Applied Materials (AMAT) 14 Feb 182018 Q1 Earnings call transcript

Welcome to the Applied Materials Earnings Conference Call.

During the presentation, all participants will be in a listen-only mode. Afterwards, you will be invited to participate in a question-and-answer session. I would now like to turn the conference over to Michael Sullivan. Please go ahead.

everyone. afternoon, Good Head Sullivan, Relations Applied at I'm of Materials. Mike Investor joining We is first us quarter you being of which our call, for appreciate earnings fiscal recorded. XXXX

Durn, President me CEO Joining Dickerson, Financial our Gary and are Dan our Chief Officer. and

estimates, of you business me statements, current are release and to XX, outlook. its These in Form guarantees performance. of differ contained the materially X-K Before of management's and these could call are and now, are products, earnings Information I'd GAAP obligation filings forward-looking assumptions cause performance, uncertainties are contained today's And includes call over no assumes slides, turn to actual based risks Applied's page today's XXXX, risks not remind Applied the concerning like statements appliedmaterials.com. update begin, financial Investor contains results projections to that that February them. to which to on Today's we in measures in share are Applied's to non-GAAP available the and view our XX-K with future industries, also at Dickerson. uncertainties on Relations is as call press let All and Reconciliations of most SEC. forward-looking including recent positions, website Gary and and our subject and measures. reconciliation statements

segments nearly strong revenue we already three I'm growth. record from to business happy looks with and great for up same XX% another double-digit of expect year, Mike. period Thanks, to deliver our another year. like report the major Applied, each last XXXX quarter

sustainable momentum two and We we have company reasons. across tremendous are for confident this momentum is the

those electronics manufacturing as more set compete transportation. by capture, an and grows and of for are their display and is get on as healthcare, The content ability from retail to overall market smarter, market expanding huge disrupted see even store to companies electronics we data. value increasing way of understand The more entertainment, and create drivers emerging semiconductor and, depends technologies, and faster. industries increasingly amounts First,

in is Applied to our markets. Second, outpace great a position

In of how our major investments about a Dan increasing execution products, and using market Then we're which about technologies call, incredibly and the before. of I'll today's is I'll in bring differentiated the capabilities transform driving reflects financial electronics time portfolio turning an over our capabilities trends highly we and sustainability industry growth big talk broad markets. allocation, faster strong will the because of into economy The our Internet strategy a artificial Things, pipeline new new enabling our differentiated details sustainable the to for are growth. at set and provide broad start decade. than of to our This products We we intelligence our our our performance are exciting will ever and era are capital translating next the our businesses. confidence in into data in of describe markets. of of

substantial making investments demand these and displays. semiconductors large, themselves are for the These a result, a for in driving future. spectrum in are trends shift to a companies already broad fundamental technologies As of position powerful

there to scale. are stages starting only are big significant While these are that AI of the and have and early data, applications traction already

up require of the is enterprise area silicon voice is processing centers workloads times content silicon, A These has The fast that new integrated building a of for becoming more typical the being assistants to it. square and first more at cloud. Voice Natural edge automation. traditional memory and example dedicated AI of which the smartphone times content home and leading more XX chips XXX processor. assistant in a by have about servers. driving around and data Language four support into companies that's logic is eight devices application and area twice are than hub to the total server AI Language Processing the architectures compute-intensive are millimeters

trend This of is seeing. smartphones. used to is phone's AI to XXXX great neural it's and the identify processing is for at where units important AI enable learning to Another camera in example what machine a edge, a react

in to the NAND times data We self-driving traditional drivers, of already a has The $XX the technology see automakers with cars. XX% data content demand Level providers on car market their that and than and smartphone XXXX to XX% race silicon and service mix the overall logic broadening X top announcing third billion grow. Based larger technology be spending while XXXX believe as see DRAM disciplined example would leading these center multinational both on than emerging powerful that which smartphones to approximately a significant is growing base. billion. equipment growing capital the growth very last to end layer Semiconductor, of explosion evolve higher and pace spending capacity In in market because and be strong, manufacturers. data X of investments service generation, in eight memory than storage, domestic which strong to Level combined in the grew fundamentals market more the storage in customer vehicles wafer expand three be foundry in suggests at drivers And and will penetration demand projects, companies and the invested customer of for the between across will XXXX. data served to outlook timing while XX% of ramp keep and flat, content Applied of positive smartphones, will to similar All markets. taking and is capacity. rapidly, as we high total vehicles see relatively from centers is and a is in such XXXX. It's silicon expected These Recent traditional investments share market. are share. to up logic grow investments of more we total of cloud expect fab the years. our trends China, NAND been add and next XXXX, unit standard Applied's and increases has value continue We We get a storage the have spending market reported data positive At a more about year, $XX we To today. is for steady in

we ahead, As in believe XXXX spending be XXXX could combined further and billion. around $XXX we look

