Applied Materials Stock Slides on China Export Curbs
Company forecasts a $710 million revenue hit from expanded U.S. export restrictions, impacting its significant business in the Chinese market.
Shares of Applied Materials (NASDAQ: AMAT) fell in after-hours trading after the semiconductor equipment giant announced it expects a significant financial blow from expanded U.S. export restrictions targeting China. The company is the latest to be caught in the escalating tech rivalry between Washington and Beijing.
In a recent disclosure, Applied Materials projected a total revenue reduction of approximately $710 million through fiscal 2026 due to the new regulations. The company anticipates a near-term impact of around , with a more substantial hit of $600 million projected for the 2026 fiscal year. The market reacted swiftly to the news, with shares declining more than 2% in extended trading sessions.
The financial guidance follows a new rule from the U.S. Department of Commerce's Bureau of Industry and Security (BIS). The updated regulation, known as the , expands restrictions to companies that are majority-owned by entities already on U.S. control lists, further tightening the constraints on selling advanced technology to China.
China represents a critical market for Applied Materials, the world's largest manufacturer of semiconductor fabrication equipment. The region accounted for 35% of the company's total sales in the third quarter of 2025. These restrictions not only impact future equipment sales but also prevent the company from servicing previously sold machinery, affecting its high-margin services business. Analysts have noted that the company's significant has caused its stock to underperform relative to competitors.
During a recent earnings call, company executives acknowledged the challenging environment. CFO Brice Hill stated that the subdued business climate in China is expected to persist for several more quarters. The headwinds from trade policy are significant enough to offset some of the benefits the company has seen from the surging demand for high-performance chips driven by the artificial intelligence boom. The latest guidance underscores the profound impact of geopolitical tensions on the global semiconductor industry.