U.S. Export Rules Dent Applied Materials’ China Revenue, With Broader Tech Sector Implications
Applied Materials anticipates reduced Chinese demand for its semiconductor equipment in 2025 as tightened U.S. export controls disrupt established supply chains. The restrictions target loopholes previously exploited through subsidiary networks, particularly affecting China's dominant position as the leading buyer of chipmaking tools since 2020.
While China currently contributes just over 20% of Applied's revenue—down significantly from nearly 40% in prior years—analysts suggest the company's diversified client base may mitigate the financial impact. Management projects stronger H2 FY2026 performance could offset these headwinds.
A temporary reprieve emerged through the suspension of the contentious 'affiliate rule' following high-level US-China negotiations, expected to generate $600M in additional sales. This development underscores the geopolitical volatility inherent in cross-border technology transfers.
