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Tag: Applied Materials Inc

  • ASML Shares Plunge as Bookings Miss Signals Chipmaker Woes

    ASML Shares Plunge as Bookings Miss Signals Chipmaker Woes

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    (Bloomberg) — ASML Holding NV’s shares plunged the most in 26 years after it booked only about half the orders analysts expected, a startling slowdown for one of the bellwethers of the semiconductor industry.

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    The Dutch company, which makes the world’s most advanced chipmaking machines, lowered its guidance for 2025 and reported bookings of €2.6 billion ($2.8 billion) in the third quarter, missing an average estimate of €5.39 billion by analysts surveyed by Bloomberg.

    The results caused ASML shares to plunge 16% in Amsterdam, the biggest decline since June 12, 1998. It also triggered a broad downturn in chip-related stocks, with Nvidia Corp. falling 4.5% and the benchmark Philadelphia Semiconductor Index sliding 5.3%. Makers of chip-manufacturing equipment were especially hard hit: Applied Materials Inc. and Lam Research Corp. both suffered their worst declines since 2020, and KLA Corp. had its biggest one-day drop in nearly a decade.

    “It now appears the recovery is more gradual than previously expected. This is expected to continue in 2025, which is leading to customer cautiousness,” ASML Chief Executive Officer Christophe Fouquet said in the statement.

    The weak results were amplified by the company mistakenly releasing its financial results a day earlier than scheduled. ASML published the release, which was expected on Wednesday, prematurely “due to a technical error,” it said in a separate statement.

    The chip industry is experiencing strangely uneven times. In areas such as artificial intelligence accelerators, companies like Nvidia can’t keep up with demand. But in other sectors, including automotive and industrial, it’s in a prolonged slump with customers cutting back orders because they have too much inventory. Intel Corp. is cutting expenses in a restructuring that includes delays to planned factories in Germany and Poland, while memory chipmakers such as Samsung Electronics Co. and SK Hynix Inc. are also being careful with spending.

    “While bookings are typically lumpy, we have to concede given lowered guidance that it’s looking like the delayed cyclical recovery and specific customer challenges are weighing heavily on ASML’s 2025 expectations,” said Bernstein analyst Sara Russo.

    ASML lowered its guidance for 2025 total net sales to between €30 billion and €35 billion, compared to as much as €40 billion previously. Next year, the company expects a gross margin between 51% and 53%, compared to a prior range between 54% and 56%, mainly due to delayed timing for its top-end extreme ultraviolet machines, Fouquet said in the statement.

    ASML didn’t give a detailed explanation of why its bookings fell so short of estimates, beyond a few delays in plant constructions. The company will hold a call with investors Wednesday.

    Europe’s most valuable technology company’s shares have fallen by a third since hitting a record high in July, hurt by the prospect of more US restrictions on its business in China, as well as a broader weakness in the semiconductor sector.

    “Many will debate whether this release was an accident or planned, but clearly disappointing,” Cantor Fitzgerald analyst C. J. Muse said in an emailed statement. “Weakness across Intel and Samsung is clearly leading to 2025 tracking worse than we thought,” he said.

    Last month, the Netherlands published new export control rules that made ASML apply for export licenses in The Hague instead of US for some of its older machines. That came on the heels of a Bloomberg report that the Dutch government would limit some of ASML’s ability to repair and maintain its semiconductor equipment in China.

    China remained ASML’s biggest market, accounting for 47% of sales in the quarter. Sales to the Asian nation jumped by nearly 20% from previous quarter to €2.79 billion.

    But the demand from China may slow in the upcoming period and Washington’s ongoing chip war against Beijing continues to be a long-term overhang on ASML shares. The company could lose nearly a quarter of its sales in China next year, and 45% of its overall revenue generated in the country is at risk from further restrictions, according to UBS analyst Francois-Xavier Bouvignies.

    –With assistance from Henry Ren and Subrat Patnaik.

    (Updates US trading in third paragraph.)

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  • Wall Street expects rate hikes are off the table for now. Next week’s inflation data will test that thesis

    Wall Street expects rate hikes are off the table for now. Next week’s inflation data will test that thesis

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  • Applied Materials Declines After Report of US Criminal Probe

    Applied Materials Declines After Report of US Criminal Probe

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    (Bloomberg) — Applied Materials Inc., the largest US maker of chipmaking machinery, slid in late trading following a report that it faces a US criminal investigation for allegedly violating export restrictions to China.

