China turns U.S. sanctions into an equipment boom

The latest warning from Applied Materials (AMAT) underscores how deeply the U.S.–China technology standoff is reshaping the semiconductor equipment landscape. Applied disclosed that its fiscal 2026 revenue will drop by about $600 million due to expanded U.S. export restrictions. 

The new rules extend licensing requirements to majority-owned subsidiaries of blacklisted firms, closing loopholes that allowed Chinese fabs to receive restricted components through affiliates. This adds fresh uncertainty for American, European, and Japanese toolmakers whose sales have relied heavily on China. 

The reaction was swift—Applied’s shares fell 3% in after-hours trading—signaling investor concern that the global equipment cycle may now hinge as much on geopolitics as on chip demand.

These developments come as non-Chinese suppliers are showing uneven results in early 2025. Most Western toolmakers saw flat or declining revenue in the first quarter, reflecting not only licensing friction, but also a pause in wafer fab expansion outside China. 

For instance, ASML’s (ASML) revenue declined more than 20% year-over-year in Q1 2025 as it delivered fewer DUV systems to Chinese fabs amid tightening oversight. Tokyo Electron (TOELY) and Screen also recorded low single-digit declines. 

Applied itself saw a modest 1.9% dip, while Lam Research (LRCX) posted the only strong Western gain at 15.6%, helped by its cleaning and etch tools used in domestic U.S. and Korean memory projects, according to our report at The Information Network entitled Global Semiconductor Equipment: Markets, Market Shares and Market Forecasts.

-- Kristian Castellano, Director of Marketing at The Information Network, USA.