Applied Materials Faces US Probe: Applied Materials (AMAT.O), the leading U.S. semiconductor equipment maker, is currently under investigation by the U.S. Justice Department for potential evasion of export restrictions on China’s primary chip manufacturer, SMIC, as reported by three knowledgeable sources.
The probe focuses on Applied Materials allegedly sending equipment to SMIC through South Korea without the required export licenses, involving hundreds of millions of dollars in equipment. This marks the first public disclosure of details regarding the investigation. Following this news, Applied Materials experienced a 7.3% drop in shares, coinciding with the release of the company’s quarterly results.
China is denied modern semiconductors and chipmaking equipment by the US for national security. A Justice and Commerce task force investigated and punished criminal export control violations targeting U.S. technology that may improve China’s military and intelligence this year.
In October 2022, Santa Clara-based Applied Materials disclosed that the Massachusetts U.S. Attorney’s Office had subpoenaed it for Chinese customer shipments. The corporation stressed its cooperation with the government and compliance with global laws, including export controls and trade rules. The ongoing investigation is being handled by prosecutors in the National Security Unit of the U.S. Attorney’s office in Boston. It is not yet clear whether Applied Materials violated the law, and the possibility of charges resulting from the investigation remains uncertain.
Also Read: Nvidia H200 Chip Shake Up AI: Faster, Smarter, and Set to Reshape the Tech Landscape
According to sources familiar with the matter, Applied Materials produced semiconductor equipment in Massachusetts, subsequently shipping it from its Gloucester plant to a South Korean subsidiary. From there, the equipment was directed to China’s Semiconductor Manufacturing International Corporation (SMIC).
Significantly, these shipments occurred after SMIC was added to the U.S. Commerce Department’s “Entity List” in December 2020, imposing restrictions on exports to the company. SMIC was included on the list due to suspected ties to the Chinese military, which the company denied, asserting that its activities were solely for civilian and commercial purposes.
The U.S. Commerce Department, responsible for export controls, and China’s embassy in Washington declined to comment on the Applied Materials probe. However, Liu Pengyu, a spokesperson for the Chinese embassy, emphasized that such imposed restrictions were inconsistent with market economy principles and fair competition.
The uncertainties surrounding this matter make it challenging to predict the outcome or estimate potential losses or penalties for Applied Materials. The company addressed the investigation in an August 2023 filing with the U.S. Securities and Exchange Commission, acknowledging the unpredictable nature of the situation.
Our Reader’s Queries
Who is Applied Materials biggest competitor?
When it comes to comparing competitors, Advanced Micro Devices Inc takes the lead with 25,000 employees and a whopping $23.6B in revenue. ASML Holding NV, based in the Netherlands, follows closely behind with 39,850 employees and $22.3B in revenue. Texas Instruments Inc, with 33,000 employees and $20.0B in revenue, also holds a strong position in the market. Tokyo Electron Ltd, headquartered in Japan, has 17,204 employees and $16.3B in revenue. These numbers provide a clear picture of the competitive landscape in the industry.
Is Applied Materials a good stock to buy?
Applied Materials has received a Strong Buy rating from 19 Wall Street analysts. The highest price target for the company is $185.00, while the lowest forecast is $128.00. The average price target indicates a 2.22% increase from the current price of $162.12.
Who owns Applied Materials?
Applied Materials Inc’s top 10 owners include The Vanguard Group, Inc. and SSgA Funds Management, Inc.
Who is Applied Materials CEO?
As the head honcho of Applied Materials, Inc., Gary Dickerson leads the charge as both president and CEO. His expertise and leadership have helped the company thrive in the ever-evolving tech industry.