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    The company is being probed by the Justice Department over dealings with China’s biggest chipmaker, Semiconductor Manufacturing International Corp., according to Reuters. The department is looking at whether Applied Materials sold hundreds of millions of dollars of equipment without the proper licenses, the news outlet reported, citing unidentified people familiar with the situation.

    The Justice Department declined to comment. Applied Materials declined to discuss details of the case but noted that it previously disclosed a federal review of China deliveries.

    “Applied Materials first disclosed in October 2022 that it received a subpoena from the US Attorney’s Office for the District of Massachusetts requesting information relating to certain China customer shipments,” the company said in an emailed statement. “The company is cooperating with the government and remains committed to compliance with global laws, including export controls and trade regulations.”

    The report overshadowed generally upbeat quarterly results from Applied Materials, which topped analysts’ estimates with its earnings and forecast.

    Shares of Applied Materials, based in Santa Clara, California, fell as much as 7% in extended trading. KLA Corp. and Lam Research Corp., two other US chip-equipment makers, also fell. KLA was down 3.4%, while Lam dropped 1.6%.

    The company and its peers are operating under increasingly strict rules imposed by Washington on exports of chip technology to China. The US has argued such rules are needed to protect national security and requires companies to seek licenses to send certain types of machines or have dealings with particular companies in the Asian nation.

    According to Reuters, Applied Materials produced chipmaking gear in Gloucester, Massachusetts, and then shipped it to a subsidiary in South Korea. It then went to China’s SMIC, the people familiar with the investigation said.

    SMIC was placed on a so-called entity list in December 2020 by the Department of Commerce, which cited alleged links between the chipmaker and China’s military. That means US companies need special permission to sell to the company.

    Applied Materials’ fourth-quarter report coincided with publication of the Reuters story. Earnings in the period amounted to $2.12 a share, excluding some items, the company said. Sales were little changed in the quarter, which ended Oct. 29, at $6.72 billion. Analysts estimated earnings of $1.99 a share and revenue of $6.54 billion.

    Fiscal first-quarter sales will be about $6.47 billion, the company said. That compares with an average analyst estimate of $6.34 billion. Excluding some items, profit will be $1.72 to $2.08 a share in the period, which ends in January. The average projection was $1.84 a share.

    Semiconductor manufacturers order machinery from Applied Materials and its peers well ahead of opening new factories, which can take more than a year to build and equip. That makes the company’s guidance a key indicator of the industry’s confidence in future demand.

    Though the chip industry has been contending with a slowdown in personal computers and smartphones — two of the biggest traditional consumers of semiconductors — Applied Materials Chief Executive Officer Gary Dickerson has argued that artificial intelligence computing will fuel a new surge in demand.

    Semiconductor equipment companies have been hurt by weak demand from memory-chip makers, which are enduring an industry glut that’s wiped out profits and slowed factory expansions. But that’s been offset, to an extent, by the ongoing race to make high-end processors — particularly for AI work.

    China had been one of the fastest-growing markets for chip equipment. But the US restrictions have begun to take a toll on sales. Analysts and investors are still trying to gauge the full impact of the new rules — and how they’re likely to be enforced.

    A recent tightening of the export restrictions won’t have an incremental impact on Applied Materials’ results, the company said Thursday.

    In the fourth quarter, that market provided 44% of overall sales and will remain at an “elevated level” in the current period because of some large shipments to a computer memory customer, the company said. Over time, China will shrink back down to around 30% of sales — its historical level.

    Dickerson said he remains bullish on the outlook for demand for his products overtime.

    “Longer term, the setup is really great,” he said in an interview.

    (Updates with more on results in eighth paragraph.)

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  • U.S. curbs export of more AI chips, including Nvidia H800, to China

    U.S. curbs export of more AI chips, including Nvidia H800, to China

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    The U.S. Department of Commerce announced Tuesday that it plans to prevent the sale of more advanced artificial intelligence chips to China in the coming weeks.

    The U.S. government says the new rules are intended to close loopholes that popped up after last year’s restrictions on AI chip exports went into effect.

    Shares of chip stocks took a leg lower in Tuesday morning trading on the news. Nvidia was down about 5% while Broadcom and Marvell slipped about 2%. Shares of AMD fell more than 3%; Intel fell about 1.5%.

    Those earlier restrictions banned the sale of the Nvidia H100, which is the processor of choice for AI firms in the U.S. such as OpenAI. Instead, Chinese companies were able to buy a slightly slowed-down version called the H800 or A800 that complies with U.S. restrictions, primarily by slowing down an on-device connection speed, called an interconnect.

