April 29, 2026, 08:02 PDT, Santa Clara, California.
The U.S. Commerce Department has told several chip equipment makers, including Applied Materials, to stop sending specific tools to China’s Hua Hong, Reuters said, tightening restrictions on Beijing’s advanced chip ambitions. Lam Research and KLA are also believed to be on the list of recipients, according to people familiar. Applied didn’t immediately respond when Reuters asked for comment.
The sequence isn’t trivial—China still accounts for a hefty share of Applied’s business, despite previous U.S. restrictions that have pared back what the company sells there. In the quarter ended Jan. 25, Applied’s revenue from China hit $2.10 billion, making up 30% of total sales, according to a filing.
It’s a tricky spot for Applied, with less than three weeks until its fiscal Q2 earnings call set for May 14. Investors are watching for updates on demand, shipments, and exposure to China following the most recent letters.
Applied shares hovered around $382.32 early Wednesday, little changed after Tuesday’s 5.8% slide sparked by the Reuters report. Lam dipped roughly 0.9%, with KLA also slipping 0.9% in the early U.S. session, leaving chip-tool names still under pressure.
China’s foreign ministry, without specifically mentioning Applied, fired back. Pressed about the Reuters story, spokesperson Lin Jian said Beijing wants the United States to take “concrete actions” that ensure global supply chains remain stable and unimpeded. fmprc.gov.cn
U.S. officials are focusing on shipments linked to two Hua Hong sites they suspect could be producing some of China’s most advanced semiconductors, Reuters said. One of those, Huali Microelectronics, has been getting ready for 7-nanometer manufacturing in Shanghai—where nanometers loosely track the sophistication of the chip process, and a smaller figure typically means a more cutting-edge product.
Chris McGuire, senior fellow for China and emerging technologies at the Council on Foreign Relations, called the move from the Trump administration “an overdue and welcome first step,” speaking with Reuters. Still, he said, unless it extends to every shipment from U.S. toolmakers—even those routed through foreign subsidiaries—the measure won’t make a real impact. Reuters
Applied has warned investors that U.S. export rules could restrict its China sales and open the door for foreign or local Chinese rivals to take its place. In its filing, the company flagged the difficulty and delays in securing licenses, noting that tighter rules might upend shipments or support for some customers.
There’s a flip side here. According to Reuters, Hua Hong might look to swap out U.S. gear for hardware from Chinese or other non-U.S. vendors. Worth noting: those Commerce Department “is-informed” letters aren’t guaranteed to turn into wider, binding rules. The upshot—nobody quite knows how much revenue is on the line, or for how long. Reuters
This latest development comes just after Applied wrapped up another U.S. export-control matter. Back in February, the Commerce Department’s Bureau of Industry and Security disclosed that Applied and its Korean affiliate would pay roughly $252 million for unlawfully shipping semiconductor manufacturing gear to China—a penalty ranking as the second-largest BIS has ever issued.
Back in February, Applied said the settlement put to rest BIS claims over specific China shipments from November 2020 through July 2022. The company also noted the Justice Department and SEC had wrapped up related probes with no further actions. At the time, Applied emphasized its ongoing commitment to export-control and trade compliance.
Applied’s main business continues to lean on AI-fueled chip demand for now. First-quarter revenue landed at $7.01 billion. Looking ahead, the company projected fiscal second-quarter sales of $7.65 billion, give or take $500 million. CEO Gary Dickerson pointed to AI computing as a catalyst for spending on advanced logic, high-bandwidth memory, and packaging.
