(Reuters) - Applied Materials Inc AMAT.O beat Wall Street estimates for quarterly revenue on Thursday but the chip gear maker cautioned that recovery in the memory chip market is unlikely before 2020.

The company, whose results are often seen as a barometer for the semiconductor industry, said spending by memory chip customers was lower in the third quarter, compared with a year earlier.

“We don’t expect to see a recovery in 2019, we see it as a 2020 event ... We expect to see NAND (flash memory chips) first then followed by DRAM,” Chief Executive Officer Gary Dickerson said on a post-earnings call with analysts.

Betting on rising demand for memory chips used in data centers, 5G phones and AI-powered devices, Applied Materials early last month agreed to buy Japanese peer Kokusai Electric for $2.2 billion from KKR & Co Inc KKR.N.

Santa Clara, California-based Applied Materials’ shares, which had gained 44% this year, were last down 1.6% in extended trading.

The continued trade dispute between the United States and China has also pressured the semiconductor industry in the past few months.

Applied Materials said sales from China fell 32% to $1.12 billion in the quarter, contributing just 31% to overall revenue. In the year-ago quarter, the country accounted for 39% of total revenue.

The company’s net sales fell 14% to $3.56 billion in the third quarter, but beat the average analyst estimate of $3.52 billion.

Revenue from the company’s largest business, semiconductor systems, which supplies gears for chip makers, fell 11.8% to $2.27 billion. It, however, came in above estimates of $2.17 billion, according to FactSet.

The company forecast fourth-quarter adjusted profit and revenue largely above analysts’ estimates.

The company’s net income fell to $571 million, or 61 cents per share, in the quarter ended July 28, from $1.02 billion, or $1.01 per share, a year earlier.

Excluding items, the company earned 74 cents per share, above analysts’ estimates of 70 cents.