Applied Materials Inc, the largest US maker of chipmaking machinery, failed to impress investors with its latest forecast following a rally in its shares this year.
Third-quarter sales would be roughly US$6.65 billion, the company said on Thursday.
Although that topped the average Wall Street estimate, some analysts had predicted revenue as high as US$7.13 billion.
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Excluding some items, profit would be US$1.83 to US$2.19 a share in the three-month period, which runs through July, while analysts had projected US$1.98.
Investors have been looking to Applied Materials for signs that a chip recovery is well under way. The company is a major supplier to Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), Samsung Electronics Co and Intel Corp. That makes its outlook an indicator of demand in a crucial part of the electronics supply chain.
The company’s shares fell 1.5 percent in extended trading. They had earlier closed at US$214.17 in New York on Thursday, leaving the stock up 32 percent for the year.
Second-quarter profit was US$2.09 a share, excluding some items, while revenue amounted to US$6.65 billion.
Analysts had estimated earnings of US$1.99 and sales of US$6.52 billion.
Demand for machines used to manufacture artificial intelligence processors is growing, Applied Materials said.
However, some customers that make semiconductors used in internet-connected appliances, communications, cars, power electronics and sensors are pausing orders while they install machinery that they have already received, the company said.
“Near term, there will be some digestion,” Applied Materials CEO Gary Dickerson said. “This year is not going to be significant growth year for us.”
Dickerson said he is extremely bullish about the prospects for AI-related chips and predicts that such processors would soon overtake the smartphone and PC industries in terms of silicon consumed.
China accounted for 43 percent of the company’s revenue last quarter. Similar to some peers, Applied Materials is benefiting from huge investments by Chinese companies — part of Beijing’s efforts to carve out greater independence in the production of vital electronic components.
While US companies are restricted from supplying the most advanced manufacturing gear to China, they are getting a flood of orders for equipment used to make simpler types of chips, such as semiconductors that typically go into cars and industrial machinery.
The rapid increase in orders has stoked concern among investors, who fear that geopolitical tensions might cut off that source of growth.
Washington and the EU have already placed restrictions on the export of cutting-edge machinery, but officials are now worried that China might gain an edge in the manufacturing of certain less-advanced chips.
“We see China staying resilient,” Dickerson said, but added: “You’re not going see the growth rate you’ve seen over the last couple of years.”
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