Applied Materials (AMAT) 17 May 182018 Q2 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, sir.

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

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

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

I for tuned like to Gary SEMICON in stay over San West And begin, On Tuesday save is during briefing date turn morning, details. calendar and to we have Before announcement. call now, Materials Francisco. a technology July Dickerson. XXth, the sponsoring Applied additional the I’d Please

record business with deliver call, major trends electronics how semiconductor our technology outstanding results. for more congratulate the in up remain track and evolving. service have our I’d the for valuable on to the trends employees All In our exposure today’s the is period our like of major to tremendous three growth momentum. world thank provide role in we a second driving of to and Dan outline how major Company, I’ll in playing Applied ecosystem. more on XX% are performance has perspective we growth broad larger double-digit XXXX. segments will for Company, strong these Across Applied, our and markets around last sustainable quarter display products revenue same fiscal fiscal strategy are another Applied’s Mike. all-time year. was about Thanks, from and portfolio the then capabilities outlook. and our our financial into provide I’ll broad details performance and the translating the

products, and in rational some have as their capacity and semiconductor customers’ the memory have particularly expectations, there near-term this our and in Smartphone have planning. adjustments levels made the investment suppliers display sales takes current high-end and quarter, During grow. particularly investment past we both plans. puts market. believe smartphones view response, makers technology in below And healthy a been for remain models, of to key We continuing and to see ways, We been disciplined, the device. long-term both many and a be add supply their Smartphones as content features of functions box capacity. therefore In balance and edge more maintained. handset demand ultimate per driver to the are will

the big the Internet of economy evidence there up Things, pace. of this data first sales are and three the that customers mobility growth that for intelligence growth unit weakness area the part of in XX% industry average forecast over will DRAM. seen year, NAND content be disrupt indicate XX% our decade. recent we next example, In and artificial and every of yearly in The emerging and over next the around to have industry transform drivers smartphone picking virtually is For from in will for years contrast

big data In are have just months, AI, very the at service their the already impact While our to increased only see starting we six are era, investments cloud of past positive capital markets. of we the the beginning providers buildout on the significantly.

we companies real CapEx were those becoming consumer are their compared more expectations year investments Also, around previous this Looking growth. up than we which at by versus XXX% cloud of up in much view from financial of XX%. Data positive leading centers top larger the reports to of as seven estate about XX% a service silicon. data XXXX see the already providers, center made XXXX, indicator a

of the market than five DRAM, in is DRAM currently for it to XX% the years. about which server mobile the segment growing the example, next faster market three For DRAM become largest means could

in workloads. significant these the tasks in for addition, silicon hardware for to of I’ll up which architecture both or level, new new, chip technology shift coming to inflection stream new hardware ecosystem. market from a turn and for computing into steady server At that This the throughout significant driving served now an specific a with are new war Applied’s market. computing innovation see computing devices, heating is In AI general-purpose trends the design is architectures and translate markets. we end major are leadership customized hardware fueling investments high-performance outlook

XX% healthy As dynamics. memory with our about to expected NAND I forecast, disciplined this bit mentioned, we our investment well is are year. extremely customers, In which believe seeing for previous we market at bodes grow by demand line

While investments expectations to we our XXXX, NAND similar in being we still see high year’s for reduced levels. have last spending

capacity technology DRAM DRAM for as customers investments strengthened in invest high-performance for demand data used has meet and outlook growing centers. in to Our

similar we to serve evenly relatively to expect year’s split spending applications. and the foundry investments and be will leading-edge trailing We this geometries and between to growing by automotive IoT and combined anticipate customers logic XXXX, be

in $XXX TV strong. spending around continue billion. be large view in high-end Adoption investments in view We OLED China and volume in account, XXXX leading wafer ramp remain to committed time. in prior we these ramp manufacturers, screens maintain OLED expected, to of makers also by compelling and are XX.X Compared factors well a as power significant transition of with In all offers as combined steady our to multinational capacity as LCD, OLED domestic and Taking advantages, making capacity the assumptions. a slower see and the sales. both of previously manufacturing cost fab than over smartphone high handset We that our investments mobile display, weakness Gen technology performance line are to and XXXX into primarily due production. of the in substrate and could equipment lower

Applied we OLED investments, have In and is organization apart. the many sets and it us portfolio possible ways, our enable such future. factors is vision generation new foldable shaping vision. addition, capabilities product systems the aligned next realize operating And this make breadth of as our flexible ultimately and form screens. that Materials’ to to will the curved In technology

We segments. have markets broadest of variety and exposure the industry across well-balanced trends to market a our and business is

challenging, as become next increasingly solutions critical deliver addition, roadmaps the more industry and In to costs improvements generation performance needed for material the are devices. power, area in

these address with modification is materials challenges materials complex to innovative valuable. creation, to approaches becoming removal ability Our increasingly and materials

