Applied Materials Inc. saw its stock price tumble more than 3% in after-hours trading Thursday after the semiconductor equipment manufacturer disclosed that new U.S. export restrictions would significantly impact its financial performance.
Export Controls Target China Operations
The Santa Clara-based chipmaker revealed in an 8-K filing with the Securities and Exchange Commission that the U.S. Department of Commerce’s newly implemented “BIS Affiliates Rule” will substantially curtail its business activities in China. The regulation restricts Applied Materials’ ability to export certain products and provide specific parts and services to China-based customers without obtaining proper licensing from authorities.
The Bureau of Industry and Security (BIS) rule represents the latest escalation in Washington’s efforts to limit China’s access to advanced semiconductor technology, a move that continues to reverberate through the global chip industry supply chain.
Financial Impact Significant
The financial implications of these export restrictions are considerable. Applied Materials estimates the new rules will shave approximately $110 million off its fourth-quarter revenue. Looking ahead, the company projects an even more substantial hit to its fiscal year 2026 revenue, with anticipated losses reaching roughly $600 million.
These figures underscore the challenges facing U.S. semiconductor equipment manufacturers as they navigate increasingly complex geopolitical tensions between Washington and Beijing. China remains a crucial market for many chipmakers, and export restrictions create both immediate revenue pressures and longer-term strategic complications.
Strong Year Despite Setback
Despite Thursday’s after-hours decline and the looming revenue impact, Applied Materials has demonstrated robust performance throughout the year. Shares have climbed approximately 37% year to date, reflecting strong demand for semiconductor manufacturing equipment amid the ongoing artificial intelligence boom and broader digital transformation trends.
The company’s stock performance highlights the semiconductor industry’s dual reality: surging long-term demand for chips and chip-making equipment, coupled with mounting regulatory headwinds that complicate market access and revenue forecasts.
As geopolitical considerations continue to shape the semiconductor landscape, Applied Materials and its peers face the ongoing challenge of balancing growth opportunities with compliance requirements in an increasingly fragmented global market.
