Applied Materials, one of the world's largest semiconductor equipment manufacturers, said on 14 November that tightening U.S. export controls have sharply restricted its ability to supply tools to China's memory and mature-node chipmakers—cutting its China revenue share nearly in half and weighing on future growth.

China Revenue Share Falls from Nearly 40% to About 25%

CEO Gary Dickerson said the company can no longer ship certain tools to affected Chinese customers due to stricter U.S. rules. Although the restrictions apply only to specific advanced products and specific customers, the impact has been significant.
Applied's China revenue share has fallen from close to 40% in recent years to the mid-20% range today, Dickerson said, adding that foreign competitors continue supplying Chinese firms the company cannot serve.

He warned that the tighter rules will result in lower wafer-fab equipment spending in China in 2026.

Q4 and Fiscal 2025 Results: Revenue Declines 3%

On 14 November, Applied Materials released its financial results for the quarter ended 26 October 2025.

 ● Q4 revenue: USD 6.8 billion, down 3% year-on-year

 ● Semiconductor systems revenue: USD 4.76 billion, down 8%

 ● Adjusted net income: USD 1.732 billion, down 10%

 ● GAAP EPS: USD 2.38, up 14%

 ● Non-GAAP EPS: USD 2.17, down 6%

For the full 2025 fiscal year, the company reported record revenue of USD 28.37 billion, up 4% year-on-year, and record non-GAAP EPS of USD 9.42, up 9%.

Applied Materials' shares fell more than 4% in after-hours trading on 13 November, closing at USD 213.59.

Export Rules Delay Shipments but Pause Helps Recover USD 600 Million

A U.S. "affiliate rule" targeting companies that use subsidiaries to bypass export controls prevented Applied from shipping about USD 110 million worth of products during the fourth quarter.
The rule—introduced in October as part of new 50% ownership-penetration restrictions—was suspended after late-October talks between U.S. and Chinese leaders.

Applied executives said the suspension will restore roughly USD 600 million in sales for the full fiscal year and allow the delayed products to ship by January 2026.

Still, the company expects the tightened rules to reduce fiscal 2026 revenue by another USD 600 million, as previously forecast.

2026 Outlook: Weak China Spend, Stronger Second Half

Applied expects first-quarter fiscal 2026 revenue of USD 6.85 billion, plus or minus USD 500 million—slightly above analyst expectations.
The company anticipates stronger overall revenue in the second half of 2026, driven by:

 ● AI-related memory expansion

 ● a rebound in wafer-fab equipment spending starting in late 2026

 ● resumed shipments following the pause of the affiliate rule

CFO Brice Hill said customers expect wafer-fab equipment spending to "accelerate from the second half of 2026."

Layoffs and Restructuring as Export Pressure Mounts

On 25 October, Applied Materials announced it would cut about 4% of its workforce, or roughly 1,400 positions, to streamline operations amid increased U.S. export restrictions.
The restructuring will incur USD 160–180 million in charges, mostly recognized in fiscal Q4.

Dickerson said the company aims to "accelerate decision-making, focus on the most important priorities, and prepare for significant growth over the next few years."

Industry Context: Foreign Competitors Fill the Gap

Analysts say the hit from U.S. controls is partly offset because China's share of Applied's total revenue has already fallen sharply.
Competitors such as ASML and KLA have issued similar warnings about China, though non-U.S. equipment firms continue supplying Chinese customers barred from buying Applied's tools.

"The key question is whether the divergence from peers reflects share loss in China," Jefferies analysts wrote. "Applied insists it does not."