Applied Materials Warns of $710M Hit From US-China Export Curbs
The semiconductor equipment giant faces significant headwinds as Washington tightens restrictions on technology exports to key Chinese customers.
Applied Materials (NASDAQ: AMAT) projected a significant financial impact from new U.S. export restrictions targeting China, forecasting a revenue reduction of approximately $710 million over the next five quarters. The announcement underscores the growing challenges faced by semiconductor firms navigating the complex geopolitical landscape between Washington and Beijing.
The chip-equipment manufacturer detailed that the new rules, implemented by the U.S. Department of Commerce's , will primarily curtail its ability to ship equipment and provide services to certain Chinese-based customers. The financial toll is expected to be back-loaded, with a $110 million revenue cut anticipated in the fourth quarter of fiscal 2025, followed by a more substantial $600 million reduction in fiscal year 2026.
China remains a , accounting for roughly one-third of its total sales. The restrictions force the company to obtain licenses for exporting certain advanced products, and management has adopted a cautious stance, stating its financial forecasts assume none of its pending export license applications will be approved. This conservative outlook signals a period of heightened uncertainty for one of the company's most important revenue streams.
This is not the first time export controls have impacted the company's finances. In late 2022, Applied Materials revised its quarterly outlook downwards by $400 million due to earlier U.S. regulations, indicating a persistent and escalating challenge. The latest rules expand the scope of restrictions, further limiting the company's access to the Chinese market.
Compounding these regulatory pressures, Applied Materials has also been under a for potential export violations concerning shipments to China’s leading chipmaker, SMIC. While the company is looking to mitigate these headwinds by capitalizing on strong demand for equipment used in AI and other advanced applications, the ongoing trade dispute and regulatory scrutiny present significant risks for investors to monitor.