Applied Materials (AMAT), a major player in the semiconductor equipment industry, has stated that it will not alter its first-quarter outlook despite the U.S. government’s recent tightening of export controls on semiconductor technology to China. This decision comes after an “initial assessment of the impact” of these new restrictions, which mark the third significant regulatory action by the U.S. against China’s semiconductor sector in three years. The announcement of these rules was made on Monday, targeting 140 Chinese companies and further regulating chip equipment makers.
The Biden administration’s latest measures are strategically designed to curb China’s advancements in producing chips that could enhance military AI applications or pose a threat to U.S. national security. Despite these new constraints, Applied Materials remains confident in its financial projections, expecting Q1/25 revenues around $7.15 billion, with a variance of $400 million. Additionally, the company anticipates an adjusted profit per share (non-GAAP EPS) of approximately $2.29, with a possible variance of $0.18. This outlook reflects the company’s positive performance in the previous quarter, where it reported revenue of $7.05 billion and non-GAAP EPS of $2.32.
Similarly, ASML Holding (ASML), another global leader in chip manufacturing equipment, has expressed that these new U.S. restrictions will not impact its latest financial guidance. This consistency in outlook from two of the world’s leading chip equipment manufacturers suggests that, at least in the short term, the companies believe they can navigate the new regulatory environment without immediate disruption to their business models or financial performance.
Applied Materials supplies critical chipmaking tools to giants like Samsung Electronics, TSMC, and Intel, positioning it at the heart of the global semiconductor supply chain. The company’s steadfast outlook amidst these regulatory changes might reflect a strategic resilience or confidence in alternative markets or technologies that can offset any potential losses in the Chinese market. However, the long-term effects of these export controls on the industry and global tech supply chains remain to be seen, as the landscape of international trade in high-tech components continues to evolve under the shadow of geopolitical tensions.
Price Action: As of press time, AMAT is changing hands at $181.29, down 1.08% intraday.
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