Chip Fab Supplier Applied Materials Gets Subpoenaed Over China Sales

Updated Applied Materials was served with multiple subpoenas relating to Chinese shipments, the chip factory equipment maker disclosed today.

Applied Materials, which supplies equipment and services for semiconductor manufacturing, revealed in an SEC filing [PDF] that it had received the subpoenas from US government authorities requesting information relating to “certain China customer shipments”.

This includes subpoenas this month from the Attorney’s Office for the District of Massachusetts, from the Securities and Exchange Commission (SEC), plus one from the Commerce Department’s Bureau of Industry and Security back in November.

Both the SEC and the Massachusetts Attorney’s Office declined to comment on the latest subpoena, and Applied Materials had not responded to questions from The Register at the time of publication.

In the filing, Applied Materials says it is cooperating fully with the government agencies, and warns that it cannot predict the outcome of the investigations, nor estimate any potential loss or penalties that might relate to them.

Last year, the US Justice Department launched a probe into Applied Materials’s dealings with Semiconductor Manufacturing International Corp (SMIC), China's largest chipmaker and a partially state-owned entity.

According to reports, these investigations were for allegations against the US company of evading export restrictions and shipping advanced chipmaking equipment worth hundreds of millions of dollars to SMIC, without being granted the necessary export licenses.

SMIC is a key target in Washington’s efforts to contain China’s expanding semiconductor industry. Last week, Reuters reported that the Commerce Department had sent “dozens of letters” to American suppliers, suspending permission for them to sell to the Chinese chipmaker.

According to Reuters, the letters put a roadblock on millions of dollars of shipments of chipmaking materials and parts from one particular supplier, Entegris, which said it had made shipments in accordance with a valid export license, but halted them after receiving the Commerce Department letter.

The moves may be in response to Huawei’s launch of the Mate 60 Pro smartphone last year, powered by a 7nm homegrown processor manufactured by SMIC. As The Register reported, the US government indicated it wants to tighten up technology export restrictions, amid concerns that advanced chipmaking equipment was still reaching China despite the controls that were already in place.

• Where there's a will, there's a way to get US chips into China
• China 'readies production' of homegrown high-bandwidth memory
• How did China get so good at chips and AI? Congressional investigation blames American venture capitalists
• ASML sees semiconductor upturn ahead, but China export restrictions are a risk

In related news, Chinese chip biz Fujian Jinhua Integrated Circuit Co. was cleared by a judge of charges relating to economic espionage and theft of trade secrets from US memory maker Micron.

The judge ruled that prosecutors failed to prove that the Chinese state-owned business had stolen intellectual property from Micron. Fujian Jinhua was added to the US Entity List the same year as the case was filed. ®

Updated to add on February 29:

Applied Materials has been in touch to say it is "committed to compliance with all global laws, including export controls and trade regulations. As we've previously said, we are cooperating fully with the government in this matter." It added that as this is an ongoing legal matter, it couldn't say more "at this time."