Applied Materials faces probe in the US for shipping chip equipment to China

Applied Materials, the largest US maker of chipmaking machinery, is facing investigations in the US for violating export restrictions to China.

In a filing to the US Securities and Exchange Commission, the company said it was under investigation by the US Attorney’s Office for the District of Massachusetts for certain shipments to China.

“In August 2022, we received a subpoena from the US Attorney’s Office for the District of Massachusetts requesting information relating to certain China customer shipments. We are cooperating fully with the government,” the company said in the filing.

“This matter is subject to uncertainties, and we cannot predict the outcome, nor reasonably estimate a range of loss or penalties, if any, relating to this matter,” it added.

The probe, according to a Reuters report, is a result of the company allegedly shipping equipment to China’s largest chipmaker Semiconductor Manufacturing International Corporation (SMIC) via South Korea without proper licenses.

The US government contends that the shipments were sent to SMIC from Applied Materials’ factory in Gloucester, England after SMIC was added to a restricted entity list in 2020.

The US first imposed restrictions on exports of chips to China in 2015, extending them in 2021 and twice in 2022. The most recent restrictions were introduced in October.

The new restrictions were added to stop the flow of advanced chips to Chinese data centers that house supercomputers and infrastructure that support AI development.

Included in the new rules is a worldwide licensing requirement for any company that is headquartered in China, Macau, and any destination subject to the US arms embargo, or whose ultimate parent company is headquartered in those countries, according to a statement issued by the US Bureau of Industry and Security (BIS), which operates under the Commerce Department.

Chipmakers and other companies involved in chip manufacturing have been trying to find new ways to supply chips to China without breaking any laws.

Last week, reports emerged that Nvidia was working on producing three new graphics processing units (GPUs) for sale in China.

Despite the new restrictions, Chinese companies continue to access restricted chips through illicit trade.

A recent Reuters report highlighted how advanced Nvidia GPUs such as the A100 can still be procured in China, albeit at a higher price.

Copyright © 2023 IDG Communications, Inc.


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