BIS Fines US Chip Firm $4.25M for Illegally Forwarding Product Samples to Huawei
The Bureau of Industry and Security fined a California semiconductor developer and supplier $4.25 million for violating U.S. export controls against Huawei, saying it illegally forwarded more than 1,500 power controllers, smart power stages and related accessories to the Chinese company without a license.
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Alpha and Omega Semiconductor (AOS) Incorporated shipped sample products from the U.S. to the company’s facility in China, which then transferred those products to Huawei, BIS said in an enforcement order and settlement agreement released July 2. The company admitted to 15 violations of the Export Administration Regulations, and in 11 of those violations AOS had “reason to know, including the awareness of a high probability,” that an EAR violation had occurred, was occurring or was about to occur.
BIS said all the items were foreign-designed and foreign-produced, and they were subject to the EAR and U.S. export controls because AOS first exported them from the U.S. The items were classified as EAR99.
AOS was ordered to pay the $4.25 million penalty within 30 days from June 27. If it doesn’t pay the penalty, BIS said it may increase the fine and deny the company’s export privileges for one year.
The order marks the largest stand-alone BIS fine since the agency penalized a Pennsylvania electronics business and its Hong Kong affiliate $5.8 million in August 2024 for illegally shipping controlled technology to China (see 2408150050).
BIS said the violations began after 2018, when AOS and its “digital power business unit” began speaking with Huawei about becoming a potential supplier of digital power products, and it sent Huawei samples as part of a “supplier qualification process.” After BIS added Huawei to the Entity List in May 2019, AOS “halted” its shipments to Huawei as the U.S. company analyzed whether its products would need an export license.
AOS "regularly communicated” with an outside lawyer between May and November 2019 about whether the company could do business with Huawei, including whether it could supply foreign-produced products to Huawei if AOS manufactured, tested and packaged the products in China. During those talks, BIS said AOS didn’t provide the lawyer “with details specific to the completed samples being exported from the United States in connection with Huawei’s supplier qualification process.”
The lawyer informed AOS that the company didn’t need a BIS license for any products assembled in China that “did not contain more than a de minimis amount of controlled U.S.-origin content,” saying they wouldn’t be subject to the EAR. But the lawyer also noted that it had “not been provided with facts specific to the products AOS intended to provide to Huawei and suggested that if AOS was unsure whether the products at issue were subject to the EAR, AOS should immediately halt supply of the items to Huawei pending further analysis of whether they were subject to the EAR,” according to BIS.
The agency said AOS didn’t seek guidance from the lawyer about sending sample products from the U.S. to Huawei for “testing and evaluation purposes.”
The violations occurred after AOS senior executives traveled to China in May 2019 to meet with Huawei, BIS said. The AOS executives later asked AOS employees in the U.S. to export 200 smart power stage samples to an AOS engineer in Shenzhen “for evaluation by Huawei.” AOS exported the samples the same day, which, BIS said, violated the EAR.
The company exported samples to its facility in China on four occasions between May 28, 2019, and June 7, 2019, totaling 600 smart power stages, power controllers and other accessories. BIS said AOS “believes” that AOS employees in China then transferred those items to Huawei.
AOS committed 11 other violations of the EAR after it exported 1,056 more smart power stages, power controllers and accessories to its China facility between mid-June 2019 and mid-November 2019, BIS said. AOS employees in China also transferred those items to Huawei without a license.
BIS said AOS had been given guidance by its outside lawyer in June 2019 that “explicitly defined” the types of activities involving Huawei that were allowed or that would require an export license. That guidance said AOS employees couldn't provide any AOS products to Huawei that “originate from the United States, are being supplied or transferred from the United States, or otherwise have transited or will transit through the United States.”
According to BIS, this guidance also said: “even an item [that was not otherwise subject to the EAR] could not be provided to Huawei if it is being exported or reexported to Huawei from or through the United States.”
AOS didn’t share the guidance with its employees or “take steps to understand whether AOS employees were exporting items from the United States for end use by Huawei,” BIS said. “Based on the above-referenced guidance from outside counsel, AOS knew or had reason to know that -- even though the smart power stages, controllers, and related accessories were foreign-produced -- authorization from BIS was required to export the hardware from the United States to China for use by Huawei.”
AOS didn’t immediately respond to a request for comment.