The renewed examination of Applied Materials’ operations in China by the US government is viewed as another stage of regulation in the expanding chip industry. The surge in demand for advanced chipmaking tools from China has led to increased production capacities; causing concerns about international supply chains, potential shortages, and inflated prices.
On February 27, 2024, the United States initiated a new set of investigations into deliveries to Chinese clients aiming to limit the transfer of advanced chipmaking tools to this global competitor. Businesses affected by these investigations have argued that these may hinder worldwide technological advancement and growth, urging the US to adopt a more cooperative approach.
Despite fathomable consequences of a possible technological arms race, the US officials upheld their decision in a meeting on March 5, with national security being their principal concern. Although restrictions are yet to be enforced, majority of the attendees were in favour of stricter scrutiny.
While companies strive to strike a balance between maintaining their competitive advantage and adhering to national security requirements, China is expected to deploy retaliatory actions. This could escalate tensions between the two nations even further.
Leading US semiconductor production equipment provider, Applied Materials has received multiple subpoenas relating to possible violations of the Foreign Corrupt Practices Act. The investigation is centered around the company’s sales to customers in Asia. Applied Materials is fully cooperating with the authorities and is running an internal review to uncover any potential wrongdoings within its operations.
This renewed scrutiny follows requests from the Commerce Department and other government bodies back in 2022 where restrictions on exporting advanced chips to China were intensified. As these legal proceedings induce anxiety within the tech industry, several organizations are reassessing their strategies and risk management policies.
Furthermore, these collective actions by Washington indicate a strategic attempt to curtail China’s increasing chip demand; potentially worsening the already strained economic relationship. Such limitations could further impact the delicate economy of both countries and usher in a more intense trade conflict. The looming threat of a trade war could have far-reaching effects on the global technology sector.
