Strong spending from cloud computing service providers and the rise of AI-embedded personal computers are driving demand for more advanced chips and by extension, for chip making equipment too.
“There is a reacceleration of capital investment by cloud companies, fab utilization is increasing across all device types and memory inventory levels are normalizing,” CEO Gary Dickerson said in a conference call with analysts.
The company reported first-quarter revenue of $6.71 billion, beating estimates, and said China sales of $3 billion accounted for 45% of total revenue, up from 17%, a year earlier. Applied Materials makes equipment that helps fabricate chips and counts Intel (NASDAQ:INTC) and Samsung (KS:005930) among its customers.
The California-based company said it expects second-quarter revenue of $6.5 billion, plus or minus $400 million, compared with analysts’ average estimate of $5.92 billion, according to LSEG data.
It also forecast adjusted profit per share of $1.79 to $2.15, above estimates of $1.79.
Analysts believe the push for stronger domestic supply chains for chips are benefiting companies such as Applied Materials and rival Lam Research (NASDAQ:LRCX).
Governments across the world have been urging chipmakers to develop domestic production of semiconductors, to reduce reliance on China and Taiwan amid U.S.-Sino tensions.
Late last year, Applied Materials was under a criminal investigation by the Justice Department for sending equipment to China’s top chipmaker SMIC via South Korea without export licenses, sources had told Reuters.
Excluding items, Applied Materials’ adjusted profit for the quarter ended Jan. 28 stood at $2.13 per share, beating estimates of $1.91.
Its gross margin jumped to 47.8% from 46.7% a year earlier.
Source: Economy - investing.com
