[News] Latest U.S. Export Curbs on Chinese Blacklisted Subsidiaries Could Cost Applied Materials $710M

Shortly after U.S. Commerce Department earlier this week expanded its export blacklist to close loopholes used by Chinese and overseas affiliates, Applied Materials warned it could lose about $600 million in fiscal 2026 revenue, dealing a fresh blow to industries spanning chips, aviation, and medical equipment, according to Reuters and The Wall Street Journal.

In addition, The Wall Street Journal report notes the chipmaking tool giant expects the tightened U.S. export rules will shave an additional $110 million off its fourth-quarter revenue, piling onto existing headwinds from weak China demand and tariffs.

Sanctioned Chinese Firms Can’t Hide Behind Affiliates

It is worth noting that for years, Washington has long used the entity list to tighten the screws on Chinese tech champions like Huawei and YMTC. But Bloomberg highlights that the new BIS rule, unveiled Monday, goes a step further — aiming to stop sanctioned firms, including Huawei, from leveraging affiliates to sidestep U.S. export curbs.

Under the new measure, subsidiaries that are at least 50% owned by blacklisted firms will now be treated the same as their sanctioned parents, according to the announcement made by U.S. Bureau of Industry and Security. The rule also imposes stricter due diligence requirements for exports to companies where a sanctioned firm holds a significant minority stake, the report adds.

The new rule officially took effect on Tuesday, though companies will still have the opportunity to file comments or request temporary adjustments, as per Industry Week.

New Headwinds

Reuters reports that Applied Materials, alongside EUV leader ASML, had already flagged weak sales, citing slow demand in China and volatile orders amid tariff-driven uncertainty. Back in August, Applied Materials projected fourth-quarter revenue of $6.70 billion ± $500 million, indicating an approximate 8% decline from the previous quarter, as per Reuters.

On the other hand, while second-quarter bookings exceeded market expectations, ASML cautioned in mid-July that rising uncertainty stemming from macroeconomic and geopolitical factors has made it difficult to confirm growth for 2026 at this stage, Reuters reported.

As the BIS rolls out its new export curbs, analysts told Reuters the rules could further jam global supply chains, drastically increasing the number of companies needing U.S. licenses to access American goods and tech.

China still makes the lion’s share for chipmaking tool firms’ revenue. For instance, China’s share of Applied’s sales, as per its press release, jumped to 35% in Q3 FY2025 (ended July 27) from 25% in the previous quarter, underscoring the company’s reliance on the market.

ASML, in the meantime, reported that China was its second-largest market in Q2, accounting for 27% of net system sales.

Read more

• [News] Applied Materials Reportedly Flags Minimal Effect of U.S. Incentives, Offers Nuanced View on China
• [News] Applied Materials Warns of Q4 Revenue Drop on China Slowdown, Tariff Worries

(Photo credit: Applied Materials)