By Karen Freifeld and Jasper Ward
WASHINGTON, Feb 11 (Reuters) – The U.S. Department of Commerce on Wednesday announced a $252 million settlement with Applied Materials for illegally exporting chipmaking equipment to China’s top chipmaker Semiconductor Manufacturing International Corp.
In 2023, Reuters exclusively reported that Applied Materials was under U.S. criminal investigation for producing semiconductor equipment in Massachusetts, then shipping the equipment to a subsidiary in South Korea, before sending it on to SMIC in China.
The shipments began, Reuters reported, after the U.S. Commerce Department added SMIC to its “Entity List” in December 2020 over its apparent ties to the Chinese military. The listing restricted exports of goods and technology to the company.
In documents released on Wednesday, the Commerce Department said Applied Materials shipped ion implanters – a critical piece of equipment for chip manufacturing – first to Applied Materials Korea for assembly and then onward to China without applying for and receiving the required export license.
The Santa Clara, California-based semiconductor equipment company and its South Korean subsidiary made illegal shipments on 56 occasions in 2021 and 2022, the department said in a statement. The value of the goods illegally shipped was about $126 million to SMIC, it added.
Applied Materials said it was pleased it had reached a settlement with the Department of Commerce, and that the U.S. Department of Justice and the U.S. Securities and Exchange Commission had notified the company that they had closed their related investigations without action.
The Department of Justice did not immediately respond to a request for comment. The Securities and Exchange Commission declined to comment.
The $252 million penalty – twice the transaction value – is the maximum allowed by law, the department said.
(Reporting by Karen Freifeld and Jasper Ward; Additional reporting by Ismail Shakil; Editing by Muralikumar Anantharaman, Thomas Derpinghaus and Lincoln Feast.)
