Applied Materials Sees $600 Million Revenue Hit from Expanded U.S. Export Curbs

Applied Materials, one of the world’s leading semiconductor equipment makers, warned that expanded U.S. export restrictions will cut fiscal 2026 revenue by about $600 million, adding pressure to an already strained chip industry. The company disclosed in a filing that the new rules will hinder its ability to export certain products and supply parts or services to select China-based customers without a license. Following the announcement, Applied Materials’ shares dropped 3% in after-hours trading.

The U.S. Department of Commerce recently widened its export blacklist, targeting not just listed companies but also their majority-owned subsidiaries. The move aims to curb efforts by Chinese companies and other international players to bypass U.S. trade restrictions through affiliates. This expansion will significantly increase the number of firms requiring licenses to access American goods, technology, and services, heightening supply chain risks across semiconductors, aircraft, and medical equipment.

Applied Materials estimates the new rule will also reduce fourth-quarter revenue by about $110 million. This comes on top of earlier challenges from weakening demand in China, ongoing tariffs, and broader industry slowdown. Competitors such as ASML Holding are facing similar headwinds. In August, Applied Materials had already issued weak sales and profit guidance, reflecting the industry’s volatility.

Despite these hurdles, the Santa Clara-based company posted stronger-than-expected results in its third quarter, with revenue rising 8% year-over-year to $7.30 billion, surpassing analyst expectations of $7.22 billion. For fiscal 2024, total revenue increased 2.5% to $27.18 billion.

As Washington ramps up efforts to strengthen domestic semiconductor manufacturing and reduce reliance on Taiwan, Commerce Secretary Howard Lutnick highlighted a strategy to encourage Taiwan to split its chip production equally between U.S. and domestic facilities. This geopolitical shift, combined with stricter export policies, underscores the growing complexity facing global chipmakers.

By tightening restrictions, the U.S. aims to safeguard its technological edge, but companies like Applied Materials now face heightened uncertainty over their growth outlook in critical markets like China.