Applied Materials expects $2.5 bn hit from China export curb

Gary Dickerson, President and CEO of Applied Materials, said the company is estimating that the impact to its fiscal 2023 revenues due to the US-driven export curb could be up to $2.5 billion.
Applied Materials semiconductorChina-based customers account for 20 percent of the sales revenue for the Santa Clara, California-based Applied Materials. Taiwan is the largest market for Applied Materials.

Chip tools maker Applied Materials has posted revenue of $6.75 billion (+10 percent) for the fourth quarter ended October 30, 2022.

Applied Materials reported record annual revenue of $25.79 billion (+12 percent) for 12 months ended in October.

Applied Materials has generated revenue of $830 million from the United States, $375 million from Europe, $606 million from Japan, $1082 million from Korea, $2068 million from Korea, $451 million from South East Asia and $1,331 million from China during fiscal 2022.

Applied Materials said it targets current-quarter revenue of $6.70 billion, plus or minus $400 million.

Applied Materials said the outlook includes an expected impact of the recently announced U.S. export regulations and ongoing supply chain challenges.

Applied Materials said its capital spending touched $787 million vs 668 million. “Though we are slowing the rate of spending growth in the near term amid geopolitical and macroeconomic challenges, we are making the strategic investments to win the major technology inflections that will enable Applied to outgrow the semiconductor market,” Gary Dickerson said.

The company’s results come at a time when the chip industry is seeing sluggish demand for consumer electronics like PCs and smart phones, with chipmakers like Intel and AMD providing weak outlook, Reuters news report said.

“Applied’s performance reflects the past strength in semiconductor demand where industry capacity was unable to fulfill demand,” said Kinngai Chan, an analyst at Summit Insights Group, adding that existing strong backlog continues to drive near-term financial performance for the company.

The COVID-19 lockdowns in China earlier this year against the backdrop of rising costs have prompted chipmakers like Intel and Taiwan Semiconductor Manufacturing (TSMC) – some of the biggest customers of Applied – to cut spending.