The largest US supplier of equipment for the production of semiconductor chips this week reported results for the last quarter and gave an outlook for the current one, and it was these statements by Applied Materials management that put investors on alert. The company expects revenue of $7.15 billion instead of the $7.22 billion forecast by analysts.
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The general thesis that substantiates this discrepancy lies in the uneven demand for equipment for chip production across market segments. If in the field of production of chips for artificial intelligence systems there is no need to complain about weak demand, then the automotive industry and the field of industrial automation from this point of view are now going through not the best of times.
Moreover, Applied Materials’ revenue in China also declined. Existing US export restrictions still allow Applied Materials to sell a certain range of its equipment in China, but in the last quarter the local market formed only 30.3% of its total revenue versus 44.7% a year earlier. Applied Materials shares are up 15% year to date, but disappointing news yesterday sent them down 5% in after-hours trading.
CEO Gary Dickerson, however, expressed confidence in the ability of advanced chips to keep the industry afloat: “Applied is leading in all advanced segments, AI is a big driver for the entire industry.” The company supplies all leading chip manufacturers with its equipment, including TSMC, Samsung and Intel.
By the way, the forecast for specific earnings per share as presented by the management of Applied Materials exceeded analysts’ expectations: $2.29 versus $2.28. Similar dynamics were observed at the end of the last quarter, and the company’s revenue for the period increased by 4.8% to $7.05 billion against the expected $6.97 billion.