    The new rules will ban those chips as well, senior administration officials said in a briefing with reporters.

    The restrictions could also affect chips sold by Intel and AMD. Other rules will likely hamper the sale and export to China of semiconductor manufacturing equipment from companies such as Applied Materials, Lam and KLA.

    The restrictions cut off a big and growing market for AI semiconductors, and could raise concerns that the Chinese government will retaliate economically against U.S. firms doing business in the country.

    Nvidia seems to have anticipated the restrictions, and said in August that they would not have an immediate material effect on earnings, but might hurt over the long term.

    “”We comply with all applicable regulations while working to provide products that support thousands of applications across many different industries,” an Nvidia spokesperson told CNBC. “Given the demand worldwide for our products, we don’t expect a near-term meaningful impact on our financial results.”

    The goal of the U.S. restrictions is to prevent Chinese access to advanced semiconductors that could fuel breakthroughs in artificial intelligence, especially with military uses, U.S. Commerce Secretary Gina Raimondo said on a call with reporters. They’re not intended to hurt Chinese economic growth, U.S. officials said.

    “The updates are specifically designed to control access to computing power, which will significantly slow the PRC’s development of next-generation frontier model, and could be leveraged in ways that threaten the U.S. and our allies, especially because they could be used for military uses and modernization,” Raimondo said.

    Senior administration officials say the U.S. will simply restrict the export of data center chips if they exceed a performance threshold set last October, or exceed a new performance density threshold benchmark measured in flops per square millimeter.

    Companies that want to export AI chips to China or other embargoed regions will have to notify the U.S. government.

    Senior administration officials also said they plan to expand the list of semiconductor manufacturing equipment subject to U.S. restrictions.

    Chips for consumer products, like game consoles or smartphones, will not be subject to the export controls, although companies may have to tell the Commerce Department about their orders if the chips are fast enough.

    The U.S. government is also closing loopholes dealing with how to ship chips to companies that are headquartered in China or other embargoed regions such as Macao, to prevent a loophole where a foreign subsidiary buys chips and then ships them into China.

    Raimondo said that the new restrictions will only affect a small fraction of chip exports to China.

    “The fact is China, even after the update of this rule, will import hundreds of billions of dollars of semiconductors from the United States,” Raimondo said.

    The rules will be available for public notice for 30 days, then will go into effect, U.S. officials said.

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    — CNBC’s Kristina Partsinevelos contributed reporting.

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  • Here are Tuesday’s biggest analyst calls: Apple, Tesla, Dollar Tree, Amazon, Alphabet, Toll & more

    Here are Tuesday’s biggest analyst calls: Apple, Tesla, Dollar Tree, Amazon, Alphabet, Toll & more

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  • The Investing Club’s top 10 things to watch in the stock market Friday

    The Investing Club’s top 10 things to watch in the stock market Friday

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    The Club’s 10 things to watch Friday, August 18

    1. Stocks are poised to open lower Friday, putting the S&P 500 on track for its third-straight week of losses. This is certainly a moment for investors to exercise patience, as we noted during the Investing Club’s Monthly Meeting on Thursday. Meanwhile, the market is finally in oversold territory, per the S&P 500 Short Range Oscillator.

    2. Club name Estee Lauder (EL) on Friday posts a small quarterly profit, compared with market expectations of a loss. But the prestige beauty firm’s guidance for adjusted earnings-per-share (EPS) for its fiscal year 2024 was in a range of $3.50 to $3.75, well below analysts’ forecasts for $4.88 a share, as travel retail in Asia remains challenged. Still, Estee Lauder expects to return to organic sales growth in fiscal 2024 and deliver sequentially improving margins throughout the year. Shares plummeted nearly 6% in premarket trading, to around $152 apiece.

    3. Shares of Applied Materials (AMAT) are rising in premarket trading after the semiconductor-equipment maker topped expectations in its third quarter and provided an upbeat view of the fourth quarter. JPMorgan on Friday raises its price target on the stock to $165 a share, from $145, while maintaining a a buy-equivalent rating.

    4. Strong earnings from off-price retailers continues, with Ross Stores (ROST) posting second-quarter EPS of $1.32, ahead of market estimates of $1.16 a share. Even so, the best operator in the space remains Club name TJX Companies (TJX), which delivered a strong quarterly beat and raise on Wednesday.

