Applied Materials has warned that new US export restrictions will weigh heavily on its business, underscoring the risks American chip-equipment makers face from Washington's widening crackdown on technology ties with China.
In an 8-K filing, the company stated that the Commerce Department's latest "BIS Affiliates Rule" will further restrict its ability to sell products and provide services to certain China-based customers. Applied expects the measure to cut fourth-quarter fiscal 2025 revenue by about US$110 million, and shave roughly US$600 million off fiscal 2026 sales.
The new rule, issued by the Bureau of Industry and Security (BIS) on September 29, expands the scope of the US entity list by targeting subsidiaries of blacklisted companies. Under the changes, affiliates that are at least 50% owned by sanctioned firms will face the same restrictions as their parent companies, while firms with significant minority ownership links may also be subject to tighter scrutiny. BIS officials stated that the move is intended to close loopholes that allowed restricted entities to access American goods through their subsidiaries.
According to Bloomberg, the expansion intensifies compliance challenges for US suppliers already navigating complex trade rules. Applied Materials and peers like Lam Research and KLA have been repeatedly impacted by escalating export controls, part of Washington's campaign to slow China's progress in chip manufacturing and artificial intelligence (AI). While the new rules are global in scope, they are expected to fall most heavily on Chinese firms like Huawei and Yangtze Memory Technologies, already blacklisted over national security concerns.
The Chinese government swiftly condemned the decision, calling the curbs an "unjustified suppression" of its companies and warning of retaliatory measures. Industry lawyers also cautioned that the widened entity list would create more uncertainty for exporters, lengthening due diligence processes and potentially delaying shipments. For Applied, the new restrictions mark yet another reminder that US-China tech tensions carry direct financial costs for America's most advanced semiconductor toolmakers.
Article edited by Jack Wu
