Applied Materials forecast beats estimate as demand for chipmaking tools surges By Reuters

By Tiyashi Datta and Stephen Nellis

(Reuters) – Applied Materials Inc (NASDAQ:) on Thursday forecast second-quarter revenue above market expectations, as demand for its semiconductor manufacturing tools picked up during a global shortage of semiconductors.

The chip-gear maker is beginning to benefit from the coronavirus-induced surge in the sales of PCs, gaming consoles and other devices used to work and play from home.

The company expects fiscal second-quarter revenue of $5.39 billion, plus or minus $200 million, which would exceed above analysts’ expectations of $4.96 billion. The forecast calls for adjusted profits to be $1.44 to $1.56 per share, above estimates of $1.28.

Shares were up 4.7% in extended trading after the results.

The semiconductor industry has suffered a global supply shortage that disrupted production at many automotive factories and limited revenue growth at chip designers such as Qualcomm (NASDAQ:) Inc and Advanced Micro Devices (NASDAQ:) Inc. On a conference call with investors, Applied Chief Executive Officer Gary Dickerson said the company had pulled together an internal group to target the makers of specialty semiconductors for sectors like the automotive industry.

“We think some of these markets could be some of the fastest-growing markets over the next several years,” Dickerson said.

American lawmakers have passed a program that, if funded, could provide a boost to chip toolmakers such as Applied by subsidizing the construction of new chip factories. Dickerson said on the investor call that the factories in the United States and Europe could be smaller in size than megafactories in Asia, which could benefit Applied because two small factories that make the same number of chips as one big factory must buy more tools overall.

“We have been engaged with customers and also government initiatives around investments in different locations,” Dickerson said. “That somewhat less efficient factory size is a positive for Applied.”

For the fiscal first quarter ended Jan. 31, Applied’s quarterly net sales rose 24% to $5.16 billion, above analysts’ average estimate of $4.97 billion, according to IBES data from Refinitiv. Excluding items, the company earned $1.39 per share in the fiscal first quarter, above Wall Street’s estimates of $1.28, according to Refinitiv data.