Semiconductor equipment manufacturer Applied Materials has unveiled a robust forecast for its fourth-quarter profits, surpassing analysts’ estimates. This projection is propelled by a resurgence in chip demand and substantial government subsidies worldwide to stimulate domestic semiconductor production. As governments allocate billions of dollars in incentives, Applied Materials and its industry counterparts like Lam Research and KLA have experienced a significant boost in business, as their tools play a crucial role in chip manufacturing.
The CEO of Applied Materials, Gary Dickerson, highlighted that governments globally are providing substantial subsidies amounting to hundreds of billions of dollars over the next five years, which is set to benefit the semiconductor industry.
Applied Materials anticipates fourth-quarter revenue of $6.51 billion, a considerable increase compared to the average analyst estimate of $5.86 billion. The company’s projected adjusted profit per share falls between $1.82 and $2.18, surpassing the market consensus of $1.61.
In the third quarter, Applied Materials reported revenue of $6.43 billion, surpassing analysts’ expectations of $6.16 billion. Adjusted earnings per share for the same period were $1.90, exceeding estimates of $1.74.
Although overall chip equipment spending has been lower this year, Applied Materials’ services business is predicted to continue growing. The semiconductor systems unit, which provides equipment to chip manufacturers, experienced a minor decline in third-quarter revenue, while the services unit, which generates revenue from maintaining tools at maximum capacity, witnessed a 3% increase.
Sales in the display segment, however, faced a decline of 29% in the third quarter. Despite facing challenges like export controls and market fluctuations, Applied Materials remains a key player in the semiconductor industry, catering to major players like Samsung Electronics, Taiwan Semiconductor Manufacturing Co, and Intel Corp.
