Applied Materials (NASDAQ:AMAT) reported third-quarter results that exceeded Wall Street expectations on but projected a steeper-than-anticipated revenue decline for the current quarter, sending shares down more than 12% in premarket trading Friday.

The semiconductor equipment maker posted earnings of $2.48 per share for the quarter ended July, topping analyst estimates of $2.36. Revenue came in at $7.3 billion, above the consensus forecast of $7.22 billion.

For the fourth quarter, the company guided for earnings between $1.91 and $2.31 per share and revenue in the range of $6.2 billion to $7.2 billion, both below analyst expectations.

CEO Gary Dickerson said the firm was operating in a “dynamic macroeconomic and policy environment” that was creating greater uncertainty and reducing near-term visibility. CFO Brice Hill attributed the weaker outlook to capacity digestion in China and uneven demand from leading-edge customers due to market concentration and fab timing.