Applied Materials forecasts gloomy current quarter as supply chain woes persist

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Applied Materials’ new corporate signage photo in Santa Clara, California, U.S. is shown in this image released on August 22, 2016. Courtesy Applied Materials/Handout via REUTERS

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May 19 (Reuters) - Applied Materials (AMAT.O) forecast third-quarter revenue and profit below estimates, signaling that supply bottlenecks, exacerbated by the COVID-19 lockdowns in China, would hamper its ability to meet demand for its chipmaking tools.

A semiconductor and parts shortage for machines used to produce chips has been pressuring the broader chip supply chain that is already facing more demand than chipmakers are able to meet.

"We anticipate our ability to fulfill this demand will remain constrained by ongoing supply chain challenges in the near term with incremental improvements beginning in our fourth quarter," said Chief Executive Officer Gary Dickerson in an earnings call on Thursday.

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Applied Materials estimates current-quarter revenue of $6.25 billion, plus or minus $400 million. Analysts on average expect revenue of $6.73 billion, according to Refinitiv IBES data.

"There has been weakness in consumer demand for products like smartphones, PCs and TVs. As a result, display equipment demand has softened and we are making adjustments to our revenue outlook," said Chief Financial Officer Brice Hill.

Sales in its display and adjacent markets segment rose 1.6% to $385 million in the quarter ended May 1.

The company expects adjusted profit to be in the range of $1.59 to $1.95 per share in the third quarter, below estimates of $2.04.

For the second quarter, the company reported adjusted profit per share of $1.85 and revenue of $6.25 billion, both of which fell short of Wall Street estimates.

Shares of the Santa Clara, California-based company fell 1.7% in extended trading.

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Reporting by Chavi Mehta and Eva Mathews in Bengaluru; Editing by Amy Caren Daniel

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