Due Diligence in China’s Semiconductor Value Chain-Lessons from the GlobalFoundries Enforcement Case

On 1 November 2024, the Bureau of Industry and Security (“BIS”) of the U.S. Department of Commerce issued a final order against GlobalFoundries U.S. 2 LLC and GlobalFoundries U.S. Inc. (collectively, "GlobalFoundries") and the related settlement agreement.  As part of the settlement agreement, GlobalFoundries admitted to violating the Export Administration Regulations (“EAR”) when it exported wafers subject to the EAR to a Chinese company on the Entity List between February 2021 and October 2022 due to a clerical error in recordkeeping.  This case does not involve the more recent BIS rules targeting China’s semiconductor announced in October 2022 and October 2023, but it carries important lessons for those involved in China’s semiconductor value chain.