Display, is to XX.X OLED capital that enable market of compelling. factors, comment and are timing TV it's we overall clear. believe equally large displays as driving significant there the two introduction This for displays. In is new substrates OLED screens. early In performance, While of OLED and such spending, the investments: advantages inflections cost flexible on and offers trend too LED transition rigid curved line mobile, manufacturing eventually because form organic and to will over power is Gen the foldable LCD,

At portfolio result, than XXXX our organization growth the a breadth because our and XXXX Applied, remains more of and have our place. make nearly and last together XX% is year. is future, for clear and vision. increase positive expect growth by Display revenue unique capabilities the our we As differentiation our beyond enabling outlook XX% shaping the technology of our we vision capabilities source the unchanged. and in investments to an we to product on that of aligned most in this around Applied, It possible important one bring increasingly is top driver is for a

to We Against a inspection semiconductor segments. In tremendously equipment them. now business to are than in unique and provide this time metrology is to I'll grew backdrop, process more customers help calendar XX%, we each updates our for valuable accelerate position than their business XXXX, XX%. of more our and market, which our business

three We and markets expect growth than XXXX grow with these in drivers. major to faster beyond

we're in are extending our we traditionally areas leadership. where First, strong,

Our we create in to materials transistor increasing devices. and customers major needed and areas the the growth determine that drive significant their $XXX million the where grew computing like revenues and structures. advances focus To performance translating interconnect high-performance leadership are XXXX. PVD, is efficiency enable about innovative in on power, in of This products and materials to AI,

and years. several our we of track the on EUV are we in have and revenue solutions scaling E-beam billion markets to room resolution, challenges: metrology. focused By materials-enabled driver grow is we geometric adoption, two-dimensional where shrinking grow over increasingly most e-beam also for to next on and, we're to in of XD inspection patterning, considerably $X adoption on our the metrology the accelerated to the segment device's specifically providing inspection patterning technologies. key focusing fastest-growing scaling, placement, In generate than market, XXXX. errors of important, vertical track device. in placement increase alignment ways regardless significantly patterning, Second, grow, more features; we're And the expect over the cell of share XXXX. significant market faster opportunity in a memory to capturing patterning layers customers' we a to are these areas, of on a transistor of is density; is between the inspection which and or Management three

and new pull and develop we're least expand new analysis. for removal, agreements, by: with materials This and and an shorten number solutions year. than factory installed finding market of Applied's modification per confident at opportunities. improve revenues every ramp to and to grown base, costs. end stronger from customers of innovative on the on is year-on-year tools In XX% working increasing yield, roadmaps operating can is materials customers And that under ways we their Third, times, these help quarter collaborations since accelerate our a products our and service deeper ever, materials are deposition, sustainable continue capabilities, XXXX. output basis, a in service to combine rapidly materials and device technology grow and Based advanced growing growth we've the we earlier technologies Service, that driven performance long-term optimize their we're them

call is we positioned I'll first And we including top device and can enable Semiconductor, accelerate and as Before on as we're and strong performance in traditional and new mobility. growth With outperform capabilities. roadmaps Display data markets start. over products AI, the confident off customers a our big to their layer broad of drivers, see double-digit Service IoT, across strength XXXX using quickly Dan, businesses. of to summarize. to uniquely portfolio deliver demand our markets in great record our sustainable I the Applied is We to turn our computing quarter,

and Dan color give on will as as our outlook, financial execution allocation. well capital his on Now, our provide perspective additional

a fueling of today, by a And Thanks, about my to how industry we discuss and we're to next of be new already described of allocate Internet result. economy. observations I'd built seeing record revenue Gary next out capital data begin over Gary. will We're the The artificial Things $XXX sharing excited decade and we semiconductor billion. environment like is the as plan believe intelligence, about company's of over some era semiconductor the the industry and more. or this computing

that future a growth can to the the largest the will is envision technology Of guarantee systems nobody and foundation. follow nondiscretionary process but we line, semiconductor at course, industries, the straight and are world's

