Applied Materials (AMAT) 16 Aug 182018 Q3 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.

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

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

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

each opportunities the within major year shared in another XX% for that remains quarter call, XXXX I’ll the XXXX full and strategy our lay our the see pursuing ongoing investments the our foundry Thanks in At Mike. to spending we setting the all-time and and $XXX views last to they history. in tremendous the providing growth. thesis future recent ahead. rational markets. up I’m highest billion to spending double-digit period we’re XXXX consistent we of in Materials, are and our same report track dynamics. perspective industry's well and is on will evolving Customers technologies. new development be resulting pleased second to XXXX start the advantage Company's equipment XXXX, was describe on time, supply to on a on for view to revenue outlook. track balanced making with expect Applied by our roadmaps year to I’ll the we business plus with details an out demand of downward on revision are strong take Then combined Demand In how positive, growth aggressively strength view of performance. the our XXXX compared wafer of aggregate, remains businesses call our our deliver drivers that capacity exceed remains In generation our their forecast next for be record The in healthy same fab record our the exception with market environment last Fiscal intact. in our are our firmly during today's

about is positive customers capacity, long towards They XX% current for time capital trimmed foundry faster. with supply still demand which As slightly are lead bit plans year to their bit equipment, forward expected prioritizing investment grow leading-edge optimize XXXX. this they’ve is spending existing growing developments, indicator with the pushing a for NAND year. leading at

the DRAM investments year-over-year combined to shows Capital markets with XX% this up for flat past date to approximately service last modestly and has how cyclicality. about by fundamentally XX% data up logic with investments line investments spending As for a as also are over very leading strong, record in years. looking from year. strengthen, year the result, year's growing in reduced providers context, we back capacity five And centers. and and levels. demand to invest customers Stepping XXXX. has to see DRAM technology to to be diverse cloud continues changed meet levels down consumer prior industry at disciplined More XXXX enterprise spanning compared investment higher the expect, drivers we the our broader view demand high-performance

not did the fluctuations past. large We’re fab we the equipment that seeing in spending wafer in

we've logic also Over within the in changes foundry. have volatile maintaining business. same time larger, while In significant points driven more market a since less XXXX, share of our resulted strong in position that semiconductor, period, in Applied gained resilient X and memory we've traditionally

well addressed major very are built of now inflections. We’ve the segments. As strong result, portfolio a technology balanced across market that we products

developing example, business billion we in for from DRAM, to $XXX our have this next more by $X patterning multi million foundry and patterning, in grown For than logic XXXX tools about generation year.

display, about mobile, as to in expect year. to patterning strengths. materials We five new In directly another and new our and EUV plays approximately are technologies billion opportunity TV by we $X.X the from billion scaled Applied’s next in investing $XXX XXXX have this steps grow both to customers are business years. adopted dollars over that the patterning In million enabled and

at to expect Company rate since In XX% compound have Service, a for growth we display the grown We remain the powerful XXXX. annual over driver long-term. revenue growth

a generate other ramp and shorten than services, from look confidence technology sales. yield long-term ahead equipment customers at this our semiconductor look When more advanced install help flexible upgrades, of and our our Combined, growth, year. driven display consulting, device and today operating least as new improve than about will businesses, we’re industry us. optimize growing times, days Applied new that a of performance in revenue spares, a costs. ramp ability we to of agreements market for most variety and software us the and billion the strongly and under gives portion ahead the by provide Company whole, $X service XX% and great for platform of confident I at placing comes products of sources sustain service customers our base, sustain tools future diversity conditions and of that we a that larger strong can that As performance pace are under growth. believe exciting revenue This

be AI the conductors. every be is Data from investment the at broad than types for is the packaging of patterning; decade, will for the the Data will semi together, needed increase across materials Big will and driver it AI sector range for and and Over materials; bigger costs including because era electronics of for of in power transform of new and and research major using the applied advanced and driving requires major shrink structures edge catalyst a believe combination these to is techniques. these focused require and development new factors; the overcoming and to Big lower five workloads; before. by new inflections; of ecosystem. EUV ever huge new a a of that economy training second, inference or and is We in next already technology and AI hardware future first, and era almost All and including computing ways the abundant growth chip two engineering in significant scaling. the applied. within a a deceleration ways customized new computing Moore's addressing the new advances innovation to opportunities area connect architectures; new Law five cost, create cloud, early new enable XD; industry in AI, a power, major improvements of approaches to performance, broader driven chip, lower storage. chips In chips innings lithography of chip chip geometries, AI driving on role play This The specific companies, self-aligned architectures

