Chip Firm Projects Continued BIS Export Licensing Delays
Applied Materials, the largest American semiconductor equipment supplier, is expecting a drop in its China sales due to uncertainty around U.S. export controls and its high volume of pending license applications, executives said last week.
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CEO Gary Dickerson, speaking during an earnings call about Applied Materials’ third-quarter results, said the company is preparing for a dip in both revenue and earnings for its fourth quarter, “primarily due to uncertainties in our China business.” He pointed to the current “dynamic macroeconomic and policy environment, including trade and tariffs,” which “has wide-ranging implications for the semiconductor industry, increasing uncertainty and lowering visibility in the near term.”
That uncertainty has partly been caused by pauses and delays in export licensing decisions by the Bureau of Industry and Security. The agency has paused and resumed processing license applications multiple times over the past few months with no public explanation (see 2506110008, 2504020051 and 2504140055).
Dickerson said the licensing delays are one of the “main factors” why the company has had to “mute our outlook for the quarter ahead.” Applied Materials is seeing a “large backlog of pending export license applications,” he said, “where we have taken a conservative position and assumed none of these licenses will be issued in the next quarter.”
Brice Hill, the company’s chief financial officer, said “we expect China as a percentage of our revenue in Q4 to decrease.” He said "this assumes that we do not receive any approvals of our pending export license applications.”
Applied Materials is also seeing its China customers slow down their spending, and it’s expecting demand from the company’s “leading edge” customers to also decrease. “We are seeing customers take longer to commit to orders, leading to a shorter visibility window,” Hill said.
Hill added that Applied Materials “had very large shipments into” China in 2023 and 2024, so it expected a drop this year. “We actually expect this to continue for several more quarters.”
He added that certain customers “have been waiting longer to make capital commits in this environment that we're all going through, with tariffs and trade and other uncertainties.”