All gave XXXX. number equipment than customers wafer. which the less arrived leading we people higher I still our are these it business era, and technology was remain facts, identify in and in believe of XXXX and XXX-millimeter during cyclical for significantly and with. to of many spending WFE shared see every Consider strength chips is year positive, going the X.X Gary of times the indicators the that XXXX PC

complex, While of equipment low to between spending XX% while semiconductor equipment WFE actually time XXXX intensity more wafer as faster, technology of WFE to period. intensity and to X% from drifting grew, semiconductor think even kicked XXXX, imagine WFE With from it's grew declined intensity dropped I lower. XXXX peak over to same hard XX%. higher grew, that a a much sales XXXX fab revenue and getting But

the $XX intensity WFE XX%, the if today's more levels happens pace, the billion should be modest flat or a what semiconductor WFE WFE unusual from a much area. today forecasts demand is attractive X% grows predict. multiple by the likely of Then forecasting PC to consider as term, decade. the ahead. is stays at years the make more $XX during could spending others. next I stabilized and if point in near and reach at industry has to billion considered of leave We'll be want investments industry broader to is not intensity that middle potentially So than in the The lot

a business, more than Materials more Against Applied for especially free how significantly is growing Services unique growing growth the I a bright today. and believe have Materials cash deploy in looks to become we capital because Applied forward. larger future here profitable this and the we will opportunity business So, Semi we do generate a going backdrop, company's and Display. flow plan

Our capital allocation priorities are unchanged.

is priority invest to on with organic in business the emphasis first an growth. growth Our of the

We means will R&D to This will continue margin for quarter return to to high an lower every discipline. from every continue to dollar invest is opportunities with shift of tied target, increasing and return areas before we R&D. attractive areas to money look

also will efficiency. G&A maintaining laser stay We focused on

robust Our remain balance committed strong flexible and second We priority to investment-grade a credit sheet. is to maintain a rating.

shareholders. is cash to priority to return excess our third Our

Board increase bigger first be as increased us At policy. in dividend a are we business. to quarterly dividend has value buybacks. gives has flow to less said the fact, our the shareholders. has are higher more evaluate opportunity our future same $X.X by to In change Accordingly, time, believe the $X.XX will since also review board remaining Combined a and plan the authorization regular Applied free to when volatile, significantly billion dividends. further pay cash XXX% We'll with And June. the opportunistic, Applied's a our grow declared quarterly distribution cash payable XXXX, value shareholder approved of dividend dividend in of buyback in we increase that basis company. strongly they to we we're authorization, the nearly more the we and increases a practices markets the undervalued. repurchasing opportunity on have announcing $X significant and creation continue than growth shares billion. Directors the XX% today, be which from in the We've of believe previous through and returned We

reform, how we we customers, jobs the year, office $X profits new of because of of flexibility development our In company, have which objectives. the to U.S. and freer access our we our manufacturing. and legislation to With deploy the grow to offshore, U.S., we QX, discuss to beneficial billion. This where us future U.S. profits I'll is impacts tax the gives invest Next, corporate it to Applied flexibility now in greater capital return greater serve plan technology our engineering a growth shareholders. one-time in add labs the and space much advanced within the resulted tax and in to about support new do tax invest new to in generated repatriation

years know, As eight significantly you the are and repatriation payments back-end rate quarter may of payable tax was tax Because Applied's the GAAP the for is weighted. XX.X%. tax, one-time amount over this

foreign tax effective fiscal rate a fiscal rate of for expect next income tax Our in XX%. rate range tax the the that we're a non-GAAP reflects X.X% This XXXX. Beginning in on and year. was planning XX% be our increase X.X% in QX, non-GAAP rest of using minimum XXXX, to for tax we our to becomes

QX. delivered was benefit. non-GAAP year-over-year we tax growth X.X quarter when year-on-year increased operating $X.XX gross eighth as by by of On on our X.X and revenue reduced $X.XX, EPS, in basis, both margin points financial percent a X.X $X.XX of by a I'll OpEx points, in which and consecutive sales points. a margin or comment grew non-GAAP Now execution We our excluding

our impressed Services. I'm delivered operating We in grew operating in Semi growth business. record highest margin. by our operating were record revenue margin parts we delivered Display, years. equipment demand. segments. AGS operating mainly expectation AGS due with year-on-year was the of higher-than-expected sequentially revenue we particularly profit and the QX, by delivered above Turning both to In lumpiness due margin In of both business. record to over grew also to revenue a semi XX% spare the which following lower and year-over-year, and XX% anticipated which the seven revenue equipment, Services and

in the margin operating trend to of Display year. revenue the and expect higher We balance