priority structures is to means materials, more our for that improve partner with challenges the increasingly new complex. manufacturing first The to valuable introduction process performance most and Our of combined integration in be the are chip novel customers. costs,

to ability of and materials broad technology materials tremendously modification interaction between creation, Our materials removal portfolio understand the and valuable. is our

As our where June, start. this a and we example multiple the solutions, to deeper single on this unique are device doing Applied just processes performance system in how launched first together, integrated system. combine we earlier develop customers typically we’re yield. within We but is seeing collaborations integrated material and can of focused a One material solutions, is result, engaging in

very several market we which of to XXXX. come We expect pipeline have in to products, robust of integrated a

create expanding our also We’re with our and to finding value within technology. engagements ways new the AI ecosystem

together develop example, For approaches develop new collaboration The July, was XXX spanning attendees materials, architects, with announced new we ARM AI manufacturing to that is with Forum chip and to the a from part architectures. to we first program over can that common In designs electronics recently hosted computing initiative Design message AI industry's designers and system participants community. the neuromorphic resurgence enable This of DARPA's computing. switch technologies cost. Maydan that needs our testing capabilities. materials differentiated market and like and lower of ecosystem our enables has and Applied to new designs. new and To connect to the accelerate innovation Technology faster across expanding accelerate further materials bring ways to new and technologies capacity to and work ecosystem, Center AI systems ability concepts we’re the highly at capabilities to rapid in

research applying development Data teams. In within AI our own we’re methods and and addition, Big

AI rates. companies and investments We’re with leading infrastructure partnering learning significantly making increase to

of be Applied's our summarize. making XXXX strong, the to performance in bright another capacity quickly and ahead. for disciplined very turn future customers over XXXX remain call investments I major businesses, fundamentals year strong. technologies, and for outlook with a is new record see I’ll we Before will positive all Dan, Industry and our remain

Big and a more We’re customers the expanding AI, Company to engagements the and larger era. with current to Data position play valuable in role new

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

In the the as we generated within EPS delivered On both non-GAAP of increased year-over-year non-GAAP all-time revenue earnings and our period. and growth, Thanks, memory we XX%, a QX, quarter. basis were set Gary. records Applied customers capacity by during adjustments strong even made last that revenue X%

as and equipment see Applied Materials the the sustainably and Gary less in XXXX and today to longer remains continue cyclical for We than being our very past wafer the positive. larger market outlook fab term outlined, and

with memory but customer the demand your circles you help you transparent in a what this foundry from our into profiling guarantee see in market or reductions, to happy own with My can't the we offer on what Given markets and tell to I make quarter happens in today the to recent along factors. want and XXXX. is CapEx I engagements. judgment economy let XXXX philosophy see adjustments markets, external analysis based how be you in you our with I little I’m about policy

calls I headwind From revenue QX can X% midpoint fiscal $X.XX see non-GAAP earnings $X.XX. sequentially revenue higher to the slightly an takes year-over-year decline our to to outlook when increase include at business Our for with higher year-over-year in that by systems what flat earnings slightly QX. increase in semiconductor even to about X% systems in by be today, QX XXXX. in rate semiconductor will well, sequentially effect Non-GAAP from tax will as fiscal you be about

Our outlook Gary fiscal QX the to balance is of XXXX described. the for in picture continued bigger and growth. the current Returning

have and demand supply You and may industry particularly adjustments now in resilient notice the memory. the become, how the place given Company taking

of cyclicality here's past, remember the of Some the news. but us steep the

and our declined by $X.XX same indication to $X QX. amount. happens overall This device also of half of We billion average revenue level has earnings grown the expect In now a revenue of demonstrates comparison nearly memory sequentially the our our full-year earnings can $X.XX our this XX% quarter. is trough business display semi, To single QX, benefits breadth services in as systems We through balanced Applied's business and in generate of the demonstrates systems non-GAAP put compared years by that XXXX. in growth. types. was the from across in share benefits of be Applied’s while This best the XXXX, quarterly XXXX six the down resilience of Applied’s to earnings our into business. perspective,

