Aug 17 Reuters Semiconductor equipment maker Applied Materials on Thursday forecast its fourthquarter profit would be substantially higher than analyst estimates, as chip demand picks up and governments spend billions on subsidies.

Shares jumped 1.9 in extended trading after the company also posted betterthanexpected thirdquarter earnings.

Governments across the globe have given billions of dollars in subsidies in the past year to boost domestic semiconductor production, which benefited Applied and rivals such as Lam Research and KLA whose tools are essential in chip making.

The government incentives total hundreds of billions of dollars globally over the next five years, Applied chief executive Gary Dickerson said in the earnings conference call on Thursday.

Applied expects fourthquarter revenue of 6.51 billion, plus or minus 400 million, substantially higher than the average analyst estimate of 5.86 billion.

The Santa Clara, Californiabased company forecast adjusted profit per share between 1.82 and 2.18, topping the market estimate of 1.61.

Applied reported thirdquarter revenue of 6.43 billion, beating analysts39; average estimate of 6.16 billion, according to Refinitiv data.

On an adjusted basis, it earned 1.90 per share in the quarter ended July 30, beating estimates of 1.74.

Applied finance chief Brice Hill said that despite overall lower chip equipment spending this year, the company39;s services business would continue to grow.

For its company39;s…