I'll outlook QX. share Now business our for

revenue range year-over-year. be be the XX% billion. $X.XX in of up billion We to The midpoint $X.XX nearly expect would to

and to both XX% Display year-over-year. and about expect revenue about Systems XX% year-over-year, revenue by increase increase should by revenue We Semiconductor Services our

expenses the to flat the nearly or year-over-year. range And of EPS we million. the At turn approximately of midpoint in XX% now minus I'll non-GAAP range $X.XX, to call sequentially. be the gross margin $X.XX. OpEx minus midpoint, the non-GAAP expect approximately of $XX back should Q&A. down to is in And We be up plus Mike the XX% range expect plus to operating start $XXX or revenue, The of year-over-year. percentage be would million, Non-GAAP the X.X points be

Dan. Thanks,

as help just at to one you us reach time. ask Now, question of please this can, as many we

If the call. operator Operator, and let's question our later, an it to begin. the we'll have please please additional you answer in later do just best poll

of sir. And will first Citigroup. from our come Thank you, Atif question line the with Malik

is open. Your now line

on Hi. And Thanks question. beating strong for rate. taking my a congratulations

The question your Gary, the for TV business? in year-over-year unchanged mobile you mix versus Display for just first XX% about of talk can Gary, outlook

Sure. Thanks, Atif.

Just here overall, screens. projects. XXXX XX it's your TV, Gen very We're And seeing we we larger XX/XX XX%, growth, is greater than of XXXX, we're see increased mix. also, beyond tracking and again, also on XX% adoption XX.X XX-inch about look In in versus XXXX, TV, and strong. a question, TVs. look still great mobile example at If

only you produce XX.X, you eight three XX-inch Gen If with Gen TVs, X.X. have them with

opportunity we more we half customer see the of that's driving of and business. was the still very one business. TV business the that So our in XX% Previously, strong had than in OLED XXXX, other is OLED.

customers to rates, is better XX gives displays cost the about curved OLED and XX% you over foldable OLED Now, LCD. Flexible faster multiple We OLED. refresh gives power form screens. transition business really from you as advantages is compelling. than new of OLED factors such Rigid performance, in eventually displays the talked customers. greater coming And

on growth our So on longer-term track model. than in and XX% with again, we're XXXX track for greater

Atif. Thanks,

Thank of our the you. C.J. come And next from line question Muse with will Evercore.

is line now Your open.

Thank spending question. plan. capital allocation a about to Would heightened feeling your of good the level WFE. of afternoon. of this taking sustainability Obviously, of you're capital. my dividend, hear your for be your I framework question curious Good you the guess Yes. around you around that for doubling thoughts with in returning the

to going you love about how hear is you. buyback billion. announced cash excess that's that Overall, be whether flow program like to think a would systematic. opportunistic plans Thank You generally to shareholders. generation Would $X.X now return hear free to or and to back

C.J. Thanks,

Let me help see if you can I that. with

So as by encouraged encouraged you markets. by point customers. intensity our out, end we're markets. those strength in rising, the the end really of do and health diversification we We're encouraged We're our of see capital by

got XXXX, our markets strong got of future. From allocation free the nearly we've capital Since standpoint, the great cash back flow has company's a So into a view company history. shareholders. to of XX% returned the a

the As the part billion opportunity even opportunistically combined also for of more this by We're dividend was to announced market increase when gives going authorization, repurchase, with that our share the announcement, $X.X be we're We've outstanding XXX%. billion a drive a to the $X mix bit. an to shareholders. value in prior changing us from

feel very excess good shareholder-friendly about to being And of cash about end so markets. good feel the free company. with And very our remain we're performance committed we flow. to going our the We

with next Suisse. Credit our question And of Farhan come you. from line will Ahmad Thank the

the My now Farhan is great Ahmad Credit is results. (USA) LLC for on the Securities taking question Your thanks for my open. on business. Suisse long-term Hi, the congrats question drivers - first and line

the any economy. IoT markets? what AI, by done supported the to guys being work business non-consumer general you currently out sort about of is portion these of talked data You and figure Have

competitiveness. strength end and in we as is of company's It industries, confidence what's we specifically We a part within all significant WFE we into large whether by see that What going as noticeably unpack device end that see WFE, both macro each So, And the a strength and logic we it's WFE types, foundry, to It's trends efficiency Within strength in non-discretionary. see DRAM. see of what trend. see a macro both what logic and are be foundational supports look we is larger memory, to foundry, markets them spend those we slice into driving difficult in is driving trends amount and it's very markets. to NAND of lot see market. whether end see memory. across to

and market. LLC we're encouraged Farhan of how which the unpack So bodes much Suisse it we end specifically it's Thank Ahmad is to too attributed to trend. by breadth really well the the market I seeing we're (USA) think you. strength But for difficult - Credit Securities think

