Applied Materials earnings to focus on China demand, chip market strength

Applied Materials  (AMAT) - Get Free Report shares edged higher in pre-market trading ahead of the semiconductor equipment maker's third quarter earnings after the closing bell.

Analysts expect the group to post a bottom line of $1.74 per share, a 10% decline from last year, on revenues of $6.16 billion. 

Applied Materials, which makes tools that allow chipmakers to ramp production as they leverage subsidies from domestic governments looking to diversify supply chains away from China, forecast revenues of $6.15 billion for the quarter, plus or minus $400 million.

The group is also set to benefit, at least in part, from export restrictions on high-tech chip technologies put in place earlier this year by the Biden administration, as China-based companies seek to amplify their legacy production platforms as a counterweight. 

Applied Material's ICAPS group focuses on chips for the IoT, communications, automotive, power and sensors sectors. 

"While China currently leads in ICAPS spending, we see other countries increasing their investments at a higher rate. In fact, the fastest-growing regions for our ICAPS business in 2023 are the U.S., Europe, and Japan," CEO Gary Dickerson told investors in May. 

"Looking beyond 2023, our long-term growth thesis for the industry remains unchanged," he added. "Semiconductors are the foundation of the digital economy, which is driving demand and puts the industry on a path to become a trillion-dollar market by the end of the decade."

Applied Materials shares were marked 0.17% higher in pre-market trading to indicate an opening bell price of $138.49 each.

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