Applied Materials’ stock price fell sharply after the market closed on Thursday (16th). Reports indicate that the semiconductor equipment maker is under investigation by the U.S. Department of Justice for violating export controls on SMIC, China’s largest chip maker.
After the news came out, Yingcai (AMAT-US) fell about 7% in after-hours trading on Thursday, as news of the investigation overshadowed optimistic forecasts and performance.
Reuters reported, citing sources, that Applied Materials shipped hundreds of millions of dollars worth of semiconductor equipment to SMIC without obtaining an export license, and was therefore under investigation by the Justice Department.
Sources revealed that Appliances manufactured semiconductor equipment in Massachusetts, USA, and then shipped the equipment multiple times from its factory in Gloucester to its South Korean subsidiary, and then transferred it from South Korea to SMIC. These shipments occurred in 2021 and 2022, after the Commerce Department added SMIC to the Entity List in December 2020.
In response to the above reports, a spokesman for the Ministry of Commerce, which oversees export controls, declined to comment, and a spokesman for the Chinese Embassy in the United States did not immediately respond to a request for comment.
Due to national security concerns, the United States has previously ordered the implementation of export restrictions on advanced chips and equipment from China. The Department of Justice and the Department of Commerce also established a special working group earlier this year to investigate and prosecute any criminal violations of export control orders.
Yingcai pointed out that in October last year, the company stated that it had received a subpoena from the Massachusetts Attorney’s Office, requesting information related to shipments to Chinese customers. The company said in a statement that it is cooperating with the government and is committed to continuing to comply with laws, including export controls and trade regulations.
The U.S. Attorney’s Office in Boston declined to comment on the investigation. Two sources said prosecutors from the office’s national security division are handling the investigation.
Reuters pointed out that it was impossible to determine whether Yingcai violated the law, and it was unclear whether the investigation would lead to prosecution.
Financial reports and forecasts were better than expected
Applied Materials announced on the same day that its last quarter results were better than expected. In the three months ended October 29, Applied Materials’ revenue was US$6.72 billion, the same as the same period last year, and adjusted earnings per share (EPS) was US$2.12, an annual increase of 4%, and market expectations were US$2.
Looking forward to this quarter (the first quarter of fiscal year 2024), the company estimates revenue to reach approximately US$647 million (plus or minus US$400 million), which is better than the US$6.37 billion expected by analysts surveyed by LSEG. The adjusted EPS is estimated to be within The range is $1.72 to $2.08.
Speaking about the investigation, Applied Materials CEO Gary Dickerson said on a conference call: “These rules are complex and we are working with the government to clarify certain details. We do not believe this will have a material impact on the company at this time.”
China has been one of the fastest-growing markets for semiconductor equipment, but as U.S. export controls begin to impact sales, analysts and investors are trying to assess the full impact of the new regulations and how the U.S. will enforce them.
Applied Materials said that the Chinese market accounted for 44% of total revenue last quarter, and will continue to maintain a high level this quarter, and will return to the historical level of around 30% over time.
2023-11-16 22:54:39
#App #Materials #investigated #U.S #Department #Justice #illegally #exporting #semiconductor #equipment #SMIC #Anue #Juheng #Stock #Radar
