Applied Materials Inc. (AMAT), the largest maker of semiconductor manufacturing equipment, Tuesday reported an 18 percent decline in quarterly profit as chip makers delayed big orders for capital equipment.

Earnings in the fiscal second quarter reached $304.8 million, or 18 cents a share, compared to a year-earlier profit of $373.3 million, or 22 cents a share. Sales were $1.86 billion, down from $2.02 billion in the same period last year.

New orders, an indicator of future revenue, fell 7 percent from the first quarter to $1.55 billion. In February, the company said that orders could decline up to 10 percent from the most recent period.

William Lu, an analyst with PiperJaffray, said the numbers suggest that two of the world's largest chip makers — Taiwan Semiconductor Manufacturing Co. Ltd. (search) and Germany's Infineon Technologies AG (search) — delayed plans to buy new equipment.

"The downside is certainly the bookings number," Lu said. "Orders weakened in Taiwan and Europe with TSMC and Infineon being the two push-outs."

Analysts on average had been expecting earnings in a range of 16 cents to 19 cents a share, with sales of between $1.7 billion and $1.9 billion, according to a poll of analysts by Reuters Estimates.

Order activity in Taiwan and Europe declined as a percentage of overall bookings from the company's fiscal first quarter. Taiwan, the center of the contract chip-making business, represented 18 percent of Applied's orders in the second quarter, down from 31 percent in the first quarter.

Shares of Applied Materials, based in Santa Clara, Calif., declined 5 cents in after-hours trading to $15.99 on Inet.