Multiple US Agencies Probing Applied Materials' Exports to China

American chip company Applied Materials has received multiple U.S. government subpoenas in recent months -- including one from the Bureau of Industry and Security -- asking for information about its exports to Chinese customers.

Applied Materials received the BIS subpoena in November, the company said in a February SEC filing, but didn’t disclose what specifically BIS was asking about. The company also said it received subpoenas in August 2022 and last month from the U.S. Attorney's Office for the District of Massachusetts and from the SEC in February. It received another subpoena last month from DOJ “requesting information related to certain federal award applications.”

The company disclosed last year that it was being investigated by DOJ, and it's reportedly under criminal investigation for potentially evading export controls on major Chinese chipmaker Semiconductor Manufacturing International Corp. (see 2311170031).

“We are cooperating fully with the government in these matters,” Applied Materials said in the SEC filing. “These matters are subject to uncertainties, and we cannot predict the outcome, nor reasonably estimate a range of loss or penalties, if any, relating to these matters.”

Applied Materials’ disclosure comes as BIS implements October rules that expanded export licensing requirements for certain sensitive semiconductors and semiconductor manufacturing equipment to China. The company said the rules “require us to obtain additional export licenses to supply certain of our products or provide services to certain customers in China,” adding that obtaining those licenses “may be difficult, costly and time-consuming, and there is no assurance we will be issued licenses on a timely basis or at all.”

It also said the “implementation and interpretation of these complex rules and other regulatory actions taken by the U.S. government is uncertain and evolving, and may make it more challenging for us to manage our operations and forecast our operating results.” The U.S. also may issue new export licensing regulations, or revise the existing ones, “which could change the impact of these rules on our business and manufacturing operations.”