Applied Materials misses revenue estimate amid uncertainty over export controls

By Priyanka G

(Reuters) -Applied Materials missed Wall Street estimate for second-quarter revenue on Thursday, weighed by less-than-expected sales in the chipmaking equipment maker's biggest segment amid uncertainties around export curbs.

Shares of the Santa-Clara, California based company fell more than 5% in extended trading.

Revenue from the semiconductor systems segment, the largest contributor to the company's total revenue, was $5.26 billion, below analysts' estimate of $5.32 billion, according to data compiled by LSEG.

Applied Materials noted a slowdown in investment in ICAPS market — covering internet of things, communication, automotive, power and sensors — but said this has been partially offset by huge investments in advanced chips.

"Clearly, the U.S. government's export restriction of certain semiconductor equipment to China is impacting the company's results and outlook," said Kinngai Chan, senior research analyst at Summit Insights Group.

The U.S. government had said in December new controls would be placed on the export of semiconductor manufacturing equipment needed to produce advanced-node chips to China — Applied Materials' largest overseas market.

"We, however, think the company can overcome this headwind overtime as spend of advanced process nodes pick-up in 2H25 and into 2026," Chan said.

The company's revenue from China, which is engaged in a full-blown trade war with the U.S., accounted for about 25% of total sales during the second quarter, down from 43% a year earlier.

For the quarter ended March 31, the company reported revenue of $7.10 billion, while analysts' on average estimated $7.13 billion, according to data compiled by LSEG.

"Despite the dynamic economic and trade environment, we have not seen significant changes to customer demand," its finance chief Brice Hill said.

The company's second-quarter adjusted profit per share was $2.39, above analysts' estimate of $2.31.

Applied Materials forecast third-quarter revenue of $7.20 billion, plus or minus $500 million, compared with the estimate of $7.19 billion.

(Reporting by Priyanka.G in Bengaluru; Editing by Shilpi Majumdar)

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