Revenue Impact from New Export Rules

Applied Materials Inc. (NASDAQ: AMAT) said Friday it expects a $710 million revenue hit from fresh U.S. restrictions on chip equipment exports to China. The company disclosed that new rules from the Commerce Department’s Bureau of Industry and Security (BIS) will significantly tighten licensing requirements.

Q4 2025 impact: ~$110 million cut to net revenue.
Fiscal 2026 impact: ~$600 million reduction in sales.
Shares of AMAT fell ~3% Friday but remain up ~35% in 2025.

Details of the Rule Change

Issued on Sept. 29, the new BIS Affiliates Rule requires U.S. firms to obtain licenses not only for companies on the entity list but also for any company 50% or more owned by those listed entities.
This move closes a loophole that previously allowed U.S. exports to affiliates of restricted Chinese firms.
Applied Materials said the rules will “further restrict its ability to export certain products and provide certain parts and services to specific China-based customers without a license.”

China Exposure

China accounted for over one-third of Applied Materials’ revenue in Q3 (ended July 2025).
The country remains AMAT’s largest single market, making the restrictions a substantial headwind.

Broader Semiconductor Impact

The export crackdown highlights rising tensions between U.S. and China in semiconductor supply chains.
Rivals are also at risk, but analysts say impacts will vary:

Lam Research (NASDAQ: LRCX): Potential $300M annualized hit.
KLA Corp. (NASDAQ: KLAC): Expected to face smaller effects.

UBS analysts cautioned that while all U.S. equipment makers are affected, Applied Materials will be hit hardest.

Investor Takeaways

Applied Materials has benefitted from booming AI-driven chip demand this year, but these new restrictions highlight the fragility of U.S. chip exports to China. Investors should watch how quickly licensing approvals come through, and whether AMAT can offset lost sales with stronger demand elsewhere.