Applied Materials to pay $252 million penalty for selling chipmaking tools to banned Chinese firm — settles over alleged 56 tool exports to chipmaker SMIC following Entity List designation

Source: Tom’s Hardware

Background

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 was placed on the U.S. Entity List.

Details of the Violation

• 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 approximately $126 million; the penalty was set at twice that amount, which the Commerce Department described as the statutory maximum.
• The Bureau of Industry and Security (BIS) cited internal communications, including an exchange dated the day after an “is‑informed” notice, where a senior executive said the company needed to go into “hyper drive” on its Korea operations.
• BIS also alleged that internal discussions referenced competitive pressure and the risk of losing SMIC business if shipments were delayed pending license determinations.

Penalties and Compliance Requirements

• The 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.
• The settlement requires multiple external audits and annual compliance certifications.

References

• Settlement documents (BIS)
• Related coverage on Tom’s Hardware
• Bureau of Industry and Security tag page