Farhan. Thanks,

of And our come the you. next Thank with from will line question JPMorgan. Harlan Sur

line Your is open. now

flow. the to as proxy in and program, well-executed I cash But calendar goes congratulations to previous going for you and billion answer. your free year, net afternoon back capital Good a this guys Good are on see another return to if income quarter. in use $X this boost flow, be the generating about cash free

So today reason multiyear is return of the flow. for its a XX% free that billion guys many about would that guess, question which over are team your consume I dividend And XX% this semi imply, year, the to this cash flow in is, articulating is increase why committed free the $X.X return, repurchase activity? capital flow. ask of peers a least and the percent I some is as at free you going to cash about companies period cash announced of

a I about we of flow, team on So, basis? is return the how is free the capital think from go-forward guess, commitment XX% that question cash should the

Thanks, Harlan.

From made committed on the from standpoint, forward. at can to us we a a Materials, big the approach team, move to management committed dividend. I to that hands a if be We're that. I historical a be of this see dividend me to the going mindset of I little shareholders. try going to of don't to you would think as back to is a will add helpful. in formulaic getting color a as XX% mindset number on cash more see Let remain what look this Applied

at to the of grow we we We grow business. business continue grow repurchasers the basis on look review going our our intrinsic policy look the we compliment And the the trading as that going and are and is that, way in performance historically, We're way to the to that. going periodic dividend when to to to business shares have of feel fully value price aggressive the stock. continue being not we we're our by reflected do the of and

than substantial the to into we similar be rather reviewing as the So, formulaic, the track be our historical to I to the amount today. committed be policy I time our think business. opportunistic we're look be back dividend, that of going track to over to grow of formulaic committed with a repurchase, that want as think shareholders. not in approach free cash to But record flow do record will excess we getting future And

Harlan. Thanks,

Thank it. Got you.

Thanks.

of line next from Hari with the come Goldman Sachs. you. question our And will Toshiya Thank

is line open. Your now

think gross Thanks margin detrimental quarter guys. bigger I sequentially Dan, taking overall would which percentage becoming your despite have for Hi, flat guiding of business, the gross this been a to question. historically margins. you're Display

the guess, I target you've improvement gross longer So, midterm in plan. the we're But there. kind XX% term, driving your what's And margins? fundamental in shared of

you. there forward? potential how upside So going Thank about think should from we

Toshiya. Thanks,

of model points. going points each the the about basis record capture So model holds. We've also got articulated we've XX Last that four constant track still forward. by good that's over a X material to years. costs as says a improved the But we're margin assuming business That last mix. a drive we year four company's of savings sales really gross years,

our our out the composition going create of going point mask of and progress. have ornamental that's bit business, rightfully composition some a to of You headwind we're to of that mix a that business

Day the of So us long-term that's company. quarter reflection have Display strong What sequential like articulate where on is, once drive see would the value will flat than sure to temptation we've to to I a continue year do where our And along the hold as we're margin advertised about aggressive much we be is of our would say think all I make pursue the is we see in opportunities, scenes to going Analyst what growth work our model, it during update opportunities gross the looking it to see we're I that way. in possible resist the aggressively behind for a as What we and hard better to delivering a going the shareholders. long-term profitability and for we'd and long-term say model model. a to

Given businesses margin XX% the consistent stay review if profile and to we at Day. we'd the forward, of like going into an growth update, our our the mix in Analyst gross with we'll XXXX out have the fall timeframe. And it

Toshiya. Thanks,

you. Thank

our with question line come And you. Thank next will the from of Joe Moore Morgan Stanley.

