Applied Materials Inc. (AMAT) shares plummeted 5.26% in pre-market trading on Thursday.
The sharp decline comes after the company agreed to pay a $252 million penalty to settle allegations of illegally exporting semiconductor manufacturing equipment to China. The U.S. Department of Commerce announced the settlement, resolving an investigation into shipments made to China's Semiconductor Manufacturing International Corp (SMIC) without required export licenses between 2021 and 2022.
While the settlement resolves the regulatory matter and related investigations by the Department of Justice and Securities and Exchange Commission have been closed, investors reacted negatively to the substantial financial penalty and the underlying compliance issues.