U.S. Export Crackdown: How Applied Materials (AMAT) Is Navigating China’s Semiconductor Storm
Silicon Valley's golden goose gets squeezed by Washington.
Applied Materials—the $150B chip equipment giant—is caught in the crossfire of escalating U.S.-China tech wars. New export controls are forcing brutal supply chain recalculations.
Here's the damage:
• 15% of AMAT's revenue now in regulatory limbo
• Chinese fabs scrambling for workarounds
• Wall Street analysts slashing Q4 targets
The real kicker? These restrictions arrive just as China's domestic chip production hits record levels. Coincidence? Please—this is geopolitics meets margin protection.
AMAT's engineers are reportedly working 80-hour weeks to redesign equipment that complies with new rules. Meanwhile, CFOs on both sides of the Pacific are recalculating depreciation schedules like it's 2008.
One hedge fund manager quipped: 'They'll need more than applied materials to fix this supply chain—try applied mathematics.'
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Even so, analysts think that the damage to Applied’s overall sales might not be too severe. That’s because the company has already reduced how much of its revenue comes from China. More precisely, just over 20% of sales come from the country, compared to nearly 40% a few years ago. Applied also said that it expects stronger overall revenue in the second half of Fiscal Year 2026, which could help balance things out. However, one positive update is that the U.S. has paused a key export restriction, known as the “affiliate rule,” following discussions between President TRUMP and Chinese President Xi Jinping.
Interestingly, Applied’s management team confirmed that this pause will result in approximately $600 million in additional sales this year. Still, CEO Gary Dickerson pointed out that foreign competitors are selling to Chinese firms that Applied can’t reach due to the remaining restrictions. This led analysts at Jefferies to question whether Applied might be losing market share in China, but the company insists that isn’t the case.
What Is the Target Price for AMAT?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on AMAT stock based on 16 Buys, eight Holds, and one Sell assigned in the past three months. Furthermore, the average AMAT stock price target of $231.27 per share implies 3.5% upside potential.
