Applied Materials warned of declining visibility and heightened uncertainty for the semiconductor sector, as U.S. export restrictions and shifting trade policies weigh on Chinese demand.

The company said it expects fourth-quarter revenue of $6.70 billion, plus or minus $500 million—well below analysts’ expectations of $7.33 billion, according to LSEG data.

China was the company’s largest market in the July quarter, accounting for 35% of total sales. But new orders from the region are under pressure, raising investor concerns over long-term earnings growth and exposure to geopolitical volatility.

"China volatility is significantly clouding visibility into core earnings potential both geopolitically and cyclically," Deutsche Bank strategists said in a note.

CEO Gary Dickerson said during an investor call that the near-term outlook was being affected by “wide-ranging implications for the semiconductor industry” arising from the current policy environment.

The company’s forecast follows a similar warning from Dutch chipmaking equipment giant ASML Holding last month, underscoring growing uncertainty across the global supply chain.

Despite the outlook, some analysts suggested the downturn may be temporary. J.P.Morgan's Harlan Sur said recent weakness in China demand and foundry orders likely reflects "timing of spending rather than structural issues."

Applied Materials’ shares had risen 15.7% this year before Friday’s drop, outperforming the Nasdaq index, which gained 12.5% in the same period.

The company reported an 8% rise in third-quarter revenue to $7.30 billion—slightly ahead of estimates. However, its earnings forecast fell short of market expectations.

Copied