By Karen Freifeld and Jasper Ward

WASHINGTON, Feb 11 (Reuters) – The U.S. Commerce Department announced a $252 million settlement with ‌Applied Materials‌ on Wednesday for illegally exporting chip-making equipment to China’s top chipmaker, ‌Semiconductor Manufacturing International Corp.

In 2023, Reuters exclusively reported that Applied Materials was under US criminal investigation for producing semiconductor equipment in Massachusetts, then shipping the equipment to a subsidiary in South Korea, before sending it to SMIC in China.

The shipments began, Reuters reported, after the US Commerce Department added SMIC to its “Entity List” in December 2020 over its apparent ties to the Chinese military. The list restricted exports of goods and technology to the company.

In documents released Wednesday, the Commerce Department said Applied Materials sent ion implanters, a critical part for chipmaking, first to Applied Materials Korea for assembly and then to China without applying for and receiving the required export license.

The Santa Clara, Calif.-based semiconductor equipment company and its South Korean subsidiary made illegal shipments on 56 occasions in 2021 and 2022, the department said in a statement. The value of illegally shipped goods was about $126 million to SMIC, he added.

Applied Materials said it was pleased to have reached a settlement with the Commerce Department and that the U.S. Department of Justice and the U.S. Securities and Exchange Commission notified the company that they had closed their related investigations without action.

The Justice Department did not immediately respond to a request for comment. The Securities and Exchange Commission did not want to comment.

The $252 million penalty, twice the value of the transaction, is the maximum allowed by law, the department said.

(Reporting by Karen Freifeld and Jasper Ward; Additional reporting by Ismail Shakil; Editing by Muralikumar ​Anantharaman, Thomas Derpinghaus and Lincoln Feast.)