We structures. new measure, and inspect also understand like unique have e-beam materials and to technologies

strong pool devices to the time to help We Shortening in customers beyond material customer takes new traditional their for that valuable, roadmaps. resulting are solutions bring to market it our process accelerate tools. go incredibly is using breadth unit

lithography both placement. shrink, The for pace technology these Applied. this and that of creates this in strength reasons and grow taking again There our techniques we these our market innovation geometries significant device and are multi-patterning consecutive of that products, capabilities packaging, the architectures the us materials, impact significant to on are Placement is to is patterning has SAQP our is market share growing, and or primary EUV clear for great between R&D enabled errors. EUV ways areas, expect three on aligned self the year. year. In shrink with evolving errors the to going for six Even traction the Based opportunity resolution into and than a the address drive faster customers’ materials which to roadmap which roadmap placement new and pipeline new conjunction layers include developed more our priorities device about new excited for will With years. opportunities in alignment our including adoption. opportunities new structures lithography solution the and place to a SADP of to vertical the of and the this semiconductor, and reliability. have in of the all are as require later advancing industry approaches our being enabled can requirements, needed portfolio of performance XD resolution combination outperform chip is We expanding that of it our advanced new aligned device insights a regardless

in value invest products our to to for continue Beyond customers. equipment, we organizational capabilities service and create new

this to year. performance XX% service with Our the record business quarter revenues all-time up same last delivered period relative

that yield, average nicely service XXXX In we optimize still we XXXX. OLED longer track Based view more per help our performance under ramp lower long-term shorten be XXXX, plans, positive at revisions driver to device operating on term, since times, Over are from on rate year that is agreements, and revenues customers products XX%. Applied. will those for an that in by new of base, than annual and recent XX% service grow grown Overall, portion XXXX, early tools up maintain at growth customers’ least than this business of driven long-term a installed remain and year, display, for a although outlook a revenue by service of the of larger and we to as growing costs. timing improve unique, we’ve XX%, the we growth can confident of sustain our

Dan, the summarize. I’ll Before quickly over I call turn to

recent and strong markets. be XXXX some long-term near-term Applied healthy We is expect and our deliver changes double-digit with equipment And While strong we and services. fab fiscal investment that place. XXXX for in display drivers spending XXXX, wafer outperforming we’ve in to customers’ remain combined in served $XXX semi, our firmly maintain could seen our view markets demand in plans, growth billion.

technology role, are look to new bringing we And devices our trends see As breadth. we play about ahead, expanding excited to we emerging that market. Applied’s

Now, give and on performance outlook. his perspective our will Dan

and new variety of Thanks, financial Gary. metrics. In records QX, across Applied set performance operating a

an quality teams high, while XX% delivery. and Company revenue millimeter number record hitting Our up shipped was year-over-year. a manufacturing XXX of for all-time on-time operations key goals and systems

semi. to and we margins And more not growing, strong operating equipment semi display businesses by even outgrew to our set cutting. service, revenue we to We ratio non-GAAP efficient. display. become We profit both our exceeded history. and lowest services non-GAAP sales as Our XX% $X.XX did in and our records, outlook the billion grew XX.X%, continue reduced this to new in our year-over-year OpEx we a record. And maintained by We gross businesses

are at low in fact, roadmap than more and for our our customers This to high continued the Applied performance, makes history, In driving investing power in new time we valuable support solutions. R&D with low a in and cost. materials any partner innovative uniquely

We performance is execution strong will results. larger laser invest evidence be less focused to growing also We attributable our industry with discipline and and and variable. dynamics. I markets see on financial improving better that Applied’s are our believe continue to

demand weakness there We despite Today economy consumers the which still the semiconductor data Gary category beginning memory. indicator of reinforces intelligence results XXXX, data the around semiconductor One, the single biggest remains particularly expect weakness wide correction, in points strong before. PC smartphone is shape. artificial our are market, outlook the have drivers might to significant segment the belief within not believe, largest discretionary. of outcome market consumer equipment price positive leading In a is the the the I than world and mentioned with and us. suite end-product strength the to just and revenue. past, high-end of Smartphones for growing. is XXXX in driver Internet and spending take This new ever Applied’s in factors. of center three Things comes more in more business-critical, are personally strong. range But in caused

adding and the And most. manner Second demand is our healthy needed is to higher. intensity disciplined where it customers in a capital capacity third, are meet

help where fact, pricing were to creating is years additional world In it units customers grows while a for lower smartphone weaker than exponentially, demand will high-end for take expected, our solid-state NAND In data to In drives. many this our Gary market customers advantage. unique from are magnetic environment, to breadth semiconductors. convert technology is described Applied’s new In we ways. a semiconductor how combining systems, the in technologies storage

are and are of leadership evidence were new this improve like memory reduce products foundry across in growing the more the see power and Applied DRAM. Many being our logic multi-patterning DRAM. our most high-k/metal pioneered wins in and also months is semi nodes. our the where logic the in You’ll growing in advanced Today, adopted And opportunity of logic. in business consumption. memory we we of are gate to beyond memory, ahead. being performance market used now set are are strong also Technologies and

