Applied Materials probed for sending chip equipment to China through Korea

A smartphone with a displayed Applied Materials logo is placed on a computer motherboard in this illustration taken March 6, 2023. [REUTERS]

Applied Materials, a U.S. chip equipment manufacturer, is under criminal investigation in the United States for allegedly sourcing its machines to China’s SMIC through an entity based in Korea, according to Reuters.

SMIC is China's biggest contract chip manufacturer and has been included on the U.S. Department of Commerce's list of entities subject to export controls since 2020.

If a U.S. chip company wishes to sell its technology or equipment to SMIC, it needs approval from the government.

According to Reuters, the U.S. Department of Justice is probing Santa Clara, California-based Applied Materials for producing chip equipment in Massachusetts and shipping it to its subsidiary in Korea, where it was discreetly transported to China’s SMIC.

The equipment was reportedly worth hundreds of millions of dollars.

The Korean subsidiary, launched in 1989, is located in Seongnam, Gyeonggi, and has a nationwide network of 12 officies, workplaces and other facilities with more than 2,000 employees.

The case comes as critics question the efficacy of the U.S. CHIPS Act as China continues to find ways to work around sanctions to get its hands on the latest chip technology.

In September, SMIC was found to have manufactured 7-nanometer chips using ASML’s DUV machine.

BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]