Applied Materials under US criminal probe for shipments to China's SMIC

U.S. semiconductor equipment maker Applied Materials is under criminal investigation for potentially evading export restrictions on China's top chipmaker SMIC. Shares in Applied Materials fell 7.3% after the news. Applied Materials said it is cooperating with the government and remains committed to compliance and global laws.

Semiconductor equipment maker Applied Materials is under U.S. criminal investigation for potentially evading export restrictions on China's top chipmaker SMIC, according to three people familiar with the matter.

The largest U.S. semiconductor equipment maker is being probed by the Justice Department for sending equipment to SMIC via South Korea without export licenses, the sources said. Hundreds of millions of dollars of equipment is involved, one of the people said. Reuters is reporting details of the probe for the first time.

Shares in Applied Materials fell 7.3% after the news and the company reported quarterly results.

The U.S. has restricted shipments of advanced chips and chipmaking equipment to China for national security, and the Justice and Commerce departments launched a task force earlier this year to investigate and prosecute criminal violations of export controls. The rules are aimed at stemming the flow of U.S. technology that could be used to bolster China's military and intelligence capabilities.

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Santa Clara, California-based Applied Materials said Thursday it first disclosed in October 2022 that it had received a subpoena from the U.S. Attorney's Office in Massachusetts for information on certain China customer shipments.

"The company is cooperating with the government and remains committed to compliance and global laws, including export controls and trade regulations," it said in a statement.