XXX systems of systems Our millimeter served trailing millimeter industrial. XXX many and such in end diverse node our and customers as automotive industries hundreds

revenue year. should systems XX% this millimeter XXX Our up be over

opportunity display. applications, are excellent service, building fact, growth, systems demand us keep which of in of other now brand-new systems In X.X. Applied to Industry also And with the gives low-cost the cash and flow. are These Things, up devices and has revenue unique billions in we sensors diversifying advanced automotive needed for and shipments consistent Internet helping a us

take time, strong. display smartphones while As Gary and OLED is will business to remains diverse additional some very overall the discussed, our transition

a As we growth more pipeline. of have had and set drivers, a in company, we’ve such the broad never

year could XXXX our As a XX% be non-GAAP up and more XX%. result, our up fiscal revenue over than could by be in EPS

of in when the quarter used short our our outstanding Consistent convection, to shares our growth about technology X% XXXX. period. $X.X even short, are XX In we billion are volatile the the we the achieving of well have during equity and markets, million long our deliver or over on strategy, stock to our markets We of in $X run, conviction pipeline, EPS shares goal with our of opportunity non-GAAP repurchase beginning our at in by strong to over the the run. track

capacity. to to capabilities equivalent Over were will R&D the same X% our CapEx by the of majority plan to past our increase increase a outstanding. At we’ve maintained $XXX four our the strong very used buybacks quarters, sheet. and of this the shares about year. time, be balance manufacturing million The expand We

increased non-GAAP on of EPS We count. $X.XX we in both a On minus XX by was growth a the lower gross rate Now, execution or XXX tax operating $X.XX and points, margin basis, basis our increased grew revenue in EPS, financial points, our by a ninth consecutive QX. and comment year-over-year by of share non-GAAP XX%. margin year-over-year basis delivered quarter benefit which

revenue service along XX% up by Turning parts to agreements expectation, our grew record revenue Services operating services. delivered In and display, demand grew revenue year-over-year. XX% non-GAAP above driven operating by strong spare the We segments. by and revenue with equipment both semi and in was and year-over-year XXX and profit We renewals. new grew equipment XX% by we long-term margin basis year-over-year. points semi

be expect revenue to exposure markets. and the our second We TV Thanks in display to inflections mobile both to balanced higher our half. in

business QX our for period Now, I’ll the same share compared outlook to year. last as

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

We X%. expect grow revenue semiconductor about systems to

increase should revenue services about Our by XX%.

Our display grow about should XX%. revenue by

in the range to expenses nearly around minus million, and gross up in should we of plus EPS $X.XX. of be $XX midpoint be minus range expect or operating The be million, plus XX.X%. or range non-GAAP XX%. non-GAAP the the is of margins Non-GAAP Our $X.XX, should $XXX

and call our Mike QX. up margin non-GAAP Finally, start be to with are now, I systems add gross non-GAAP be the approximately color models is sequentially you semiconductor likely And the revenue around help to metrics revenue, will display up revenue, full could four your to year following the services turn additional in flat QX, back be revenue in likely XX%. to which to QX OpEx; Q&A. from I’ll some The overall fiscal to company and for sequentially

Thanks, Dan.

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

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

from [Operator with Instructions] Evercore And is our ISI. C.J. Muse first question

total double-digit then, view question. we Yes. changed, will next me I your guide of Good the seeing you And question should just that outlook strong the is you afternoon. your side, combined Thank ‘XX billion that? spending or WFE think reflective you that calendar my provided? year? smartphone the discuss how sustainable for are WFE -- could weakness for outlook remain low as taking about Is in for in high-end into growth more guess, you that $XXX considering

strong than probably a the being strong. of was XXXX, will up end strong. XXXX, I across billion our fundamentals it’s a XXXX they’ve all be about very strength into year. in and are really end We markets markets, device conviction today our balanced see reflection over Gary sustainably and think, good and said $XXX markets XXXX are feel been. and types. ‘XX, ‘XX we like in more we seeing The the ever