This its quarter consecutive quarter, growth. AGS of posted XXth year-over-year

install year. XXX In more our This the fact, millimeter largest systems over services systems, new XX,XXX alone. of this next will record has year shipping expand shipments than industry's X,XXX Applied base further year's we’re opportunity and

plus our In total long-term about of generating are quantify are the our we customers agreements. to increasing the now services products, due placing fact, trust services revenue of display AGS are that from as business reported I in our asked proportion sometimes am half from to the our That’s in semiconductor services part install which upgrades of our group The segment. millimeter answer systems XX%. servicing comes semi-related excluding refurbishments, is XXX base.

So other Applied base in install revenue company more our industry. generates than any

income summarize results. generated XX% let’s third Now which our was billion, quarter We year-over-year. of operating up $X.X

lower tax benefiting midpoint was revenue, as well Our the and share above $X.XX was rate $X.XX non-GAAP from EPS which as higher count.

group slightly Turning our segments, the our expectations. revenue of was midpoint the delivered semiconductor to systems that above

QX XX% midpoint and year-over-year, in well revenue all-time of another was slightly long-term the above both AGS lower growth than record but income. services our our posted which was target. up Our revenue operating expectations,

Our income. above the display group that was also operating revenue revenue set midpoint and records in delivered new slightly and both

balance we’re initiatives both the aimed support We capital manufacturing sheet. to driving Gary in R&D Turning about to and were invested $XXX in primarily our capabilities to innovation. that expanding improvements many accelerate talked the our customers. million at

quarter, we This and stock. shares shareholders. repurchase to over XX to $X.X we We first billion million the dividend of out used billion returned $X.XX paid our $X.XX

in of authorization. repurchased that shares, or beginning period. Over we've million the about we billion buyback outstanding have remaining the of last And XX still X% shares the months at XX alone, $X

our Now I’ll QX. for business share outlook

in be $X.XX the of to revenue $X.XX overall expect to range billion. billion We

we forecast the impact foundry CapEx revenue about outlook, recent the semiconductor to year-over-year. expect includes reductions. systems decline by Within of This X%

increase Our year-over-year, should by X% services our display should by and revenue XX% about grow about year-over-year. revenue

gross non-GAAP be non-gap should million, expect Our to range the and EPS $X.XX of the $XXX minus in our be XX.X% of margin operating expenses or to $X. we be in plus $XX around million range should non-GAAP and

investor even the have interim you stage to breakfast the I very XXXX XXX we experts the weeks context West. been see for I'd that of for millions to in to of others Now top Gary full our Forum, Law At fiscal to the has an shared explore startups. work Company you opportunities financial later, model, for how many and engineering neuromorphic materials the update are our at dollars partners you Design our new expectations accelerate Nvidia, can our indications a Gary awarded Summit, slows. like to joined positive Two on our our research give to showing These ERI XXXX, was and going of Moore's our for use new and and as material year growth now of quarter the Semicon of financial QX DARPA at AI, are Applied, IBM Arm the early with Nvidia, was Gary and and DARPA AI us computing. XXXX of describing. at than we more busy delighted world's customers. Intel the and view drive

we and that our fiscal goal the per confident our strategy view earning we on will markets, XXXX current evolving based So of $X.XX of exceed our share our performance, our financial are in year.

more $XX new Specifically, of with believe revenue pace we will $XX.X expect in than the We industry. semi-systems keep billion XXXX. revenue the the in normal to industry. WFE billion this be for that growth fiscal And

of services $X We than revenue more also plus expect display billion.

services target. we being above Within in offsetting be which the see revenue, revenue our expectations, still mix, prior XXXX we our to expect original but fully below display

XX% XX.X% than expectations our to of due We tax continue slightly to prior operating XX% be tax rate should expect higher margin gross of new and rules. non the margin of GAAP the

goal to our $X.XXX share below we’ll billion. count to cash already return excess $X original is And continue the of our versus billion Additionally, investors.

the back I to start call Now the Q&A. to Mike turn

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

the you our an best in additional have just operator, to later later, If it the answer question do we’ll call. call please

Let’s please begin.

