Applied Materials Forecast Low Amid Supply Chain Issues

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Applied Materials’ revenue and profit guidance for the first quarter fell short of market expectations as continued chip shortages impacted the supply chain of the world’s largest maker of tools for chip manufacturing.

The gloomy forecast sent the company’s shares plunging nearly 6.7 percent in extended trading.

The company, which makes machinery for making semiconductors and other high-tech chips, forecast net sales for the current quarter of $6.16 billion, plus or minus $250 million, against analysts’ forecasts of $6.50 billion.

Gary Dickerson, CEO of Applied Materials, said demand remains strong and that the company’s fourth-quarter sales would easily exceed $300 million in the supply chain, which Dickerson said will impact company revenues through fiscal 2022.

Chief Financial Officer Bob Halliday said at least 10 components out of thousands of components used in Applied’s machinery had caused supply chain problems and the company hoped its supply problems would slowly improve in each quarter for fiscal 2022.

Chipmakers are doubling their production of new chips and buying new tools as the world switches to 5G and consumers upgrade their electronic devices. The transition to remote work and learning during the Covid-19 pandemic has also catapulted demand for chips.

Applied, whose customers include leading chipmakers such as Intel Corp and Taiwan Semiconductor Manufacturing Co Ltd as its clients, is forecasting adjusted earnings of between $1.78 and $1.92 per share, well below analysts’ estimate of $2.01 per share.

The company’s fourth-quarter revenue rose 31% to $6.12 billion, below its original forecast of $6.35 billion. Adjusted, the company earned $1.94 per share, 1 cent less than originally forecast.

For more information, you may view the original story from Reuters.

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