So, XXXX. markets, the performance the about into we good outlook feel and still the

with next is question Our Citigroup. from Atif Malik

of quarter? display expecting expectations or market for the OLED Can XXXX, you talk And in is are reported the you down, LCD more TV about down mix in OLED? being with versus be displays the it to

in look or is ‘XX, of mobile in more So, at growth, screens between give for revenue adjacent let driving greater investment on some and a And Display TV, TV; between annual the our ‘XX, towards balance and Applied. market. is market overall. view When XXXX. weighted We the down on me than in XX% growth we we are growth mobile be around of and to to for larger customer see good XX% XXXX averaged TV, really display track revenue the color still XX% is TV. Based XXXX. XX%. adoption And plans XXXX on we

XX-inch you at produce televisions. Gen a factory, eight versus XX-inch Gen a If you can three look versus X.X XX.X televisions factory

it’s proposition there. value compelling really So,

for still it track is time we lead factories. is these investments. projects. than these tracking are We are expected. slower with long customers OLED still previously on XX XX.X Gen In There a And

around committed timing tracking XXXX. OLED XX handset But to that are still from XXXX still make has display compelling still out to We the and leading transition. extended the is fabs transitioned makers are

look better have cost, form OLED, go factor, lower and to volume flexible you If screens. manufacturing, foldable better performance, OLED high and and you for eventually curved rigid the ability at entitlement, to

as great growth see So, in new few the continue good technology we growth performance Applied. in had our capabilities, have for really of inflections, display over display future we to pipeline last With opportunity years. a

from Our Pierre with is next Newstreet question Research. Ferragu

investments. how managing what mentioned you quarter And you maybe remarks that first the way and think us prepared on in disciplined your tell industry become the its I happened in the Gary, has of in the could elaborate it’s year.

smartphones in weaker demand than So, came in expected.

smartphone We like weak fairly in a are environment; that’s new.

industry actually other my this small is plans adapt of does investment affects that that drivers adapted your their actually now plans a for plans not smartphone other center, lost this new increase So, whole discipline, like that mean and have -- that as the content data today’s and like really into a growth in very moving question able been as that part that is a and rapidly already? the markets that’s and Although is clients to unit so driver world? means

at We lot, that making but out investing a driving demand real, or they in take So, economy End-market is drivers, memory about it’s are macro look at the data strong. we demand artificial of point talking as a are market. look they’re keep incredibly we lot. an and illustration the also see They Customers are take for if markets healthy. the demand. memory demand a we the a playing intelligence, discipline, around The silicon.

we fact, growth as was XXXX supply and about a market In In to discipline. growth XXXX, XXXX, seeing a perspective, market at are China. from XX% of to XX%. the our about China growth modest percent the DRAM they similar intent XX% take have at XX%. as date be are XXXX each. market In the we is from are what’s XXXX, and happening it’s disciplined was WFE growth growth XX%. XX%. than led their and XXXX, China, on spender, look this NAND, EBITDA in characterized DRAM clear. have Capacity And showing this in expectations strategic about demand a in is of When more balanced environment long In bit was again, are financial all incredible being emerging pragmatic. The customers in we bit growth at in resources supply investments. XX% story. is those In to bit about confidence bit with are we In supply modest. XXXX, think demand realistic. today. They Demand the is see was a is we in balanced demand by And about both to that. clear down region account, dialogue, we expect based into a In XX% run. additions slightly to And we the supply-demand when

markets, up environment, XXXX. out. WFE. multiple a as And across seeing year a multiple was XXXX back a take geographies, play we disciplined over that So, great will from step are XXXX we very be in environment

could Gary ‘XX. As said, ‘XX be and $XXX billion between

So, customers all are are and are device a strength we healthy, manner. disciplined acting types, they seeing in across

next with JP Morgan. Harlan question Sur Our from is

memory. on commentary the for Thanks

you outlook So, supply a for see balanced DRAM. demand

XX% was then think, year X.X starts bit capacity as down technology migration. guys every do of DRAM I capacity going losing but wafer they every this per per a time wafer technology you time the something entering million like like to are the And migration loss. they know, capacity tune effective also I do industry is think suppliers month about

So, as given year you seeing, what you’re end it Thank think to DRAM we relates the you. what capacity? total

at happening you in adds dynamic we the less about, back shrinks month. that capacity million exactly of handful of was saw was X.X wafer go the it which of out growth more In shrinks per for it the probably DRAM XXXX, to a starts we XXXX, talked and we’re per the question. interval, starts month Thanks If a before wafer and market. frequent getting is because are X.X million years big

exiting to XXXX. rounded it million wafer per So, month, starts X.X

bit because demand but goes output XXXX, with balance I alone, adds struggling are growth up is in just demand the shrink bit think, when added and it’s and too from you end growth XX% the a see factory to more early bit we customers in Greenfield supply drive shrinks definitely being to keep we line call about complex, to supply driving process down growth. where

too acting market, it to looks still call with early So, healthy it like discipline. but a

I revenue much add become strong growth is very thing periphery, faster XXXX, for in logic are what One DRAM, The going to in Yes. changing than we to that like XX-nanometer we’re similar see steps. the more foundry would in like the market. devices to to in project

and We’re never the patterning positions. also where had wins we gaining

So, especially in DRAM, we see very strong growth for Applied in XXXX and beyond.

next with Thank Romit is question you our from Shah Nomura Instinet.

