Core Viewpoint - Applied Materials has announced a global layoff plan affecting approximately 4% of its workforce, which translates to over 1,400 employees, as a response to market fluctuations and policy adjustments in the semiconductor equipment industry [1][3]. Group 1: Layoff Details - The layoff will incur costs between $160 million and $180 million, primarily for severance and one-time termination benefits, with most costs expected to be recorded in Q4 of FY2025 [3]. - The layoff notifications began on October 23, 2023, and the plan is expected to be completed by Q1 of FY2026 [3]. - The company aims to enhance operational structure and efficiency to tackle challenges posed by market volatility and geopolitical factors [3]. Group 2: Market Impact and Revenue Forecast - New export control rules from the U.S. Department of Commerce are projected to reduce Applied Materials' revenue by $110 million in Q4 of FY2025 and $600 million in FY2026 [4]. - The company's revenue from China accounts for 35% of its total, but a decline is anticipated due to equipment shipment digestion and new policy restrictions [4]. - The U.S. House of Representatives has identified support for Chinese companies by U.S. equipment manufacturers as a regulatory focus, increasing policy uncertainty for operations in China [4]. Group 3: Industry Trends - The global semiconductor equipment industry is entering a cyclical adjustment phase, with a projected sales decline of 8%-10% in 2025, marking the first negative growth in five years [5]. - Competitors like ASML and Tokyo Electron have lowered revenue forecasts, while other U.S. firms are implementing hiring freezes or localized layoffs [5]. - Despite current challenges, the CEO of Applied Materials emphasized the long-term growth potential of the semiconductor industry, particularly in AI chips and advanced packaging [5]. Group 4: Domestic Opportunities - The contraction of U.S. equipment manufacturers is creating opportunities for domestic semiconductor equipment localization in China, where the current overall localization rate is about 20% [6]. - In mature process areas, the localization rate exceeds 35%, with companies like Naura and North Huachuang entering the supply chains of major Chinese firms [6]. - It is anticipated that the localization rate for mature process equipment could surpass 50% by 2027, promoting a self-sufficient industry chain [6].

Core Insights - The total investment in China's semiconductor industry for the first half of 2025 is projected to be 455 billion yuan, reflecting a year-on-year decline of 9.8% [1] - This decline indicates that the global semiconductor industry is undergoing a cyclical adjustment phase, although the year-on-year decrease has shown a significant improvement compared to a 41.6% drop last year [1] - Notably, investment in semiconductor equipment has increased by 53.4%, marking it as the only sector to achieve positive growth, highlighting China's strategic commitment to supply chain autonomy [1]