Applied Materials has agreed to pay a $252.5 million fine to settle allegations of illegally exporting advanced chipmaking equipment to China, marking the second-largest penalty ever imposed by the U.S. Commerce Department for export violations. The settlement resolves 56 violations of U.S. export control guidelines, with the company accused of shipping equipment worth at least $126 million to Semiconductor Manufacturing International Corp between 2020 and 2023.

This penalty follows years of escalating tensions over technology exports to China, as both the Biden and Trump administrations imposed strict restrictions on semiconductor sales to Beijing. Applied Materials had previously warned that these export controls would impact its sales, reflecting the growing challenges faced by U.S. tech companies operating in the Chinese market.

The settlement underscores the intensifying enforcement of export controls in the semiconductor industry, particularly as Washington seeks to limit China's access to advanced chipmaking technology. While Applied Materials expressed satisfaction at reaching a resolution, the case highlights the significant financial and operational risks companies face when navigating complex international trade regulations in the technology sector.