I it’s correctly, outlook are forecast. the reiterating forecasting, you your your guys If same the I time looks revenue in $XXX XXXX lowering to mean, at to street display. target, it swing guidance display you Dan, heard like you’re million but is about relative relative for what

reiteration for us versus display? that Thank help reconcile you of lower target guidance can you. XXXX So, the

new We’ve So, well. going got look, that pipeline the the be performing to driving more company. QX term. the are we’re is we’re a introduced, record performing opportunities, to is year extremely be to business The them business record was quarter; is and in going near for well performance. be a products XXXX good announcing

of of of $X fall. this by business over the But $X are hitting a EPS, long-term at How later analyst target day We’re well business? around model not that with We lot to of profiles call; over long-term that’s on track XXXX. do core of by our update our XXXX. hitting performing across on is that EPS the a that $X we’ll going the EPS this well conviction at to

you. Thank

Timothy Arcuri Our with next UBS. question is from

year. because is double year I in over the this billion up sounded billion digits $XX guys wanted talking of And up a off base in next are number. and about that saying follow you to it $XXX like for this that XXs this like low on you’re year line

not to So, not that that. because it like could would down of know imply is China. to higher I’m easily billion X what’s $X and year. guidance that’s bit happening or the number XXX I just surprised But that like that probably that little you something a next it’s in a billion raise

ramp what shipping year three I So, question are think you to can my A, about if ramp imply? year those into we next like, you’re what’s to the guess And is, that’s this Gary, and going talk B, that And through now China? China, trying how you in projects decline year? next in

of a couple things. So,

XXXX. reasons we follow First the I we that, thanks we that and specific the the of $XXX Gary good an through. providing Like said, indication really and ‘XX, on are of end for It’s feel It’s ‘XX XXXX. And too strength half, first full XXXX of is tell at early of core all, markets. profiles how a convection guide see and and and lot all XXXX strengths XXXX question. of think don’t device But, about confidence across exactly half, a year today types. of got to how into number the second profiles. at we’ve core There heading it. billion

a macro up. is about impact. having real, they are they for trends, talking real Demand We are silicon are

board, across that’s Second, capital up is Markets all intensity are balanced. and the types. device

again, see lot a are XXXX, NAND step of strength market which near-term step seeing something are When the in going take was XXXX, back, noise. driver We This out to indicate manner. meaningful they growth is are forward. stability of an health we disciplined profitable; incredibly long-term strong are being in of right be types. across taking healthy; late. the NAND a again, Customers, we high, behaving seeing to very all-time and end for of signals going they of that similar We has four kind And a are back all continue China a we device to from gotten the publicity market. a customers an

into outlook but got exactly the it and call how lot early and conviction about profiles, how of we’ve a too So, XXXX. to fundamentals strength look

bit Tim, also I little China. can more color maybe give on a

So, Applied to great be a XXXX in year is China. for going

going we going between But is strong global market to the a that We service, on position logic; higher foundry have revenue pretty in are balanced are to very XXXX. there overall, on is semi, anticipate and have global Domestic great year grow ‘XX is than higher from China faster we there. we a memory. perspective. in and display, domestic companies

Dan is opportunity are rational said, long-term, investments we And continue. believe this will growth a and As great Applied. the for

with Our Suisse. Ahmad question from is next Farhan Credit

‘XX XXXX, saying Should My comment down there? that be the are you What you $XX the could last as going combined like should the do first ‘XX ‘XX XXXX? you ‘XX ‘XX $XXX trends expect think at to was in WFE question regarding well growth like XXX. forward ‘XX and from ‘XX, continued at WFE XXXX for on billion; but maybe years, plus. WFE If ‘XX, was XX; several be we ‘XX, ‘XX had is I billion look up

go XXX to about introduced, was There when in bottomed XXXX, into or XX% were industry industry at to intensity it the overall then. systems a into was been it back -- I factory and And we peaked today, capital WFE run, if per But, factories host XXXX factory; the automation as ever on about a industry. efficiencies whole industry of of That maybe we then, And XXXX, work more the WFE about take intensity intensity. more been was think just it’s XX%. whole at a you millimeter the look on were the And way that it’s host XXX of revenues. it’s it the since about at X% -- driven were XX% rise If drove wasn’t efficiencies. wafers systems. XXXX it millimeter of a -- of mix, output the the

