By Adam Clark

Applied Materials and its chipmaking equipment peers Lam Research and KLA were dropping early on Friday. New export restrictions threaten to hurt their business in China.

Applied Materials expects a $710 million hit to its revenue from new export restrictions published by the Bureau of Industry and Security. The changes mean it won't be able to export certain products to China-based customers without a license, the company said in a filing on Thursday. The new rules are expected to reduce Applied Materials' fourth-quarter revenue by $110 million and 2026 revenue by $600 million, it said.

Applied Materials stock was down 3.1% in premarket trading. Lam was falling 2.0% and KLA was down 2.4%.

Those moves are set to put only a small dent in the chipmaking equipment companies' impressive gains this year so far, driven by increasing demand for wafer fabrication equipment. Applied stock has climbed 37% this year, as of Thursday's close, while Lam is up 104% and KLA has risen 81% over the same period.

China represented around 30% of Applied Materials' sales this year so far and the company had already signaled a meaningful drop in Chinese revenue, Stifel analyst Brian Chin noted in a research note. He estimated Applied Materials is likely to suffer a 10% quarter-on-quarter sales drop in the fourth quarter.

"We expect other semi equipment peers/suppliers to have some, albeit varied negative exposure, which again highlights ongoing US-China trade friction/risk," Chin wrote.

Write to Adam Clark at adam.clark@barrons.com

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October 03, 2025 07:27 ET (11:27 GMT)

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