Applied Materials Agrees to $252M Penalty for Exports to SMIC

The U.S. Department of Commerce announced on Wednesday that Applied Materials Inc., a major American supplier of semiconductor manufacturing equipment, and its South Korean subsidiary have agreed to pay a $252 million civil penalty to resolve allegations of illegal exports to China's largest chip foundry, Semiconductor Manufacturing International Corp. (SMIC). The violations involved shipments of ion implanter systems, critical tools for doping silicon wafers in chip production, from November 2020 to July 2022.

According to the Commerce Department's Bureau of Industry and Security (BIS), the company conducted 56 exports or attempted exports valued at approximately $126 million without obtaining required licenses. Ion implanters, while not as advanced as extreme ultraviolet lithography machines, play an essential role in transistor formation across various chip process nodes. The penalty, set at twice the transaction value, represents the statutory maximum and ranks as the second-highest export control fine ever imposed by BIS.

The exports targeted SMIC subsidiaries after the Chinese firm was added to the U.S. Entity List in December 2020 over concerns about potential military...