Applied Materials shares fell over 7% when Wall Street opened on Friday, after the group warned of an expected decline in its investments in China for 2026. The semiconductor equipment manufacturer is feeling the impact of tougher measures imposed by the US authorities, which aim to restrict technology exports to China, particularly via affiliated entities. These rules are also weighing on the performance of competitors such as ASML and KLA Corporation in a Chinese market that has historically been crucial for the sector.
Although China remains the world's largest market for chip manufacturing equipment, Applied Materials' share of revenue from the country has fallen to 25%, down from nearly 40% just a few years ago. Nevertheless, the company expects its business to recover in H2 2026. At the same time, the temporary suspension of certain trade restrictions, achieved after bilateral discussions between Washington and Beijing, could enable Applied to recover approximately $600m in revenue.
CEO Gary Dickerson has denounced unfair competition, claiming that some foreign rivals continue to serve Chinese customers that are inaccessible to Applied. Despite these tensions, management rejects the assumption that its market share will fall. Last month, the company anticipated a negative impact of $600m on its 2026 revenues and announced a 4% reduction in its workforce. However, the stock is still up 37.3% YTD, and several analysts have raised their target prices for it following the latest results.