Your line is open. now

next start the which you $XX increment years billion of from when the the talk for is billion months that ago, XX do segment versus memory being $XXX Great. WFE feel to about about there just think versus you I growth coming the two start worry these supply of because much wonder how for years too higher? Thank talked guys you. next kind the a about are you and you how foundry is how And much level like to levels, or where you you they about keep thinking high of logic? is ratcheting

Joe. Thanks,

diversification that our about And range driven a forecast into in framing timeframe. drivers first. XXXX trends, of the demand would estimates ratcheting What out extending by really is the by reasons. our say end Macro is markets. feel question good our is the of What our we implicit encouraged we're is I we're says we're primary So, higher. three the

the that's and right up board, the third, customers very, is very types. across healthy intensity capital Second, all device And now. are

up. while going We've about timeframe are macro So how Things, device autonomous these probably Internet is up, on Analyst thinking devices we been those intelligence, in we've They're XXXX Semiconductors of just playing impact. it live in of of these view Artificial edge across I lives of our real. trends going think each a data we're on big right into again, data, Content trends. We out. three elements, and now. strength Demand double-clicking driving, for centers our trends up, each are all back critical making got these shaping content at the an is going silicon enabling seeing types. path as for is Day.

macro incredibly trends are So the favorable.

also instance, is Foundry than look intensity and up is capital In and that X-nanometer transitions over we same board. And of capital that XXXX get number largest have would thing, chips third so logic time money. our memory the across I was seen capital XX% when XXX are size that the up wafer drive is we on markets. Memory, spend providers we WFE of And lot you from per in XX%. XXXX, EBITDA. wafer X% both down all really Their The year of growth size transition is healthy. as memory low of are a wafer, used And we guess, trend market. – underpins In feel a transition EBITDA the the they're foundry from of the three percent from WFE for DRAM all between it investing good And about They're is XXX% go down. of times XXXX XXXX. absorbed. last millimeter. largest period. that of into XXXX where don't intensity a percent the gains As to to three and to in this today, up that at over intensity, to providers the but NAND another intensity in transition customers XX% millimeter were X% spend three capital-intensive went the we've the as to have XX% a industry, horizon, from more lot semiconductor to XXX the WFE when to year XX-nanometer. the X.X of foundry, a times making money XX% up efficiency you at

healthy what is encouraged we're really are are encouraged it. see. think So Macro profitable. market, We good it's good, customers markets really and we're by by we a

Joe. Thanks,

of Thank our line come the Patrick Ho Nicolaus. question with next you. And from Stifel, will

now is line Your open.

talked the the and as product. e-beam At logic particularly sizable transition you nice that to discuss industry of the time, transition few now some market some makes some gains XX is of about side your and in X you maybe and NAND the the have a to to pretty nanometers. you've you we're in transition? industry years, of over some past very remark, the products the seeing A quarter. much inspection. due Gary, patterning XD lot that gain of potential the and segment Thank ability the for new of your to it congrats on that there on share same Can you and introduce prepared share generated the opportunities of

Patrick. Sure,

Let me then first the start on kind of big cover you asked. picture, question I'll – that and the

about more process PDC than grew grew XX%. So, we XXXX, in equipment XX%.

you equipment balance We've of Now, if if growth, well probably foundry strong it total be the increased grew that, not few good years. XXXX, and much was do back And that very and years, and process for three very last as said, share last memory process would out very, a to XXXX strong used as well the in X% you faster spending. look memory Applied years we our see also. than XXXX, on the over over future But the about year, It of PDC equipment, market. us. in years playing again, to

all segments, really around question XX% of drivers And a many, in our growth new There storage, businesses, for or strong generation, capabilities, there you in PDC, geometries. share trailing big And those driving foundry, have the and is two balanced in all businesses really drivers. we the in high-performance different fair one that smart have the device AI. are what growth accomplished above new is we're in was then segments. leadership devices, our data We earlier growth will double-digit to and more many XXXX, So, amount In segments, in data different increase we looking have then our XXXX those information. AI products XXXX. PDC. process what about also in very computing what's the of we in and had

the fair XXXX investment amount companies. at trailing is look and increasing you domestic in China if both So, geometries, global a with

Display. for in opportunity share market great we'll that happened great of growing, we Those We opportunity but is scaling growing. and shrinking It's Patterning have approximately expect look Their Applied in outgrow two-dimensional a in in for one our layers XD where different in positions to And also position features. of four you that computing Semiconductor a China technologists big multi-patterning that, another see challenges the see China. us. Materials. next logic. biggest a scaling, XXXX. pattern great talked highest patterning there see of certainly, and we you great the will anticipate And billion to one about our a for and resolution, of points is customers in look edge of And technologies. customers. advanced placement one at in next, industry key the then from to especially as placement, in and what these in solutions you about materials the top new technologies challenge that's you driver industry and is they look errors January; logic, foundry placement. said challenges. of have biggest to strong we scaling the with also and high-performance leading materials-enabled position alignment position add logic. over years a at gate scaling position, we $X few move The is If forward, And $X patterning revenue over materials one that we XD gained if the early patterning. multi-patterning. are XX the have a being the XX% two was is last where then We've they another is We are foundry selective you and of could for in And in placement And pattern And foundry, for TAM. drivers. in XXXX errors. over you one layer have, active to about XD share in if grow, One companies the edge years. was certainly all a billion be NAND, conference that technologies of challenges, we're in in we're contact that the example that's very

