Applied Materials, one of the world’s largest makers of semiconductor manufacturing equipment, will lay off about 4 percent of its workforce, or roughly 1,400 employees, as it restructures operations to navigate tighter U.S. export controls on semiconductors.
The job cuts, announced on Thursday, are part of the company’s plan to streamline operations and simplify decision-making as it faces growing challenges in its China business. Applied Materials will incur a restructuring charge of $160 million to $180 million, primarily in the fourth quarter of fiscal 2025, according to a regulatory filing, Reuters news report said.
The company had 35,700 full-time employees as of October 2024, meaning the layoffs will impact thousands of roles across regions. Employees were informed about the decision earlier on Thursday.
CEO Gary Dickerson said in a memo that the move is aimed at transforming how the company operates and preparing for future growth.
“Our goal is to continue to transform how we work, move faster, simplify decision-making, and focus on what matters most as we prepare Applied Materials for significant growth in the coming years,” Gary Dickerson wrote.
The layoffs come as Washington expands export restrictions to prevent Chinese firms and other entities from accessing advanced semiconductor manufacturing tools through foreign affiliates. These measures have hit U.S. equipment suppliers, including Applied Materials, Lam Research, and KLA Corp.
Earlier this month, Applied Materials warned that the expanded U.S. export curbs could reduce its fiscal 2026 revenue by about $600 million.
Despite delivering record performance in the third fiscal quarter ended July 27, 2025, and being on track for its sixth consecutive year of revenue growth, the company expects a decline in revenue in the fourth quarter, driven by lower demand in China and delays from leading-edge chipmakers. Applied Materials has guided for Q4 revenue of around $6.7 billion.
CFO Brice Hill acknowledged that the company is operating in a period of uncertainty.
“We are navigating and adapting to near-term uncertainties by leveraging our robust supply chain, global manufacturing footprint, and deep customer relationships,” Hill said.
The layoffs mark one of the most significant workforce reductions in the semiconductor equipment sector this year, reflecting broader industry headwinds from geopolitical tensions and uneven chip demand recovery.
Earlier, Applied Materials reported record revenue $7.30 billion, up 8 percent year over year, for its third quarter ended Jul. 27, 2025.
Semiconductor Systems’s revenue reached $5.43 billion, up 10 percent year-over-year, driven by strong demand in foundry-logic as customers invested in gate-all-around nodes. Growth was partially offset by slower spending in ICAPS (mature nodes). DRAM outperformed expectations due to AI-related investments, and NAND saw strong growth from multinational customers in China. Non-GAAP operating margin rose to 36.4 percent, up 140 basis points year-over-year.
Applied Global Services (AGS) business delivered $1.6 billion in revenue, up 1 percent year-over-year. Core services grew 10 percent, supported by higher tool utilization in advanced foundry-logic and memory segments. However, a decline in 200mm equipment sales and customer mix pressures reduced non-GAAP operating margin to 27.8 percent, down 180 basis points year-over-year.
Display Business generated $263 million in revenue with a non-GAAP operating margin of 23.6 percent.
Baburajan Kizhakedath