Applied Materials gives upbeat revenue forecast as chipmakers build capacity

Aug 18 (Reuters) – Semiconductor equipment maker Applied Materials Inc (AMAT.O) on Thursday assuaged fears of a slowdown with a strong revenue forecast as chipmakers rush to add capacity, sending its shares 4% higher in extended trading.

The company expects current-quarter revenue of $6.65 billion, plus or minus $400 million, compared with the $6.57 billion estimated by analysts, according to Refinitiv IBES data.

Chipmakers have been flooding Applied Materials – the largest maker of semiconductor equipment – with orders as they try to build capacity to ease a widespread supply crunch.

But the same shortage has left the company without the components needed to make its products, while recent COVID-19 flare-ups in China have worsened the supply chain bottlenecks.

That has forced Applied Materials to spend more on logistics, hitting its margins. In the third quarter, gross margin fell to 46% from 47.9%, pushing the profit down by 6%.

"Ongoing supply chain challenges constrained our ability to meet demand, and our top priority remains increasing shipments to our customers," said Chief Executive Officer Gary Dickerson.

Still, the company posted a record quarterly revenue of $6.52 billion, which was higher than expectations of $6.28 billion.

Reporting by Chavi Mehta and Tiyashi Datta in Bengaluru; Editing by Aditya Soni

Our Standards: The Thomson Reuters Trust Principles.

Source:www.reuters.com