LRCX - Applied Materials: SMIC Move To 7nm Node Capability Another Headwind

• U.S. sanctions against China's SMIC haven't worked in the last 18 months as SMIC moves to the 7nm node using DUV lithography.
• Assuming SMIC makes 7nm logic chips instead of 28nm at its new fabs, Applied Materials will generate net revenues of just $14 million.
• Other equipment suppliers will see a tailwind from SMIC’s transition including Lam Research (+$962 million) and ASML (+$4,128 million).
• Applied's minimal net gain means further loss of market share to competitors.
• The net gain in revenues from SMIC will move ASML to the top of the global equipment market in 2022.

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