Applied Materials Reports Strong Earnings, Faces U.S. Justice Department Probe
Applied Materials (ticker: AMAT) announced better-than-expected earnings for the October quarter, but saw a decline in its shares following a media report that revealed new details about a U.S. Justice Department investigation into the company.
According to Reuters, the chip equipment maker is currently under criminal investigation for allegedly sending its equipment to a Chinese company, SMIC, through South Korea without the necessary export licenses. The report states that "hundreds of millions of dollars of equipment" are involved in this investigation.
Applied Materials had already disclosed in October 2022 that it had received a subpoena from the U.S. Attorney's Office for the District of Massachusetts, requesting information related to certain shipments to Chinese customers. The company stated that it is fully cooperating with the government.
During an earnings call on Thursday, chief financial officer Brice Hill declined to provide further details regarding the Reuters report, as the company had already disclosed the investigation in October.
In terms of its financial performance for the October quarter, Applied Materials reported adjusted earnings of $2.12 per share, surpassing the consensus estimate of $1.99 among Wall Street analysts. The company generated $6.7 billion in revenue, exceeding expectations of $6.5 billion.
Applied Materials also provided a revenue forecast for the current quarter, projecting a range with a midpoint of $6.5 billion. This outlook compares favorably to the consensus view of $6.4 billion.
The company's notable customers include Intel (INTC) and Taiwan Semiconductor Manufacturing (TSM).
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