Applied Materials sees weaker China spending in 2026 on tighter US curbs

Core Viewpoint - Applied Materials anticipates a decline in spending on chipmaking equipment in China by 2026 due to stricter U.S. export controls, although overall revenue is expected to be stronger in the latter half of the year [1] Group 1: Revenue Impact - The company projects a $600 million reduction in fiscal 2026 revenue as a result of expanded U.S. export restrictions affecting shipments to China-based customers [2] - Current-quarter revenue is forecasted at $6.85 billion, with a variance of $500 million, compared to analysts' expectations of $6.76 billion [3] - The suspension of the affiliate rule is expected to enable approximately $600 million in sales for the full fiscal year [4] Group 2: Market Dynamics - Applied Materials' share of sales in China has decreased from nearly 40% to the mid-20% range, with foreign competitors still able to sell to Chinese companies [5] - The company can no longer supply China's memory chip and older-generation chipmaking markets due to tighter U.S. controls, but does not foresee major new shipment restrictions [4] Group 3: Future Outlook - Customers indicate that spending on wafer fab equipment is likely to accelerate starting in the second half of calendar 2026 [6] - The company forecasts a profit per share of $2.18, excluding one-off items, which is higher than the estimated $2.13 [6]