(Bloomberg) -- Applied Materials Inc., the biggest maker of machinery used to manufacture semiconductors, topped earnings estimates and gave a rosy forecast in the latest sign that the chip boom is going strong.
Revenue will be roughly $6.3 billion in the three-month period ending in October, the Santa Clara, California-based company said Thursday. Analysts have estimated $6.04 billion on average, according to data compiled by Bloomberg. Profit will be $1.87 to $2.01 a share in the fiscal fourth quarter, excluding some items, compared with an average estimate of $1.81.
Chipmakers have filled Applied Materials’ order books as they rush to add production capacity. A surge in demand for semiconductors has led to unprecedented shortages of the vital electronic components, forcing the industry to play catch-up. Applied Materials’ customers include Samsung Electronics Co., Taiwan Semiconductor Manufacturing Co. and Intel Corp., making its projections a window into the spending plans and confidence levels of some of the biggest companies in technology.
The shares rose less than 1% to $129.95 in extended trading following the earnings report. They had been up 50% this year through Thursday’s close.
Two years of slowing investment -- and extra caution during the pandemic’s peak last year -- mean that many semiconductor makers can’t keep up with orders, particularly for car components. It takes months to build and install equipment made by Applied Materials and other chip-equipment producers. Machines being built now won’t add to output until 2022. Earnings climbed to $1.90 a share in the third quarter, excluding some items. That topped an average analyst estimate of $1.77. Sales rose 41% to a record $6.2 billion, compared with an estimate of $5.94 billion.
The company has said it sees the total market for chip factory equipment growing to the high $70 billion range this year. That will expand again in 2022 to bring the two-year total to more than $160 billion, Applied Materials has projected.
While management has remained optimistic about the future, some investors are concerned that previous patterns will return. In the past, spikes in equipment demand have been followed by painful contractions. Applied Materials’ revenue shrank 15% in 2019.
More stories like this are available on bloomberg.com
Subscribe now to stay ahead with the most trusted business news source.
©2021 Bloomberg L.P.
