Leading semiconductor equipment maker Applied Materials is under U.S. criminal investigation for potentially evading export restrictions on China's top chipmaker SMIC (Semiconductor Manufacturing International Corp), Reuters reported.
Applied Materials is a global leader in providing equipment, services and software to the semiconductor industry.
Applied Materials is being investigated by the Justice Department for sending equipment to SMIC via South Korea without export licences.
The company produced semiconductor equipment in Massachusetts, then repeatedly shipped the equipment from its plant in Gloucester to a subsidiary in South Korea, Reuters reported quoting sources aware of the development.
The company's shares fell more than 7% following the reports that it was under investigation.
The U.S has imposed curbs on shipments of advanced chips and chipmaking equipment to China on the grounds of national security.
SMIC is China’s largest contract chip manufacturer.
Widely regarded as ‘national champion’ for its pivotal role in China’s ambition to turn self-reliant on advanced technologies like chips, SMIC is backed by several state-owned entities.
SMIC depends heavily on American companies for supply of major chip manufacturing equipment.
In October 2022, the U.S imposed export restrictions on shipments of American chip-making tools to China from US companies like Lam Research and Applied Materials on national security grounds.
In September 2020, U.S. Commerce Department imposed a tough licensing regime for suppliers of certain equipments to SMIC because of an “unacceptable risk” that the goods could be used for military purposes.
The Commerce Department said exports to SMIC “may pose an unacceptable risk of diversion to a military end use in the People’s Republic of China.” It said suppliers “must submit an application for an individually-validated license prior to exporting, reexporting or transferring in-country” certain sensitive technologies.
SMIC has repeatedly rejected allegations that it is connected to Chinese defence establishment. It maintains that it offers chips and services “solely” for civilian uses, and that it had “no relationship with the Chinese military.”
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