[News] US Reportedly Hits Applied Materials with $252M Penalty for Illegally Sending Chip Equipment to SMIC

Ahead of its upcoming earnings, U.S. chip equipment giant Applied Materials faces a $252 million hit, agreeing to settle over illegal exports of chipmaking tools to China’s top foundry, SMIC, Reuters reports.

The announcement, as per Reuters, was made by the U.S. Department of Commerce on Wednesday. The report added that Applied Materials was under a U.S. criminal probe for producing semiconductor equipment in Massachusetts, routing it through a South Korean subsidiary, and ultimately sending it to SMIC in China.

Shipments reportedly began after the U.S. Commerce Department added SMIC to its “Entity List” in December 2020. According to documents released Wednesday, Applied Materials first sent ion implanters—a critical chipmaking tool—to its South Korean subsidiary for assembly, then forwarded them to China without the required export licenses, Reuters adds.

Reuters notes that the $252 million penalty—twice the transaction value—is the maximum allowed under U.S. law. Authorities reportedly said 56 shipments were illegally sent to SMIC in 2021 and 2022, with the total value of the equipment estimated at roughly $126 million.

According to Reuters, Applied Materials said it was pleased to have reached a settlement with the Commerce Department and noted that the U.S. Department of Justice and Securities and Exchange Commission had closed their related investigations without taking any action.

China and 2026 Outlook

Notably, according to Investing.com, Applied Materials President and CEO Gary Dickerson said in November, 2025, that multiple trade rule changes in 2025 have reduced the size of the company’s addressable market in China. As a result, China accounted for 28% of total systems and services revenue in fiscal 2025 and 25% in the fourth quarter.

Dickerson also noted during the previous call that the company expects wafer-fab equipment spending in China to decline in 2026. According to a previous Reuters report, Dickerson said Applied Materials can no longer serve China’s memory chip and legacy chip markets due to tighter U.S. export controls, but he does not foresee major new restrictions on shipments.

For the upcoming 1QFY26 earnings. Seeking Alpha suggests that Applied Materials is expected to report an EPS of $2.21, down 7.1% year-over-year, with revenue likely falling 4% to $6.88 billion for the quarter. During its Q4 earnings call, the company had guided Q1 revenue at $6.85 billion ± $500 million and non-GAAP EPS at $2.18 ± $0.20, the report adds.

Read more

• [News] Applied Materials Flags a 2026 China Fab Spending Drop Amid Tougher U.S. Export Rules
• [News] Latest U.S. Export Curbs on Chinese Blacklisted Subsidiaries Could Cost Applied Materials $710M

(Photo credit: Applied Materials)