The U.S. Department of Commerce's Bureau of Industry and Security (BIS) announced a settlement with Applied Materials Inc. (AMAT) of Santa Clara, California, and its subsidiary Applied Materials Korea, Ltd. (AMK), requiring the companies to pay a $252 million penalty for violations involving the export of semiconductor manufacturing equipment to China.
The penalty, set at approximately $252 million (with Applied Materials specifying $252.5 million), represents twice the value of the illegally shipped merchandise, which totaled about $126 million, and is the maximum allowed by statute. It is the second-highest penalty ever imposed by BIS.
The violations occurred in 2021 and 2022, after a customer in China—placed on the Entity List in 2020—required a license for exports of certain ion implanters, a type of semiconductor manufacturing equipment. Instead of obtaining the required license, Applied Materials shipped the ion implanters to AMK in Korea for assembly, then forwarded them to China without applying for or receiving BIS approval. This resulted in 56 violations of U.S. Export Administration Regulations, according to reports on the settlement.
Under Secretary of Commerce for Industry and Security Jeffrey Kessler stated that BIS is committed to safeguarding sensitive American technologies and imposing stiff penalties on violations.
As part of the agreement, Applied Materials will conduct multiple audits of its export compliance program and provide annual certifications to BIS related to those audits. The compliance employees and senior global trade and production executives responsible for the shipments are no longer employed by the companies.
Applied Materials described the issue as stemming from a misunderstanding of the applicability of the regulations for shipments to China between November 2020 and July 2022. The company stated that the settlement concludes the U.S. government's review, with the Department of Justice and the Securities and Exchange Commission (SEC) closing their related investigations without action. Applied Materials indicated that resolving the matter serves the interests of the company, its customers, employees, and shareholders, and reaffirmed its commitment to export control and trade compliance practices while focusing on its technology roadmap and semiconductor innovation demand.
