Applied Materials in Hot Water For Gear Sent to China Chipmaker

US authorities are conducting a criminal probe into the country’s biggest chip equipment maker on whether it secretly sent large cargoes to China’s top chipmaker via South Korea.

Applied Materials revealed on Thursday that it received another subpoena from the US Department of Commerce this month, as regulators requested more information on shipments that may have contravened chip curbs imposed by the Biden administration.

The semiconductor equipment maker received an SEC subpoena and two from the US Attorney’s Office for the District of Massachusetts. They follow a subpoena sent by the Commerce Department in November 2023 “requesting information relating to certain China customer shipments.”

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Applied Materials is being investigated for potentially evading export restrictions on Semiconductor Manufacturing International Corporation (SMIC), three people familiar with the matter said in a report in November.

Applied Materials, which supplies chipmaking tools to Samsung Electronics and Taiwan Semiconductor Manufacturing Co, reported that 43% of its total revenue came from China in the second quarter.

Applied Materials is being probed by the Justice Department for sending equipment to SMIC via South Korea without export licences, sources told Reuters in November.

Hundreds of millions of dollars of equipment is involved, one of the people said at the time.

The company repeatedly shipped equipment from its plant in Gloucester, Massachusetts, to a subsidiary in South Korea and then to SMIC, the people familiar with the probe said in November.