(Bloomberg) -- Applied Materials Inc., the biggest maker of machinery used to manufacture semiconductors, tumbled more than 5% in late trading after persistent chip shortages weighed on its forecast for the current quarter.
Sales will be about $6.25 billion in the fiscal third quarter, which runs through July, the company said in a statement Thursday. Analysts estimated $6.69 billion on average, according to data compiled by Bloomberg. Profit will be $1.59 to $1.95 a share in the period, excluding some items, compared with an average prediction of $2.05.
The stock had closed at $110.74 on Thursday, down 30% this year.
The chip industry is ordering machinery from Applied Materials and its peers at a frantic rate, trying to build enough production capacity to end industrywide shortages that are hurting growth across the economy. But those same shortages are leaving Applied without the components it needs to make its equipment.
The Santa Clara, California-based company posted earnings of $1.85 a share, minus certain items, in the second quarter, compared with a prediction of $1.91. Sales rose 12% to $6.25 billion, missing the $6.36 billion projection.
“Demand for Applied Materials’ products and services has never been stronger, yet we remain constrained by ongoing supply chain issues,” Chief Executive Officer Gary Dickerson said in the statement. “Our priority is to work quickly and creatively across the supply chain to bring more industry capacity online.”
Soaring sales of semiconductors have helped Applied Materials maintain revenue growth as chipmakers order more manufacturing equipment from the company. But that hasn’t allayed investor concern that the industry will overshoot and put too much capacity in place, causing a glut -- a regular occurrence in past cycles.
Dickerson has argued that growing use of semiconductors in new types of devices is lessening the industry’s dependence on personal computers and smartphones. That means demand for chips and chipmaking equipment will be more sustained and predictable.
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.
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