think, higher at that to potential rates modest types But, overall arguments could your industry. to, we about lot complexity if significantly billion, to think $XXX semiconductor if and could you growth are revenue, go say to apply has XX% XX% device that WFE capital the the ratio where you increasing. mean a across of billion, see industry be And to the we $XXX it grow XXXX keep are $XXX of a billion intensity you it there’s even numbers you just I and industry on to based it get north today. that aggregate where that

than and hence we more got opportunities industry the trends. critical believe So, in more on mirror. have And getting of of the trends that believe the that we’ve that those the are long-term We in us front capital-intensive. rear complex think in seeing. that we more is view we path we’re We semiconductors enabling believe

has feel this where we go. the So to good potential about

Thank you.

from Toshiya Sachs. with next Goldman is question Our Hari

business. I services guiding you been good very think, historically, at the guys have

I in the I’m sustainability two your growth quarters, standpoint? just think guide. of into fundamental half we in significantly of business for wondering, come XXXX? a about the year back anything and above think has the past changed you’ve how should the into And from

the us. We volatile good really we’re think a things well. about our that in rate where in headed. that seen seeing of cash focused I We’ve now Toshiya. revenue three team form in business analyst time. way. business of And growth business. We think revise we’ll forecast. is more the per of a Thanks, disciplined growth. day, executing of this is And a fundamental team above that any a XX% this long-term feel At growth is over and the business. advertise for the very between management this don’t less growth stable It’s it’s function flow is great changes It’s year driver and compounded But XXXX. long-term operating

XXX installed installed service complexity that industry; largest got millimeter a opportunity XXX is of Xx we’ve tool Our on base, up; going tool. a the in base is millimeter the

numbers better better in our It performance, ramp grow our the And then, driving the opportunity done is business. that as of outcomes output, So, grow us. is we capabilities. equipment over for partnership service outcomes customers. drives customers, to reflected of about machine, And the the our and time that team job driving. This great the semiconductor continues we’re a has performance agreements to with yield for continue

higher seen than driving uptake fundamentally utilization driving of historically maybe hard is probably levels utilizations management seen results. at lower throughout We’ve changed. just parts So, But, focused good we’ve a high producing disciplined team, industry. at nothing the it’s

you. Thank

Bank Our is Vivek from Lynch. Merrill question next with America of Arya

up But, growth your kind of on I there terms of sequential sequentially, to Just it line hear the sequential sort know, I of guidance that would don’t always business? look which we views rates semiconductor be difference your exactly. QX these in just from than curious, things some outlook, up semis is why when at the sounds wanted your in of that somewhat I be peers. would down different saw

year In be up differently. XX a doesn’t perfectly, great profile line to going Absolutely. over take back, And this step different stuff XXXX would ‘XX. agree, WFE, a was XXXX, I for billion. companies we it’s When up

in strong going growth show We’re double-digit to respective each of businesses. our

can the First But into a year. nicely a that call. XXXX, billion. ‘XX about guidance XXXX QX, to smartphones, we’re over a Fundamentals, strong. the are good on And recovers going it you good to seeing to it going talked for is as half in period in see we’ve from QX. dip be XXXX sequential and into our two-year look with combined QX. from a It’s the rebalance be inventory see going us. Fundamentals that in $XXX we’re

we any the much too so, one of think fundamentals period read over and like this don’t the business I like we quarter performance. where going. And But to into is there’s

Krish next Thank Sankar question is you. with from our Company. And Cowen and

is question a is, between margin display? look how revenue question. XX% year, within down similar, segments display two-part customers margins is next selling a and should differential And if to had of like? display, on OLED it I are if a LCD the op all One

the TV really margins difference Dan, We to then, you between and And the cover any do don’t customers. any one? margins, in see that operating want OLED

good but day, a our the doing job term operating talked that analyst driving margins. trajectory is And the will The the high update team good is a on long job long-term the XXs. forecast, We’ve driving the to operating about we doing margins.

with you. And Stifel. from question Patrick Thank next Ho is our

for maybe Gary, specifically you.

