Applied Materials Inc, the largest US maker of chip-manufacturing equipment, on Thursday gave a lukewarm revenue forecast for the current period, citing the risk of export controls crimping its business.
Sales would be about US$7.1 billion in the fiscal second quarter, which runs through April, the company said in a statement.
That compares with an average Wall Street estimate of US$7.22 billion.
Photo: Reuters
Profit per shares would be US$2.30, Applied Materials said, in line with projections.
Applied Materials chief financial officer Brice Hill said the company was “taking into account export control related headwinds.”
China makes up about one-third of the company’s sales and stricter trade curbs from the US have made it harder to sell in that nation.
The company’s shares fell about 5 percent in extended trading following the announcement. They had earlier closed at US$184.27, up 13 percent this year.
Export rules adopted in the final months of the administration of former US president Joe Biden would knock about US$400 million off revenue this fiscal year, the company said.
About half of the reduction would come in the current period, with much of it hitting Applied Materials’ service business.
That is because the company would have to stop servicing equipment at some customer sites in China, Applied Materials chief executive officer Gary Dickerson said on a conference call with analysts.
In the long term, Dickerson said he expects the company’s service operations to resume healthy growth.
China accounted for 31 percent of sales last quarter, down from 45 percent a year earlier.
A surge in orders from Chinese memorychip makers has not continued into this year, the company said.
Meanwhile, Applied Materials is enjoying high demand for the most advanced types of equipment needed for artificial intelligence (AI) components, Dickerson said.
That is making up for weaker demand from makers of less complicated chips, he said.
“The biggest driver for the whole industry is AI,” he said.
The amount of silicon going into data centers — facilities that handle much of the AI workload — will soon surpass the level consumed by personal computers and smartphones.
Those have traditionally been the two biggest markets for chipmakers.
First-quarter profit was US$2.38 per share, excluding some items, compared with an estimate of US$2.28. Revenue gained 6.8 percent to US$7.17 billion. Analysts projected US$7.15 billion.
The company is facing tax changes in Singapore, resulting in an expense of US$644 million, or US$0.79 per share during this fiscal year.
Applied Materials’ management has maintained confidence in the overall growth of the industry.
The rapid spread of semiconductors to new products and the AI boom would help maintain demand, Dickerson said.
The sheer complexity of chips has also added pressure on customers to upgrade their equipment, he said.
Customers of Applied Materials include some of the biggest names in the chip industry, including Taiwan Semiconductor Manufacturing Co (台積電), Samsung Electronics Co and Intel Corp. Those manufacturers order gear well ahead of starting production, making Applied Materials’ forecasts a barometer for demand.
Intel Corp chief executive officer Lip-Bu Tan (陳立武) is expected to meet with Taiwanese suppliers next month in conjunction with the opening of the Computex Taipei trade show, supply chain sources said on Monday. The visit, the first for Tan to Taiwan since assuming his new post last month, would be aimed at enhancing Intel’s ties with suppliers in Taiwan as he attempts to help turn around the struggling US chipmaker, the sources said. Tan is to hold a banquet to celebrate Intel’s 40-year presence in Taiwan before Computex opens on May 20 and invite dozens of Taiwanese suppliers to exchange views
Application-specific integrated circuit designer Faraday Technology Corp (智原) yesterday said that although revenue this quarter would decline 30 percent from last quarter, it retained its full-year forecast of revenue growth of 100 percent. The company attributed the quarterly drop to a slowdown in customers’ production of chips using Faraday’s advanced packaging technology. The company is still confident about its revenue growth this year, given its strong “design-win” — or the projects it won to help customers design their chips, Faraday president Steve Wang (王國雍) told an online earnings conference. “The design-win this year is better than we expected. We believe we will win
Chizuko Kimura has become the first female sushi chef in the world to win a Michelin star, fulfilling a promise she made to her dying husband to continue his legacy. The 54-year-old Japanese chef regained the Michelin star her late husband, Shunei Kimura, won three years ago for their Sushi Shunei restaurant in Paris. For Shunei Kimura, the star was a dream come true. However, the joy was short-lived. He died from cancer just three months later in June 2022. He was 65. The following year, the restaurant in the heart of Montmartre lost its star rating. Chizuko Kimura insisted that the new star is still down
While China’s leaders use their economic and political might to fight US President Donald Trump’s trade war “to the end,” its army of social media soldiers are embarking on a more humorous campaign online. Trump’s tariff blitz has seen Washington and Beijing impose eye-watering duties on imports from the other, fanning a standoff between the economic superpowers that has sparked global recession fears and sent markets into a tailspin. Trump says his policy is a response to years of being “ripped off” by other countries and aims to bring manufacturing to the US, forcing companies to employ US workers. However, China’s online warriors
RSS