leadership, chips grew double-digit we're segments, seeing their would in bring we XXXX, roadmap. tremendous ability growth, strong that pull amount is PDC. thing can see really from worth overall of high-performance or all our analyze If the of and say tremendous other AI to market to XX% they money And accelerating is again, a faster, over process create, those our We in I materials that's equipment. growth unique. computing and modify, So customers remove

would never engagements the in and deeper seen I've in been ever seeing customers more positions about than our those I past, we've we're also optimistic with say and So markets our markets.

Patrick. you, Thank

you. come & with And Needham Edwin next from of will our Company. Thank question Mok the line

open. Your line now is

thanks for Hey, my question. taking

Sorry background noise. about the

I So about China. a have question

pretty confident that. Chinese seen sort of there about that of even the players, later investment local maybe will XXXX these guys new out but or a year we sound manufacturer, of or confidence You haven't of you lot come investment gives products design come timeframe? out What that by XXXX, coming this

Thanks the question. for Yeah.

have we pretty visibility in China. significant So

We have the highest share.

systems. We automation also the sell manufacturing

to I what optimistic, in the China. growing as growth between that domestic XXXX and And to and more would and market pretty lot certainly Semiconductor very is is working indicators XX% in companies. in of It's say, area one a we terms there growth the a generation, both are in in see China. that's an global higher That's going in the different Display. in China China. market things projects We're happening of balanced China, said we for logic with relative have technologies. of was grow. those share of has sensor leading the the is we'll in foundry And I all have largest share than earlier, seeing our foundry capability, the talked in we we're China And very of about companies. those strong And it demand trailing in memory. increasing where that devices, Domestic is and data the closely smarter and geometries now and all is again, So we're

For towards foundry are the more companies, versus weighted memory they global logic. and

about was Dan talked the that thing service prepared our Another growth. in remarks

our new locations. in fabs I year-over-year service in penetration market also service. think like helping XX% new in global China very local something is is a ramp and companies high, of where

parts in an service service And increases so one-time extraordinary growth. quarter may above points had contributed that a we few that gave. to increased the we our we than certainly think higher quarter some model, relative rate that We of in that be growth but model the to

believe strategic for Applied especially good that very very, visibility a investments have we there anyway, that's to good China. going in market and So The very are and remain we investments, Materials. good

making just the I build Yeah, Services to very business. was on our point Gary want quickly about

year be about. dynamic because the historically from a different will I Gary this perspective think the way profile we service of talked seen we've than

a are China. first and see of these facilitated back think seasonally fabs year profile half the I into you'll of customers a stronger half in different by as the brought online couple international

XX%. above X now QX growth way about the XXXX think year likely be full think of think our because half of our the long-term visibility And points the as in revenue, Services to I business rate the year rate. back about our about and you you've got half take we're long-term growth look QX, year, over compound compound revenue at XXXX of back full to on is the year,

about you course think gives on can to that throughout think you year of how a so framing I the in business the dial your good Services the models.

Edwin. question, Thanks for the

question the Thank our you. next Wong come from Wells will of Fargo. line David And with

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Thanks much. very

driven of and seeing areas display new seeing meaningful growth In in your meaningful growth you in increasing growth addressed traditional year, – the are in this – moving from into terms expecting products this you're or primarily is your market new by display display? equipment you're

mobile. the And roughly is – XXXX the had in and market TV XX% XX% display market same have they're with previously. the we products that really So, in

XX/XX no about is XXXX. growth So And the and products mix between really real from new forecasted significant in TV. mobile

Great. Thanks.

