Expects Strong Chinese Demand For Packaging

WEB Applied Materials upbeat despite Intel's capex cuts

Expects strong Chinese demand for packaging

Applied Materials shares jump on earnings beat, upbeat outlook

Applied Materials Inc (AMAT.O) shares jumped 8% to hit an all-time high on Friday after the semiconductor equipment maker beat quarterly revenue estimates and gave an upbeat outlook, helped by strong demand from China for chip packaging.

The Santa Clara, California-based company expects first-quarter revenue of $6.47 billion, plus or minus $200 million, above analysts' average estimate of $6.38 billion, according to Refinitiv data.

Applied Materials, which supplies to Intel Corp (INTC.O) and Samsung Electronics Co Ltd (005930.KS), said it expects strong demand for its equipment used in packaging chips, which protects and connects them to other components.

The company's upbeat outlook comes despite Intel's plan to cut capital spending this year, which had raised concerns about a slowdown in the semiconductor industry.

Applied Materials said it expects its semiconductor systems business to grow in the "mid-single digits" in 2023, driven by demand for its equipment used in advanced packaging and memory chip production.

The company also said it sees growth in its applied global services business, which provides maintenance and support for its equipment.

Analysts said Applied Materials' upbeat outlook is a positive sign for the semiconductor industry.

"AMAT's results and guidance suggest that the semiconductor industry is still growing, despite the recent weakness in the PC market," said Susquehanna Financial Group analyst Mehdi Hosseini.

"The company's strong demand for packaging equipment is also a positive sign, as it indicates that the demand for chips is still strong," Hosseini added.

Applied Materials' shares have risen about 25% this year, outperforming the Philadelphia Semiconductor Index (.SOX), which has gained about 10%.