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Applied Materials Chops Revenue Forecasts on China Curbs

California-based supplier of chipmaking technology says export restrictions will would result in a net sales loss of $250 million to $550m in the current and next quarters.

People work at the at the chip packaging firm Unisem's plant in Ipoh
The curbs will be a blow for Japanese equipment makers given the absence of a strong domestic chip market. Photo: Reuters


Applied Materials, a California-based supplier of chipmaking technology, said on Wednesday US export restrictions to China would result in a net sales loss of $250-$550 million in the current quarter and a similar impact in the following three months.

US companies were told last Friday of sweeping new regulations by the Biden administration, which ban them from supplying Chinese chipmakers with equipment that can produce advanced chips unless they obtain a licence.

Applied Materials became the first US semiconductor company to put a dollar figure to the perceived impact. The company’s stock was down 1.6% in extended trade.

China accounted for 29% of Applied Materials’ total sales in 2021, according to Evercore ISI analyst CJ Muse.

Sales of tool-makers including KLA Corp, Lam Research Corp and Applied Materials are expected to be affected by 5% to 10%, Muse wrote in a recent note, and that any retaliatory measure from China could further impact revenue.

ALSO SEE: South Korea’s SK Hynix Wins Reprieve From US Chip Curbs



Group Export Licences

Applied Materials said the restrictions would reduce its fourth-quarter net sales by about $400 million, plus or minus $150 million. Adjusted profit is expected to be $1.54 to $1.78 per share, down from an earlier forecast of $1.82 to $2.18.

Consequently, it has revised fourth-quarter revenue outlook to $6.15 billion to $6.65 billion, compared with the prior forecast of $6.25 billion to $7.05 billion and lower than analysts’ estimate of $6.67 billion, according to Refinitiv data.

“Applied is pursuing additional export licenses and authorisations where needed,” the company said.

The company also said it recently received a subpoena from the US Attorney’s Office for the District of Massachusetts requesting information relating to its customers in China.

Applied Materials’ warning comes as the global chip industry already faces major headwinds from tumbling demand post-Covid in computers, smartphones and other electronic devices.


  • Reuters with additional editing by Jim Pollard






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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years.


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