Applied Materials (NASDAQ:AMAT), Nvidia (NASDAQ:NVDA)
A report from the United States Commerce Department looks to intensify restrictions on chip equipment makers’ retailing of the vital technology to China.
The limits, which the Commerce Department is expected to announce soon, may target Chinese memory programs and lithography tools, according to Citi analyst Atif Malik. The investment firm did not alter its forecast for yearly wafer fab equipment sales of $80 billion, however, as this figure already accounts for a 40% drop in Chinese spending on memory and manufacturing projects for wafers with a 14 nanometer or smaller size.
In a message to customers, Malik stated, “We continue to believe the group bottoms in [September/October], with expanded China limitations as the final bit of [wafer fab equipment] negative news.”
Semiconductor Stock Outlook
The Commerce Department will release new regulations based on the limitations mentioned in the letters submitted to Applied Materials (NASDAQ:AMAT), KLA Corporation (NASDAQ:KLAC), and Lam Research (NASDAQ:LRCX). In premarket trade, Applied Materials (NASDAQ:AMAT), KLA Corporation (NASDAQ:KLAC), and Lam Research (NASDAQ:LRCX) all experienced a slight decline.
Other semiconductor firms, like Nvidia (NASDAQ:NVDA) and Advanced Micro Devices (NASDAQ:AMD), might also be hurt, according to UBS analyst Timothy Arcuri. The analyst did add that there wasn’t “anything new” to the plans the Commerce Department has already made.
“The incremental piece to the story would, in our view, be if the [Commerce Department] placed more direct bans on [Yangtze Memory Technologies] – one of the most successful domestic Chinese chipmakers, we think representing [more than] 10% of revenue for [Lam Research] and mid to high single-digit revenue for other US suppliers,” Arcuri wrote in a note to clients.
Several Republican congressmen warned last week that Apple (AAPL) would be subject to more congressional scrutiny if it purchased iPhone components from Yangtze Memory Technologies, a Chinese company.
Wafer fab equipment sales are falling, Arcuri stated, so chip equipment manufacturers are anticipated to have headwinds for the upcoming quarters.
However, Nvidia (NASDAQ:NVDA) is regarded favorably as it might be able to sell older systems, “get around” some of the China-related restrictions, and recoup some of the $400 million in lost income that the firm highlighted in a recent filing.
Both Nvidia (NASDAQ:NVDA) and AMD (NASDAQ:AMD) recently reported that they had received information from U.S. officials that certain semiconductor devices could no longer be marketed in China or Russia due to their possible use in military projects in those nations.
Featured Image- Megapixl @Timonschneider
Author Jowi Kwasu 