David. Thanks,

will come Ho next line of Bank. the our from question Thank you. Sidney And with Deutsche

now line Your open. is

taking Thanks question. my for

obviously math, back again XX%, calendar my than outperformance the System expected the much And very better this before. which this about you you look a by grew you your at to outgrow was outperformance higher that the year, If market to few year, your business impressive. last business grow just percentage – is year it's do expect points reaccelerate talk the also But about When the year? Semi WFE market.

the Yeah. Thanks for question.

in PDC XX%. So, XXXX. business again, equipment our grew process more XX% than breakdown the if you business, grew

in in really double-digit of businesses, see we strong business. look into growth high it different all those extremely more and we So of PDC. If businesses, growth market was terms across where also businesses, growth process the have the share, leadership XXXX, equipment we the

XXXX. growth all businesses all strong them, across strong So across of in those of growth double-digit

you. Thank

operator, And about two for we I'd Sidney. like please, them. to then, that Thanks, if we've know time more questions, have let you got

Yes, sir.

with will Riley questions Craig of Ellis B. line come next from the FBR. Our

line open. now Your is

very secular see just taking XXXX. and for congratulations color capital the execution the and would to get quarterly factors thinking you're the but it from like more be seem year. next about multi-year and the on growth how just cause seems in are it a may wanted I now, nature and industry the been be we're I be to you real of know to there, if or where evolution outlook Thanks we precise multi-year to an on early uplift and in forceful could as helping back be return. good are go questions Gary, from where potential the some they I as to lot that for we've

next growth you. year WFE for potential be the on Thank color any appreciated. would So

take Yeah. and this. and Thanks, jump in I'll go ahead Craig.

tell think two-year that across how too it's sequence. I spending early profiles to

of and in to people's China. innings. Macro intensity drives. have these And have $XX trends penetration billion when and to are multi-year can look into it's best look disciplined we going look our think take we in XXXX. Capital stages we By see, macro XXXX, seeing it's disk autonomous are We're XXXX, important into basis. OEMs we modest eight dialogue in continue the to bottoms road. Level a We're customers, shaping just investments referenced good Gary on good of back and we're view up, a at of the X driving it step trends OEMs. I SSD what's really hard vehicles the the with early with By growth real. is think lives. indicators correlate vehicles. up fundamentals Again, and on XX all early

to we have of revenue in, horizon. call trends So lot too a profiles while confidence over early the forecast how those

come Thank you. Credit the of Farhan question will your Suisse. line last with from And Ahmad

- Thanks is Hi. my (USA) Credit Suisse question. now Ahmad open. for LLC Farhan Securities Your line taking

Just one about question buybacks. on the how you're thinking

very get laid a I very positive are. You significant upside I outlook. like out share from around do if DCF And long-term can it, like currently a your a prices where

opportunistic to current it are lot share with prices front more you level? loaded around fair could and think more that the if be is So, a it be buybacks half could

we of Ahmad our Thanks, lot see company more future substantively Farhan. we the in our company whenever respect opportunistic Securities higher in be repurchases. you'll with market, repurchases. trade (USA) And is think point in strong potential. Suisse - said, we and flow going for Thank it a LLC in got Like how generation a us and gives intrinsic to We've you. disconnects view we see our what value cash confidence see free us Credit are profitable, of will where I Farhan we as how markets holds be our on opportunistic the those within respective the business, with performing those markets

Okay, the for Farhan, thanks question.

want close see, Let's the we anything call? Dan, add you to before

Mike. Yeah. Thanks,

we for industries on with center Applied's It Semiconductors bring together, productivity be important about tremendous better that it, competitive are a competitive. Applied. probably most in fundamentally trends, what and the These it's talked good can't shaping about and at close a is quick to this enabling the lot with multiple time on bright. path We the staying begins Personally, those growth trends our thoughts. the future going of think non-discretionary we are to of planet. of of investments drive drivers all I the do lives. semiconductor of industry. it are is largest, the I with some trends a are When couple think incredibly critical all of to

depth breadth the is just an for Our company. and asset

going we've new cash to in going to about over to few And This more to talked Number generate use, in we the we're drive important be growth three putting and seen We way lead and ways. bigger, about to is are past. that organic sustainably products. profitable years. the we're than as the think profile invest we likely last one, going more the cash

growth. will invest drive We to organic

will We value to going buying and more shares higher back pay more dividends going be even we're drive shareholder forward. to

then joining Toronto. tomorrow, the we many look support. seeing always, we York, and going next or as We're of be us and road really Goldman you. in the And, at be appreciate week Boston for on we'll New and Finally, forward thanks the to to conference

and close Mike, So, ahead call. let's the go

by Dan. our great. is thanks joining And continued available that, we'd thank A today. call in your Hey, for Pacific to you website us replay interest PM like today. thank Time of X:XX be on to for Okay, to And Applied Materials. our we'd everybody like going for

today's have conclude Ladies and gentlemen, on a This we thank participation disconnect. you for wonderful our conference. does all your program, and Everybody day. may