Applied Materials to pay $252 million civil penalty — settles alleged 56 exports of ion implanters to SMIC following Entity List designation
Summary
Applied Materials has agreed to a $252 million civil penalty to resolve allegations of illegally exporting semiconductor manufacturing equipment to subsidiaries of SMIC, highlighting ongoing regulatory scrutiny in the tech industry.
Key Insights
What is the Entity List and why was SMIC added to it?
The Entity List is a compilation of foreign entities regarded as restricted recipients of items subject to U.S. Export Administration Regulations (EAR). SMIC (Semiconductor Manufacturing International Corp.), China's national semiconductor champion, was added to the Entity List because it is involved in the development and production of advanced-node integrated circuits and supports China's military-civil fusion strategy. Once on the Entity List, U.S. exporters must obtain a license from the Bureau of Industry and Security (BIS) before selling items to SMIC, and items uniquely required to produce semiconductors at advanced technology nodes (10 nanometers or below) are subject to a presumption of denial to prevent key enabling technology from supporting China's military activities.
What are ion implanters and why are they controlled semiconductor manufacturing equipment?
Ion implanters are specialized semiconductor manufacturing equipment used in the production of advanced integrated circuits. They are subject to U.S. export controls because they are among the items uniquely required to produce semiconductors at advanced technology nodes. The export of such equipment to Entity List entities like SMIC requires specific BIS authorization, and violations of these restrictions—such as the alleged 56 unauthorized exports by Applied Materials—constitute serious violations of U.S. national security export control laws designed to prevent advanced semiconductor technology from supporting foreign military development.