for shipping $17.1 million worth of semiconductors to a company in China that has ties to the CCP military. All of this was a mistake, though, and not purposeful direct sales.
GlobalFoundries has more than 200 customers around the globe, but this sanctioned Chinese firm isn’t one of them. An error in data screening resulted in these shipments being made. A simply mistyping mistake in a spreadsheet is now costing the company loads of money.
America Has a Tech Dilemma
The U.S. has taken a hard-line stance against sending certain technologies to Chinese companies, especially those who are linked to the Communist Party.
As Matthew Axelrod, the assistant secretary for export enforcement, explained:
“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.”
Even if these companies are “hypervigilant,” up front and turn themselves in, though, it seems they are still going to pay a hefty price — even for honest mistakes. It goes to show just how serious America is to fight back China when it comes to tech wars.
Biden Betting on Out-Chipping China
The U.S. has thrown a lot of money at the chip problem with China. It has committed $825 million for research and development into semiconductors through what’s known as the CHIPS Act. It’s a lot of money, and it’s being used to try to catch up to China in a sector where America probably should never have fallen behind.
Gina Raimondo, the secretary of commerce, commented on the CHIPS Act by saying:
“The research and development component of the CHIPS and Science Act is fundamental to our long-term national security and ensuring the U.S. remains the most technologically competitive place on earth.”
The U.S. has spent years shipping manufacturing to other countries, which led to the tech edge the country used to have going elsewhere. So, it’s about time we’re doing something to try to “remain” competitive, as Raimondo says.
The Bottom Line
American companies that make honest mistakes are now facing massive fines, while they’re also being asked to rat themselves out. Doesn’t seem like a recipe for success. Not only that, but the Biden administration is spending billions to try to “catch up” to a country we should’ve never fallen behind.