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

(Reuters) -Applied Materials said on Thursday it expects spending on chipmaking equipment in China to fall in 2026 as tighter U.S. export controls limit its market access, with overall revenue projected to be stronger in the second half of the year. While tighter U.S. export curbs are expected to dampen demand, strong memory output tied to surging AI investments is likely to help partially offset the impact. Shares fell more than 4% in after-hours trading. Last month, the company forecast a $600 million hit to fiscal 2026 revenue following the U.S. expansion of export restrictions, which complicates shipments of certain products and services to China-based customers. The company said about $110 million worth of products were not shipped in the fourth quarter due to an affiliate rule that was later suspended after talks between U.S. President Donald Trump and Chinese President Xi Jinping. The products will ship in the three months to January and are included in the forecast.  The company forecast current-quarter revenue of $6.85 billion, plus or minus $500 million. Analysts on average expect revenue of $6.76 billion, according to data compiled by LSEG. Executives also confirmed that the suspension of the affiliate rule will re-enable about $600 million in sales for the full fiscal year. CEO Gary Dickerson said Applied Materials can no longer supply China's memory chip and older-generation chipmaking markets due to tighter U.S. controls, but does not expect major new limits on shipments to the country. But Applied's share of China sales has reverted from nearly 40% of revenue in recent years to the mid-20% range, and Dickerson said foreign rivals were still selling to Chinese companies that his firm cannot serve. "Non-U.S. equipment companies don't have the same restrictions, and so restricted customers can buy from those companies, even if they would rather buy from Applied," Dickerson said during a conference call.  The company previously had said the new rule would make it more difficult to export some products and supply specific parts and services to some China-based customers without a license. "Our customers are indicating to us that wafer fab equipment spending is likely to accelerate beginning in the second half of calendar 2026," Chief Financial Officer Brice Hill said. Excluding one-off items, the company forecast profit per share of $2.18, plus or minus 20 cents, higher than estimates of $2.13. (Reporting by Akash Sriram in Bengaluru and Stephen Nellis in San Francisco; Editing by Tasim Zahid and David Gregorio)

(The article has been published through a syndicated feed. Except for the headline, the content has been published verbatim. Liability lies with original publisher.)