Applied Materials, a chip gear manufacturer, stated it expects foundry clients limit their expenditures during the present quarter as the company move to producing smaller chips.

Applied Materials currently designs, makes and sells a variety of equipment for manufacturing integrated circuits. The company's shares plunged by around 3% in  xtended trading yesterday. Within second half of this year however, the demand for chips making use of the upgraded 20-nanometer process technology was projected to increase. The said technology could pack more computing capability into smaller units of micro-circuits.

"We are seeing a near-term slowdown in investment by our foundry customers as they focus on ramping (production using) new capacity installed over the past two quarters," chief executive of Applied Materials, Michael Splinter, said.

The corporation's net income nose-dived to USD168 million or 14 US cents for every share during the third quarter. In comparison, Applied Materials' income last year was USD218 million or 17 US cents per share. Also, its revenue dropped by 16% to USD1.98 billion.