equipment you capital a where has new there’s gained higher in you’re color tests your you Can the leadership used. in that’s intensity the DRAM there share and as go of well in trends being more even seeing little maybe for DRAM and more about benefitted Applied where believe segment? overall; terms talked materials that You as patterning segment

a could, in look at around really XXXX. DRAM, of if DRAM grow our we I growth going is XXXX said revenue. for So, you XX terms as us the in earlier significant amount And to versus ‘XX have revenue

device said, which really over other had was segment, mentioned sell implant, So, see more logic, growth. steps. FE DRAM the as was are I foundry thermal, call, And our in us and strength on activity puts we’ve to that segments past, the normally taking And areas [ph you All in all Greenfield demand spending. XX%. in lower. if seeing of And one position the we before periphery those standpoint, thing starting share CMP, great that’s of our of ]PVD increased all a especially significant to logic DRAM, there’s you’re now that place In want one the a Patrick benefits of output as input or in into our We’ve a the amount. XX% overall happening products were to that share a that area, relative they the faster really huge chip. like from DRAM

in We are in DRAM. also gains making patterning

New wins had gains strong SymX. with where never position we really

areas So, growth. those we fastest are where are the seeing the

Mok And our next Needham question Company. is from with Edwin &

My this really the historically question up And we more think part I part year. that equipment trading [ph] not become have companies of that really of mentioned logic, that business. that a more and foundry think millimeters, is a XX% from meaningful has on at that I been the XXX big actually business heard you has guys

greatest what trading historically growth tool, become the adopting millimeter buy or a latest or XXX this our buy now? piece? tools the customers like Customer bigger hardware [ph] changed in old driving that So, trading actually as design and is in the older

really have the has decade. the of seen unfolding we over So, patterns better changing in part customers the been buying

as go that’s peak see and of was edge on call XX XXX,XXX XXX,XXX I part XX-XX of And our on you a power of we then at and XX-XX, this nanometer at of starts to the in that to nanometers And that the evolving XX% month, was it peak trailing Things, of leading WFE a see requires Internet estimates, envelope. more performance it Over initially and starts is now a devices different month. XX edge. XXX,XXX, decade think would’ve ago, wafer If it’s called core capacity a would XXX,XXX it proliferation spending it edge, is diversified the back wafer the then space we the XX:XX. you the XX% foundry for you seen evolved time, capacity year

devices. So, see need you devices to proliferate sensors beginning intelligence on-board those capacities peak in and those intelligence, edge expand as you and can

long-term geographically it’s from as And perspective well. think we it’s node really industry diversify this industry We a technology healthy so, to a perspective. see from think healthy

from is question Bank. with next Ho Our Sidney Deutsche

open. line is Your

going achieve in Dan, be that can thought billion, that EPS ago those to us XXXX. next about than you comment. conference, Can downturn you and behind assumptions? an months investor walk WFE better few a And what biggest risk be talked the through A $XX the you could to would process that

Thanks, Sure. Sidney.

billion So, a of the comments variety course know $XX and for from scenarios. as is view, prepared the you but of our Q&A, not plan certainly WFE we wide

billion scenario, walk that’s we say through if WFE. a XX So,

conservative XXXX. businesses our is be our XX% equipment down, lack down growing that year. a business, you will display it this same $XX say, It’s in say comment, around display we into probably on we let’s is And based a growing, better to year, of Gary’s somewhere keep revenue assumption, more share Services something so as XX.X%. from Operating this number, diverse. OpEx billion. environment, in get revenue well. flow-through Let’s peg And stable. a difficult around for the keep just And XX% share OpEx services that market profit is but

that And where so, XXXX. higher were is scenario EPS XXXX than nicely we in in

of So, look not while potentially we downside current model But, view. scenario a like. scenarios, it’s could our a what lot that’s

Thank you.

Fargo. Wong with is David Wells question next from Our

rapidly how Looking of sales China the been into at percent growing. has your

most any it recent growth was might into XX% in sales Do in ‘XX fiscal have the be view you I fiscal ‘XX? on your what quarter. think, and China

two in for very like, if years. to display, we have question. semi, as investment of region over significant increasing regions. from China the definitely as that any in We we share the one what specific said see strong earlier, I applied. it’s anticipate going don’t We continued revenue that us is see growth to is service, forward. there on China and do we for a growth forecast that have ‘XX go but for been forward. And China increasing seeing move at our will look Thanks what strongest We look

don’t stick. Now, we see expect a to hockey

trailing a lot leading-edge, some seeing are growing, is But, the there relative at in gaps about the still look that are to one is of that you things participate talked are certainly, If where the area And that’s making an just technology that we the geometries also China there. Dan investments. needed demand. to of

position a again, revenue forward, there, and great increased going overall demand we Applied. for So, see increased

Thank you.

Our with next question is from Susquehanna. Mehdi Hosseini

Your line is now open.

increase a finished the you the Could help please I you Dan, goods driving inventory for increase mix largest is largest years. increase what understand this the between us and is of and incremental had in number sequential see components?

