San Francisco: Semiconductor-equipment maker Applied Materials said on Thursday that its fourth-quarter profit significantly exceeded analyst expectations as demand for chips surged and the government spent billions in subsidies. I expected it to exceed.
Shares rose 1.9% in after-hours trading after the company’s third-quarter earnings also beat expectations.
Governments around the world have given billions of dollars in subsidies over the past year to expand domestic semiconductor production, including Applied and Lam Research and KLA, which have the essential tools to make chips. profited by its rivals.
Applied CEO Gary Dickerson said on Thursday’s earnings call that government incentives will total hundreds of billions of dollars worldwide over the next five years.
Applied expects fourth-quarter sales of US$6.51 billion (RM30.26 billion) plus or minus US$400 million, well above the average analyst forecast of US$5.86 billion.
The Santa Clara, Calif.-based company expects adjusted earnings per share of $1.82 to $2.18, beating market expectations of $1.61.
Applied reported third-quarter revenue of US$6.43 billion, beating the average analyst estimate of US$6.16 billion, according to Refinitiv data.
On an adjusted basis, earnings per share were $1.90 for the quarter ended July 30, beating expectations of $1.74.
Applied finance chief Bryce Hill said the company’s services business will continue to grow, although overall chip equipment spending is down this year.
The company’s semiconductor systems division, which supplies equipment to chip makers, saw third-quarter sales fall about 1 percent to $4.68 billion.
Applied’s profitable services division, which generates revenue by providing consulting and spare parts to keep tools in top operating condition, grew 3% to US$1.46 billion.
Sales in the display segment for the quarter fell 29% to US$235 million.
Applied and other tool makers were initially hit by a series of U.S. export controls that restricted sales of cutting-edge equipment to Chinese customers. But in recent months, it has benefited from Chinese customers buying more equipment that can handle older manufacturing processes.
Samsung Electronics, Taiwan Semiconductor Manufacturing Co, and Intel Corp use the company’s advanced chip production tools. – Reuters
