U.S. Extends License For Transactions With Venezuela's PDVSA
Shares of Applied Materials tumbled in early trading in New York following a Reuters report that disclosed the largest US maker of chipmaking machinery faces a US criminal investigation for allegedly violating export restrictions to China.
The Justice Department is investigating Applied Materials' dealings with China's biggest chipmaker, Semiconductor Manufacturing International Corp. One source said Applied Materials sent hundreds of millions of dollars in semiconductor equipment to SMIC without export licenses.
"Applied Materials first disclosed in October 2022 that it received a subpoena from the US Attorney's Office for the District of Massachusetts requesting information relating to certain China customer shipments," the company told Bloomberg in an emailed statement.
It added: "The company is cooperating with the government and remains committed to compliance with global laws, including export controls and trade regulations."
This comes as the Biden administration has expanded US restrictions on advanced chips and chipmaking equipment to China for national security purposes. Also, the DoJ and Commerce departments launched a task force this year to investigate and prosecute violators of export controls. The rules are to prevent China's military and intelligence capabilities from expanding.
In September, Huawei Technologies Co. shocked Washington by revealing a cutting-edge 7-nanometer processor smartphone in China. Bloomberg broke down the Huawei Mate 60 Pro and found it was equipped with a Kirin 9000s chip manufactured in China by SMIC.
Shares of Applied Materials shares sank 7% in premarket trading.
The report also noted the chipmaking equipment in question was produced in Massachusetts and then shipped to a subsidiary in South Korea, where it was then sent to SMIC, according to the sources familiar with the DoJ's investigation.
News of the probe overshadowed an earnings report.
Here's a snapshot of fourth-quarter results:
And the first quarter forecast:
Wall Street analysts were overwhelmingly pessimistic about the probe (list courtesy of Bloomberg)
Berenberg (Tammy Qiu; buy)
Cowen (Krish Sankar; outperform)
Citi (Atif Malik; buy)
Bloomberg Intelligence (Masahiro Wakasugi)
Morgan Stanley (Joseph Moore; equal-weight)
Beijing will be closely monitoring the events unfolding.
By Zerohedge.com
The leading economics blog online covering financial issues, geopolitics and trading. More