Applied Materials Inc, the largest US maker of chipmaking machinery, slid in late trading on Thursday following a report that it faces a US criminal investigation for allegedly contravening export restrictions to China.
The company is being probed by the US Department of Justice over dealings with China’s biggest chipmaker, Semiconductor Manufacturing International Corp (SMIC, 中芯), Reuters reported.
The department is looking at whether Applied Materials sold hundreds of millions of dollars of equipment without the proper licenses, the news outlet reported, citing unidentified people familiar with the situation.
Photo: Reuters
The justice department declined to comment.
Applied Materials declined to discuss details of the case, but said that it previously disclosed a federal review of China deliveries.
“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 said in an e-mailed statement. “The company is cooperating with the government and remains committed to compliance with global laws, including export controls and trade regulations.”
The report overshadowed generally upbeat quarterly results from Applied Materials, which topped analysts’ estimates with its earnings and forecast.
Shares of Applied Materials, based in Santa Clara, California, fell as much as 7 percent in extended trading.
The company and its peers are operating under increasingly strict rules imposed by Washington on exports of chip technology to China. The US has said such rules are needed to protect national security and requires companies to seek licenses to send certain types of machines or have dealings with particular companies in the Asian nation.
Reuters said that Applied Materials produced chipmaking gear in Gloucester, Massachusetts, and then shipped it to a subsidiary in South Korea. It then went to China’s SMIC, people familiar with the investigation said.
SMIC was placed on a so-called entity list in December 2020 by the US Department of Commerce, which cited alleged links between the chipmaker and the Chinese military.
Applied Materials’ fiscal fourth-quarter earnings, excluding some items, amounted to US$2.12 a share, the company said. Sales were little changed in the quarter, which ended on Oct. 29, at US$6.72 billion. Analysts estimated earnings of US$1.99 a share and revenue of US$6.54 billion.
Fiscal first-quarter sales would be about US$6.47 billion, the company said. That compares with analysts’ average estimate of US$6.34 billion. Excluding some items, profit would be US$1.72 to US$2.08 a share in the period, which ends in January. The average projection was US$1.84 a share.
China had been one of the fastest-growing markets for chip equipment, but the US restrictions have begun to take a toll on sales.
A recent tightening of the export restrictions would not have an incremental impact on Applied Materials’ results, the company said on Thursday.
In fiscal fourth quarter, that market provided 44 percent of overall sales and would remain at an “elevated level” in the current period because of some large shipments to a computer memory customer, the company said.
Over time, China would shrink back down to about 30 percent of sales — its historical level, it said.
Dickerson said he remains bullish on the outlook for demand for his products overtime.
“Longer term, the setup is really great,” he said in an interview.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The Financial Supervisory Commission (FSC) yesterday met with some of the nation’s largest insurance companies as a skyrocketing New Taiwan dollar piles pressure on their hundreds of billions of dollars in US bond investments. The commission has asked some life insurance firms, among the biggest Asian holders of US debt, to discuss how the rapidly strengthening NT dollar has impacted their operations, people familiar with the matter said. The meeting took place as the NT dollar jumped as much as 5 percent yesterday, its biggest intraday gain in more than three decades. The local currency surged as exporters rushed to
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
RSS