Bass, Berry & Sims attorneys Thad McBride and Faith Dibble co-authored an article for Corporate Compliance Insights discussing a recent case in which the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) issued a penalty against Applied Materials (AMAT) for $253 million, the second-largest civil penalty in BIS history. AMAT was required to pay the penalty and meet audit requirements to resolve allegations that they and Applied Materials Korea (AMK) re-exported semiconductor manufacturing equipment from South Korea to China’s Semiconductor Manufacturing International Corp. (SMIC) and its affiliates without the required U.S. government authorization.
Thad and Faith provided important takeaways for exporters from this case, especially when it comes to designated end-users and how the complexity of supply chains can make compliance with U.S. law more complicated, especially in the case of relatively low technology items. This matter serves as an important reminder for export compliance on the importance of understanding items’ jurisdictions and classifications, treating entity list controls as following an item to the end user, and elevating domestic transfer controls.
As Thad and Faith note in the article, “[a]ny company that builds equipment across borders must ensure that its export compliance program reflects the challenging enforcement environment.”
The full article, “$253M Settlement Raises the Bar on Re-Exports, ‘Dual‑Build’ Models & Entity List Risk,” was published by Corporate Compliance Insights on April 14 and is available online.