:max_bytes(150000):strip_icc()/GettyImages-2189946115-cf8e0a671d044e19b6aefb2030fe7e73.jpg "Applied Materials Sees 0M Hit From China Curbs. Here’s What You Should Know")
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KEY TAKEAWAYS
- Applied Materials said it expects a $710 million hit to its revenue from new restrictions on its China exports, pressuring shares of the chip manufacturing equipment maker Friday.
- The Commerce Department’s Bureau of Industry and Security issued a new rule on Sept. 29 raising the number of Chinese clients Applied Materials would need a license to export to, the company said.
Applied Materials (AMAT) said it expects a $710 million revenue hit from new restrictions on its China exports, pressuring shares of the chip manufacturing equipment maker Friday.
The Commerce Department’s Bureau of Industry and Security issued a rule on Sept. 29 that the Santa Clara, Calif.-based company said will “further restrict its ability to export certain products and provide certain parts and services to specific China-based customers without a license.”
Applied Materials said the new rules would reduce its fourth-quarter net revenue by $110 million, and fiscal 2026 revenue by around $600 million.
Why This Matters for Investors
Applied Materials, one of the world’s largest makers of chip manufacturing equipment, has seen its shares surge this year as the AI boom drives up demand for chips. But putting limits on its sales to China, which makes up more than a third of its revenue, could impact those share price gains.
Before the BIS Affiliates Rule earlier this week, U.S. companies would only need licenses when selling their products to certain companies on what’s known as the entity list. Now, American firms would need licenses even for companies that are 50% or more owned by the companies on the list, according to the BIS, a move that it said “closes a significant loophole.”
China accounted for more than a third of Applied Materials’ total revenue in its fiscal third quarter ended in July, making the country its biggest source of sales.
Applied Materials shares, which entered Friday up 37% for the year, were down about 3% in premarket trading.
