Applied Materials, one of the world’s largest semiconductor equipment makers, said it expects a $600 million revenue impact in fiscal 2026 after the U.S. government broadened export restrictions on technology shipments to China and its affiliates.
The company’s shares fell about 3% in after-hours trading on Thursday following a regulatory filing that detailed the potential hit. Applied Materials said the new rules will make it harder to export certain products and provide parts or services to specific China-based subsidiaries without a U.S. export license.
New U.S. Restrictions Target Loopholes
The U.S. Department of Commerce this week expanded its export blacklist to include majority-owned subsidiaries of already restricted companies. The move targets entities that have been using offshore affiliates to circumvent U.S. export controls on sensitive technologies, particularly in the semiconductor, aerospace, and medical equipment sectors.
The company estimated an additional $110 million impact on its fourth-quarter 2024 revenue, compounding challenges already caused by a slowdown in China and ongoing tariff pressures.
Broader Industry Pressure
Applied Materials, along with European chipmaking equipment supplier ASML Holding, has been hit by weak demand in China, where export curbs have limited access to advanced lithography and chip-manufacturing tools.
Analysts said the new rule could disrupt global semiconductor supply chains and increase the number of firms that will now need licenses to receive U.S.-origin components and services.
Washington’s Push for Domestic Chip Production
In a related policy move, U.S. Commerce Secretary Howard Lutnick said Washington was urging Taiwan to adopt a 50-50 manufacturing split with the United States, part of efforts to boost domestic chip production and reduce dependence on overseas supply chains.
Applied Materials’ Financial Outlook
Despite the looming headwinds, Applied Materials reported strong results for fiscal 2024, with revenue up 2.5% year-over-year to $27.18 billion. Third-quarter revenue rose 8% to $7.30 billion, surpassing market expectations of $7.22 billion, according to LSEG data.
However, the company’s August outlook had already signaled a cautious tone, citing “geopolitical uncertainty and weaker equipment spending” as persistent risks heading into 2025.
As the U.S.–China technology rivalry intensifies, Applied Materials’ latest warning highlights the growing cost of Washington’s export-control campaign, which is reshaping the global semiconductor landscape and testing the resilience of supply chains worldwide.