On October 23, 2025, Applied Materials, a US chip equipment manufacturer, announced the initiation of a global layoff plan, with a scale accounting for approximately 4% of its total workforce. According to documents from August 2025, the company employs around 36,100 full-time employees, so this round of layoffs will affect about 1,444 employees. The company has already begun notifying affected employees across "all levels and teams" globally since October 23, and the layoff plan is expected to be completed in the first quarter of the 2026 fiscal year.

Details of the Layoffs

The layoffs are one of the measures taken by Applied Materials to address the numerous challenges facing the global semiconductor industry. Although demand in the AI and HPC fields is strong, the global semiconductor industry is still confronted with demand fluctuations and market uncertainties. In addition, the US government's implementation of stricter export controls on the semiconductor industry, especially restrictions targeting the Chinese market, has had a significant impact on Applied Materials' business. Earlier this month, the company had forecasted that its revenue for the 2026 fiscal year would be reduced by $600 million due to the expanded control measures. Applied Materials stated that the layoffs are aimed at "strengthening operational structure and efficiency to face the challenges brought by market volatility and geopolitical factors."

The layoffs are expected to incur costs of approximately $160 million to $180 million, mainly consisting of severance pay and other one-time employee termination benefits. These costs will be paid in cash, with the majority being recorded in the fourth quarter of the 2025 fiscal year. After the completion of the layoff plan, Applied Materials is expected to lay a solid foundation for future development by optimizing its organizational structure and enhancing its competitiveness and productivity.

Industry Background

The global semiconductor equipment industry is entering a cyclical adjustment phase. Data from SEMI indicates that global equipment sales are expected to decline by 8%-10% year-over-year in 2025, marking the first negative growth in five years. Against this backdrop, peers such as ASML from the Netherlands and Tokyo Electron from Japan have both lowered their revenue expectations, while US companies like Lam Research and KLA have successively taken measures to freeze hiring or implement partial layoffs. Moreover, the US export control policies on the semiconductor industry have not only affected Applied Materials but also brought significant pressure to the entire industry.

Future Outlook

Despite short-term challenges, Applied Materials' CEO Gary Dickerson emphasized in an employee memo that the semiconductor industry is expected to achieve significant growth over the next decade. The company is currently optimizing its organizational structure to build a more competitive and productive system in order to expand its scale and seize long-term development opportunities. Market analysts have pointed out that the expansion of demand in areas such as AI chips, advanced packaging, and high-bandwidth memory will drive equipment investment to gradually recover over the next 2-3 years, with companies that have technological reserves likely to recover first.

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