According to Financial Investment News, the largest chip manufacturing equipment manufacturer in the usa, Applied Materials (AMAT.US), announced its fourth-quarter performance. Data shows that as of October 27, fourth-quarter revenue increased by 5% to $7.05 billion, exceeding the expected $6.95 billion. Adjusted earnings per share were $2.32, also exceeding the expected $2.19. The company also released disappointing revenue guidance, indicating that some semiconductor customers may delay orders.

Applied materials' revenue guidance for the first quarter is below Wall Street's expectations, indicating weak demand for the company's chip manufacturing equipment outside of ai chips. Although demand for cutting-edge equipment from ai chips is strong, softness in certain markets has slowed spending, impacting demand for companies like applied materials.

According to data compiled by LSEG, applied materials expects first-quarter revenue of about $7.15 billion, below the average analyst estimate of $7.22 billion. The company anticipates adjusted earnings per share of around $2.29, slightly above the expected $2.27.

In addition, the United States has tightened export restrictions on high-end chips and certain equipment to china, creating lingering uncertainty for tool suppliers and chip companies. Applied Materials also faces competition from other chip manufacturing equipment suppliers such as KLA Corp (KLAC.US), Lam Research (LRCX.US), and ASML Holding (ASML.US).

Applied materials' revenue in china has also declined. The company saw a surge in orders from china in recent quarters, partly due to demand for memory chip equipment. Applied materials stated that the market remains healthy. Last quarter, china accounted for 30% of the company's total sales, down from 44% in the same period last year.

The massive spending on ai computing has stimulated demand for advanced chips, which in turn has driven demand for the machines needed to produce these chips. Competitor asml holding predicted in early October that sales and order volumes for 2025 will be below expectations, due to continued weakness in some sectors of the semiconductor market despite the boom in ai-related chips. Other parts of the industry are slowing down. For example, some industrial equipment and auto chip manufacturers reported weak demand.

The demand for applied materials' ICAPS business is also lukewarm. The ICAPS business provides components for connected appliances, communications, autos, power control, and sensors. Following the earnings release, as of the time of writing, applied materials' stock price fell about 5% in after-hours trading. The stock closed at $186 in New York on Thursday, up 15% year-to-date.

However, Gary Dickson, the CEO of applied materials, stated that he still believes that AI and new types of chips will keep the industry growing. In an interview, he said, 'Applied materials is at the forefront in all high-end fields. AI is a huge driver for the entire industry.'

The main clients of applied materials are some large companies in the chip industry, including Taiwan Semiconductor (TSM.US), Samsung Electronics (SSNLF.US), and Intel (INTC.US). These manufacturers place orders long before they start production, making the forecasts from applied materials a barometer for future demand.

Seeking Alpha analyst Bashar Issa commented on the company's performance in an email, saying, 'As expected, AI will continue to drive the growth of Foundry Logic. My only caveat is that, aside from AI, other business lines are performing poorly. We are still waiting for the promised recovery in the Flash business. DRAM is still okay, but it hasn't met the standards, despite high bandwidth memory (HBM) being heavily promoted. Clearly, these quarterly data should not distract us from the favorable factors in the medium to long term.'