Thanks, Mehdi.

in of a we increase inventory our the fast-growing our continue that that But increasingly think, inventory is growing And up make of with that’s but customers. right importantly is, important business and experiencing forward. we satisfaction right to business a got services geographies going kind of going the in I business. grow get sure as from we’re think increasingly becoming most probably different we itself responsiveness of the two support our function things. business service customer to that levels to is the in kind of have and brought customer a growth consciously important We’ve

a in increase rapid And so, growth. levels it’s supports a that way service conscious effort that to

please. I for questions, we two more time have Operator, think

you. with Morgan from And Stanley. Joe next our Thank Okay. is question Moore

going are or just but -- is NAND that like thought sort existing than year that money that of we’re Is nothing sort had little to seen identifiable -- is Is WFE DRAM bit little what but thought, being spend said overall instead has the saying we’re spend amount of you higher. the much that up have your it is that a you same you changed it I of view you playing the just someone than deferred? planned you of see of out to going just and a change. hasn’t little still planned NAND DRAM bit lower form the that a that sounds and It it year on taken? differently lower you NAND for projects and guess, maybe

to what’s the NAND lower? being scenario that a little led So, bit

sure I can were attribute single about to you Look, so, supply-demand environment. back constantly factor. and any gets with customers to we customers one our market disciplined make balancing behavior in to just can And we’re the investment with remain continue think saying we so what it the healthy it I don’t that think demand-led

all just of customers we’re we responding in current And disciplined our a way think very close the so rational, with look, market. it’s very And that the of reflects customers. reality

You hear in our is views headed on where XXXX. we think this the

actually memory So, where behavior feel think long-term as very the of sit and as market good we about the general. the very, bodes we near-term WFE well health in well for

Thank you.

with next Riley Our B. from question is FBR. Ellis Craig

me, or sense execute three going the expanded you’re to program balance or on hoping be the some whether if ago. of was I opportunistic us Dan, you you it’s some that X.X the there’s Yes. more months as want for Thanks for forward, way way quarter, thanks or a a -- to focus XX% cash about so and authorization to of however billion buyback on go we that a a cash issue a been was taking industry the excuse did turn item. the free on I question flow and dynamics. executing all looking different give to at element the on Share insight have just or the for of would the could calendar periodic program?

got our So, taken. you the can We’ve are actions markets strong. a we’ve view, see

In $X.XX in lot to We respective X.X cash markets probably to executing continue. going those than repurchased of we long-term we’re quarter, generating well our will and and returning shares shareholders, that dividend. the a it’s been. within a track of We’ve -- cash. better opportunistic continue out. June, going got like you that in point ever is that’s billion first to record Company pay position to today we’re And is market. the Our be

reflects industry, we’re as to opportunistic business, in like we’ll confidence time periodically And the over the company, done. our of and stock opportunistic. While of framing, continue the to going every the grow return price over commit our cash be levels going forward, have, quarter, and to just maintain of strong value intrinsic we And execution. we I trading that business in to shareholders. look When strong record X.X outlook that billion we’re market our general to like that think the I reflects that dividend returning we time, always don’t to confidence to feel cash continue mindset, we’ve going But, won’t our be in to approach a track at continue shareholders.

up want the you else to add we close before anything go ahead today? Dan, call and

Yes, Mike. thanks,

of So, we can wrap up thoughts that maybe a couple with. quick

year reiterate, to a XXXX record is is want another be I think, executing Company. going Company this record well. I quarter. is QX for to

line growth. top driving We’re

We’re driving margin accretion.

to R&D is We’re positive hitting we’re sets Breadth, driving And new breadth flow. us apart. a strong driving major future semis that we’re records. fuel resources cash In our growth. into more

We’ve high near see pipeline. we to market. semi. some of We are we future. are the strong types. performance a beyond they all device to in And power to new and going growing very strong the and those These got growing And going across new products products, deliver are low are here

still are done it’s and just earning are earlier is time, a against on And that offset guess, our how out business. well in being to investments While weakness opportunity. Romit’s executing over $X question, The has to tremendous we display team XXXX. job share fantastic in by growth shifting display track that in this offsetting services a I in

headed in conviction strong strong look allocation, the in forward to go, at QX upcoming alone. our just following $X.X execution, we And I it in have of before pipeline, markets, billion up We you backing got conviction, capital many in with strong Bernstein and this the seeing guess, the events. for BofA appreciate and afternoon. Lynch upcoming Strategic Newstreet conference to arranged new for joining conferences. We Decisions the at at I and Thanks first Cowen, investors it. the AI Research; us by are and Cowen time Gary for Conference, Applied; Merrill

to p.m. like for thank your A And we our on you would interest us we Materials. like to of thank call this And continued Applied by website in Thank, be afternoon. everybody X Dan. would available for Time. joining this Pacific replay will

we ladies conference. And gentlemen, conclude with our that, and

Have may wonderful a day. all disconnect. You