The U.S. Department of Commerce has ordered Applied Materials to pay a $252 million civil penalty to settle allegations that it illegally exported semiconductor manufacturing equipment to subsidiaries of Semiconductor Manufacturing International Corp (SMIC) after the Chinese foundry had been placed on the U.S. Entity List.
According to the Bureau of Industry and Security (BIS), the violations involved 56 exports or attempted exports of ion implanter systems and related modules between November 2020 and July 2022. The transactions were valued at some $126 million, with the final penalty set at twice that amount, which Commerce described as the statutory maximum.
The charging letter includes excerpts from internal communications, including one exchange dated the day after the is-informed notice, where a senior executive wrote that the company needed to go into “hyper drive” on its Korea operations. BIS also alleges that internal discussions referenced competitive pressure and the risk of losing SMIC business if shipments were delayed pending license determinations.
The Commerce Department’s order includes a three-year suspended denial of export privileges, which can be activated if Applied Materials fails to comply with payment or audit conditions imposed by the order. The settlement also requires multiple external audits and annual compliance certifications.
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