Applied Materials expects to recoup sales lost to pandemic in second half

Chip gear maker Applied Materials said it expects supply chain to gain strength in the second half of the year and help it recoup sales lost due to the Covid-19 disruption, sending its shares up 4% in extended trading on Thursday.

The company had earlier said that government restrictions in the U.S. and other countries, as well as reductions in airline schedules globally, were disrupting its supply chain.

“All of our suppliers have now been able to resume operations, and they are recovering to normal output. We have been in very close communications with our customers, and their demand indications remain strong,” Chief Financial Officer Daniel Durn said on a call with analysts.

Revenue from semiconductor systems, which supplies gears to chip makers, jumped about 18% to $2.57 billion in the second quarter.

Durn said sales from the unit would have been nearly $650 million higher in the absence of pandemic constraints. “We hope to recover this revenue in Q3 and Q4 as the supply chain improves,” he said.

However, the company did not provide a forecast for the third-quarter revenue and missed market estimates for second-quarter revenue and profit, joining a slew of semiconductor firms that have borne the brunt of disruptions and fall in demand.

The pandemic has wreaked havoc on the chip industry as strict lockdown rules globally hampered operations and supply chains, even though many plants were eventually allowed to remain open.

Revenue rose nearly 12% to $3.96 billion in the second quarter ended April 26, but fell short of analysts’ average estimate of $4.13 billion, according to IBES data from Refinitiv.

Excluding items, the company earned 89 cents per share, below estimates of 94 cents.