NEW YORK, December 31, 2025, 21:07 ET — Market closed
Applied Materials shares fell 1.1% to $256.99 on Wednesday, extending a two-day slide into the year’s final session as chip-equipment stocks tracked policy-driven headlines out of China.
China is requiring chipmakers to use at least 50% domestically made equipment for any new semiconductor manufacturing capacity, Reuters reported, a step that would steer orders toward local suppliers and away from foreign toolmakers. The policy is not publicly documented and is being enforced through state approval processes and procurement tenders, with officials pushing for levels above 50% and an eventual goal of 100%, sources told Reuters.
That matters for Applied and its peers because China has been one of the largest end-markets for wafer fab equipment — the machines used to make chips on silicon wafers — even as U.S. export controls have tightened access to certain customers. Applied said in November that its China sales share has fallen to the mid-20% range from nearly 40% in recent years and that spending on chipmaking equipment in China is expected to fall in 2026 as tighter U.S. curbs limit its market access.
Separately, Taiwan’s TSMC said the U.S. government granted it an annual export license that lets U.S. export-controlled chipmaking equipment be supplied to its Nanjing fab in China without individual vendor licenses, after its validated end-user status — a waiver from some licensing requirements — expired at year-end. The approval “ensures uninterrupted fab operations and product deliveries,” TSMC said. Reuters
Applied’s decline came as Wall Street ended 2025 slightly lower in holiday-thin trade, with technology stocks among the biggest drags on the day. “I do not expect that the last few days will have so much bearing on the performance of the next year,” said Giuseppe Sette, co-founder and president of Reflexivity. Reuters
Other chip-equipment names also eased, with Lam Research down 1.5% and KLA off 2.3%, while the iShares Semiconductor ETF slipped 1.2%.
Trading in Applied was subdued, with volume well below its 50-day average, and the stock ended about 7% below its 52-week high reached earlier this month, MarketWatch data showed.
Investors are now watching for signs that China’s localization drive spreads from new fabs into replacement parts and services, an area where equipment makers typically earn recurring revenue. Any further tightening or loosening of U.S. export licensing for shipments into China remains a key swing factor for 2026 expectations.
Before the next session, U.S. equity markets will close for New Year’s Day on Thursday and reopen on Friday, Jan. 2, according to the NYSE holiday calendar.
The early-January macro calendar includes the next Manufacturing ISM PMI report on Monday, Jan. 5, and the Labor Department’s December employment report on Friday, Jan. 9, both closely watched for clues on demand and interest-rate expectations.
For Applied, Wall Street’s next hard catalyst is its expected earnings report on Feb. 12, according to Nasdaq’s earnings calendar, with investors looking for updated commentary on China demand and export constraints alongside the broader chip-equipment spending outlook. Technically, the stock ended below $260, leaving December’s $276 high as the next major level traders will watch.
