Taiwan Semi Supplier Applied Materials Under Scrutiny, Gets Subpoenas For Potential Violation Of Export Restrictions to China
Portfolio Pulse from Anusuya Lahiri
Applied Materials Inc (NASDAQ:AMAT) is under scrutiny for potential violations of export restrictions to China, receiving subpoenas from the U.S. Department of Commerce, SEC, and U.S. Attorney’s Office. The company is under criminal investigation for allegedly shipping equipment to China's SMIC without export licenses. Despite these issues, AMAT's second-quarter revenue beat analyst expectations, and the stock has gained over 79% in the last 12 months. Investors can gain exposure to AMAT through ETFs like First Trust Nasdaq Semiconductor ETF (NASDAQ:FTXL) and Pacer BlueStar Engineering The Future ETF (NASDAQ:BULD).
May 24, 2024 | 12:29 pm
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NEUTRAL IMPACT
Pacer BlueStar Engineering The Future ETF, which includes exposure to Applied Materials, may be affected by the legal scrutiny faced by AMAT. The ETF's diversified holdings could help mitigate the impact.
Similar to FTXL, BULD's exposure to AMAT could lead to some impact from AMAT's legal issues. However, the ETF's diversified nature is likely to result in a neutral short-term effect.
CONFIDENCE 80
IMPORTANCE 50
RELEVANCE 50
NEUTRAL IMPACT
First Trust Nasdaq Semiconductor ETF, which includes exposure to Applied Materials, may be impacted by the legal scrutiny faced by AMAT. However, the ETF's diversified holdings could mitigate the impact.
While FTXL has exposure to AMAT, its diversified portfolio may cushion the impact of AMAT's legal issues. The overall effect on the ETF is likely to be neutral in the short term.
CONFIDENCE 80
IMPORTANCE 50
RELEVANCE 50
NEUTRAL IMPACT
Taiwan Semiconductor Manufacturing Co (TSM), a customer of Applied Materials, may experience indirect effects from AMAT's legal issues. However, TSM's strong projected revenue growth could offset any negative impact.
While TSM is a customer of AMAT, the direct impact of AMAT's legal issues on TSM is likely to be minimal. TSM's strong revenue growth projections should help mitigate any indirect effects.
CONFIDENCE 70
IMPORTANCE 30
RELEVANCE 30
NEGATIVE IMPACT
Applied Materials is under investigation for potentially violating export restrictions to China, receiving multiple subpoenas. Despite this, the company reported strong Q2 revenue and EPS, and the stock has gained significantly over the past year.
The legal and regulatory scrutiny could negatively impact AMAT's stock in the short term, despite strong financial performance. The potential for fines or restrictions could weigh on investor sentiment.
CONFIDENCE 90
IMPORTANCE 100
RELEVANCE 100