    5. Oppenheimer lowers its price targets on a slate of big banks, including Goldman Sachs (to $461 a share, from $483), Citigroup (to $85 from $88) and Bank of America (to $49 from $52), but maintains a buy-equivalent rating on all three. Oppenheimer notes that the KBW Bank Index (KBX) fell about 30 percentage points relative to the market in the weeks after the collapse of Silicon Valley Bank in March, and the group has yet to recover this underperformance despite stable fundamentals.

    6. Will there be fireworks tonight after the closing bell when Club name Palo Alto Networks (PANW) reports its earnings and provides an update on its medium-term targets? There’s universal caution here, even with the stock down more than 18% this month, but the market will have a full weekend to digest whatever the cybersecurity leader has to say.

    7. Deere & Co. (DE) posts a big EPS beat of $10.20, compared with analysts’ forecasts for $8.19 a share, while raising its full-year outlook.

    8. Club name Amazon (AMZN) is reportedly adding a new 2% fee on third-party sellers who use the ecommerce giant’s Seller Fulfilled Prime program, according to Bloomberg. That’s another step that would incrementally help its retail margins.

    9. B. Riley on Friday upgrades Marvell Technology (MRVL) to a buy rating, from neutral, thanks to an “expected wave of AI-led growth.” The firm also raised its price target on Marvell to $75 a share, from $60. The chipmaker is scheduled to report quarterly results on Thursday.

    10. Evercore ISI previews Club holding Apple‘s (AAPL) upcoming iPhone 15 launch, set for September. The firm expects the new iPhone will be more evolutionary than revolutionary, but should still drive a so-called device refresh and higher average-selling prices. Historically, Apple tends to outperform the market into its launch events, but that hasn’t been the case so far this year.

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  • Apple’s Tim Cook calls India ‘huge opportunity’ after tech meeting at White House with Prime Minister Modi

    Apple’s Tim Cook calls India ‘huge opportunity’ after tech meeting at White House with Prime Minister Modi

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    US President Joe Biden looks on as India’s Prime Minister Narendra Modi speaks during a meeting with senior officials and CEOs of American and Indian companies, in the East Room the White House in Washington, DC, on June 23, 2023. 

    Brendan Smialowski | AFP | Getty Images

    The CEOs of Apple, Alphabet, Microsoft got a healthy does of facetime with the leader of India this week, who was in the U.S. to meet with President Biden as well as other political and business leaders.

    The tech company execs spent over an hour with Prime Minister Narendra Modi inside the White House on Friday, discussing opportunities and challenges in investing in India. Earlier in the week, Modi met with Tesla CEO Elon Musk.

    After the meeting concluded at the White House, Apple CEO Tim Cook told CNBC that India represents a “huge opportunity.” When asked if Apple would continue expanding there, he pointed to the two retail stores the company opened in India earlier this year.

    It was the first state visit to the U.S. for Modi, who became prime minister in 2014. Following Friday’s meeting, the White House said Google will be working with the Indian Institute of Science on open sourcing of speech data for artificial intelligence models.

    OpenAI CEO Sam Altman was also in Washington for the event. Two people with knowledge of the matter said Altman and Modi discussed opportunities to collaborate on AI.

    Hemant Taneja, CEO of venture capital firm General Catalyst, attended the roundtable. Ahead of the meeting, he shared with CNBC his intentions to find alignment on efforts to streamline technology transfer rules between the U.S. and India, which has overtaken China as the world’s most-populous country. U.S. relations with China have become increasingly strained in the past few years.

    We are in a digital cold war with China, and this approach will ultimately foster an atmosphere of increased cooperation,” Taneja said.

    Large semiconductor companies like Micron and Applied Materials used Modi’s visit as an opportunity to announce plans to make significant investments India. Micron is aiming to open a facility in Modi’s home state of Gujarat as the broader chip industry looks for ways to diversify its supply chain. Lam Research revealed plans to train 60,000 Indian engineers. 

    Access to highly skilled labor and outdated labor laws are challenges for American businesses when it comes to staffing up in India.

    “U.S. companies in India have had difficulties over time with regulatory uncertainty as well as challenges in relocating or terminating employees,” said Kenneth Juster, former U.S. Ambassador to India. Juster, who’s now a distinguished fellow at the Council on Foreign Relations, said he remains optimistic, adding that India has pledged to ease the process for foreign companies to do business there.

    WATCH: Big tech CEOs meet with Biden

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  • Stock market rally will be put to test in week ahead, after yields fall and tech surges

    Stock market rally will be put to test in week ahead, after yields fall and tech surges

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