Applied Materials, the largest producer of wafer fab equipment in the U.S., said in a filing with the U.S. Security and Exchange Commission that it had received multiple subpoenas from various government agencies over shipments of its products to certain customers in China. At least one subpoena could be related to shipments to SMIC, a major China-based foundry that is blacklisted by the U.S. government.
"We have received multiple subpoenas from government authorities requesting information relating to certain China customer shipments," the filing by Applied Materials reads. "In August 2022 and February 2024, we received subpoenas from the U.S. Attorney’s Office for the District of Massachusetts; in November 2023, we received a subpoena from the U.S. Commerce Department’s Bureau of Industry and Security; and in February 2024, we received a subpoena from the U.S. Securities and Exchange Commission. […] We are cooperating fully with the government in these matters. These matters are subject to uncertainties, and we cannot predict the outcome, nor reasonably estimate a range of loss or penalties, if any, relating to these matters.
At least one U.S. Justice Department investigation is focused on allegations that Applied Materials circumvented necessary U.S. export licenses by routing some of its tools, valued in the hundreds of millions of dollars, to SMIC through South Korea. The shipment was allegedly made following the U.S. Commerce Department's decision to place SMIC on its Entity List in December 2020 due to national security concerns. The specific WFE types and the exact timing of these shipments to SMIC remain undisclosed at this point.
Back in October 2022, Applied Materials confirmed receiving a subpoena from the Massachusetts U.S. Attorney's Office, which requested details regarding its shipments to certain customers in China. Since then, the company received several more subpoenas as various government agencies are looking into Applied Materials business with Chinese entities.
In October 2023, the U.S. government, citing national security, introduced stringent export controls on shipments of high-performance processors and cutting-edge semiconductor manufacturing equipment to China. Specifically, manufacturers of U.S. fab tools are required to obtain a license to export equipment capable of producing FinFET logic chips with 14nm/16nm technology or more advanced, to Chinese firms.
Meanwhile, even without the latest U.S. export rules, SMIC, the only contract maker of chips in China capable of manufacturing 14nm-class chips, has been on the U.S. Department of Commerce's Entity List for some time, which is why Applied and other American makers of fab tools must secure an export license for any dealings with the Chinese chip giant.
