Applied Materials shares fall 13% after forecast hit by China pause, export‑licence woes
China, an essential market for chip companies, was Applied’s largest revenue driver in the July quarter
Applied Materials forecast fourth-quarter revenue and profit below estimates on Thursday, citing weak demand in China and erratic orders from customers facing uncertainty because of tariffs, sending its shares down nearly 13 per cent in extended trading.
US President Donald Trump’s ongoing tariff negotiations and certain export restrictions to China have made it more difficult to forecast where the economy is headed, weighing on new orders for chipmaking tools suppliers such as Applied Materials.
“We are expecting a decline in revenue in the fourth quarter driven by both digestion of capacity in China and non-linear demand from leading-edge customers given market concentration and fab timing,” Applied’s chief financial officer Brice Hill said in a statement.
Tightened export controls on advanced semiconductor manufacturing equipment to China prevent these companies from selling their most cutting-edge tools to Chinese customers.
In China, chipmakers are pausing new equipment orders to absorb recently added capacity for older-generation, mainstream chips used in cars, industry and other everyday electronics, the company has said.