Chip equipment giant under investigation

U. S. regulators are investigating possible circumvention of sanctions on applied materials.

On November 17, Reuters quoted three people familiar with the situation as saying that the semiconductor equipment maker applied materials was under criminal investigation by the United States because the company did not have an export license, circumventing American restrictions, it has exported hundreds of millions of dollars' worth of semiconductor equipment to Semiconductor Manufacturing International Corporation through its Korean subsidiaries.

  Image Source: application materials

In October 2022, the United States issued a semiconductor export control policy to China, restricting the export of high-performance computing chips and advanced semiconductor manufacturing equipment to China. On February 16, the U.S. departments of Justice and Commerce 2023 a task force to investigate and prosecute export control violations.

The new mechanism, called the Disruptive Technology Strike Force (DTSF) , the Department of Justice Is United States Department of Commerce by the Assistant Secretary of National Security and the Assistant Secretary of the Department of Bureau of Industry and Security, the Federal Bureau of Investigation and the Department of Homeland Security, and 14 federal prosecutor's offices in 12 metropolitan areas of the United States to jointly investigate and prosecute alleged violations of United States export control laws.

Image: United States Department of Commerce

According to people familiar with the Northeastern United States, the materials are used to make semiconductor equipment at a plant in Gloucester, Massachusetts, and then repeatedly ship the equipment from the Gloucester plant to a South Korean subsidiary, the equipment was then shipped from Korea to smic.

The United States Department of Commerce put smic on an “Entity list” in December 2020 that restricted exports of goods and technology to the company, according to two people familiar with the matter. After that, in 2021 and 2022, applied materials appealed SMIC's shipments through its Korean subsidiary.

The DOJ declined to comment on the news, and the application declined to discuss details of the case.

Applied Materials said on Thursday that it first disclosed in October 2022 that it had received subpoenas from the US Attorney's office in Massachusetts asking for information about shipments to certain Chinese customers.

In its latest statement, applied said: “The company is working with the government and remains committed to complying with global laws, including export controls and trade regulations.”

“We will not confirm or deny the investigation,” the U.S. Attorney's office in Boston said

Prosecutors from the office's National Security Division are handling the ongoing investigation, two sources said.

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