The U.S. Department of Commerce announced on Wednesday that Applied Materials Inc was assessed a $252.5 million civil penalty after being accused of exporting advanced semiconductor manufacturing equipment to China in contravention of U.S. export rules.
In its action, the Commerce Department's Bureau of Industry and Security (BIS) alleged that Applied Materials committed 56 separate violations of U.S. guidelines governing technology exports to China. The alleged activity is said to have occurred between 2020 and 2023 and involved shipments or attempted shipments of equipment valued at a minimum of $126 million to Semiconductor Manufacturing International Corp, identified in the announcement as China’s largest chipmaker.
Applied Materials issued a separate statement saying it was pleased that the matter was settled. The company had previously warned that stricter U.S. export controls targeting China could affect its sales, a point that has been reiterated amid stepped-up restrictions from both the Biden and Trump administrations aimed in part at slowing the development of advanced artificial intelligence capabilities in China.
Wednesday's penalty ranks as the second-largest civil fine ever imposed by BIS for export violations. The only larger penalty cited by the department was a $300 million fine levied against Seagate Technology PLC in 2023 for sales of hard drives to Huawei.
The department's announcement and the company statement together frame the enforcement action as significant both for the size of the penalty and for its connection to ongoing U.S. export-control measures. Applied Materials' acknowledgement that the case has been settled closes this particular enforcement matter, while the citation of prior administration actions underscores the regulatory backdrop cited in the department's findings.
Context noted in announcements:
- The Bureau of Industry and Security cited 56 violations of U.S. export guidelines.
- Alleged exports or attempted exports involved at least $126 million in equipment sent to Semiconductor Manufacturing International Corp between 2020 and 2023.
- The penalty imposed is $252.5 million, the second-highest BIS civil fine on record, following a $300 million penalty for Seagate in 2023.