Thank you Instructions]. [Operator

Evercore comes Muse question first from of Our ISI. C.J.

open. now is line Your

investments memory my then adjustments you and about of as question, terms your through of end the part to the calendar timing of the if thoughts for saw just think And whether NAND. availability can DRAM, could guess foundry clean and I calendar Thank each around in puts that you logic, foundry, can seeing of room And takes ’XX, you. year? include talk markets, and you you that you’re how discuss both you recently. as

XX-XX. seeing XXXX the just capital Given color we seeing XXXX, holds was foundry, continue we’re When XXXX all-time and In our what give Gary, believe true. we business in we’re other the now plus foundry to to for still provide in XXXX, QX. geometries. prepared node That's we geometries of think on above historically billion. be the to last some likely comments point node both healthy. at on and announcements new we’re To and in month, in see 'XX; it be XXXX combined either seeing quarter record; XXXX edge edge, to more based conversations is up $XX towards just being seeing it’s time we're spend having, to the XXXX, spend trailing XXXX all XXXX expect make a said a his in will trailing in lead into is from The then split early items, But more XXXX leading long be assumptions specifically, node the billion we reflected leading leading in we types. healthy broader I provided and going $XXX became on spend a node XX-XX types. last was movements look you device leading across over indicator XX-XX. growth node trailing strength spending. like an customer year. see And exceed beyond. all guidance record down. And up on device we’re to geometries trailing and edge very fiscal All estimate we between the context; still good will too and Today, And it’s prioritization and which across

And how seeing things market profile a so and into really end XXXX. we're strong

capacity something some the C.J. fab for think I I And level might comment a of at it. add about

speakers] think changed. hasn’t I So really view [multiple

globe XX, average tracking size the XX be XX,XXX XXX standpoint floor and for still starts a equipment. get best month per those can factories I it we’re about XXX is of mm so potential represents wafer from to about The the billion of fabs around have WFE space Yes, capacity that is facilitized. to

think fairly and terms of the So deploy rapid I a in infrastructure build ability to the is fashion, in there. capacity out

of I their rational think a maintain the supply just strong letting to and pricing demand demand in customers’ matter led markets. profile lead it’s investment our environment dynamics

Thank you.

Our next of question Citigroup. from comes Atif Malik

Your line is now open.

for thank track XX% question you I model. are 'XX. $X for fiscal us do segment. updating a growth looks on It target display on Dan, guys year-over-year on the to the like have XXXX you

curious the fiscal On the markets? talked decline of last to XX% DE earnings or the mobile that for to in changed Thank was call, you. outlook guys the you anything about I has 'XX. XX% if

unchanged display we previously. our So forecast is really what to similar communicated

said, is up range you million 'XX from tremendous the XX% than previous As be in XXXX, from in growth up to be XXXX going And more XXXX. we XXXX $X.X billion, so to higher overall display. in around see down the $XXX still than year XX% and and

In Gen weighted is for XXXX-XXXX terms remind mix, TVs large-screen you towards to TV compare of versus three. XX.X Gen if TVs, thing one more everybody you get eight X.X and I’d

view So XXXX new we growth company. Future of XXXX strong growth. for that our more pipeline the driver we overall create technology great see market a what the to over see opportunity TV we on continue up for capital-intensive and again a as a previously display is communicated. to future similar And have inflections are capabilities

Thank you.

of Ferragu comes Our Research. Pierre next question from Newstreet

open. Your is line now

back like question logic. make to a and on difference really between C.J.’s very come memory I’d and rapidly

be about visibility is memory thing outlook points based QX from us what in the then logic back then things what reasonably and than meant how which your back much logic. you have and in of new would quarters understood of also correctly in the improving on just through memory logic, do negative expect growth that, put you therefore push And you you there to to that three memory a that pull is QX should you months down and gone in out and on only saying didn’t the So they’re question in and low you're couple limited is was in if system, And today. means have QX which the QX back my points numbers that reason a surprise pull mentioned could that with sequential low semiconductor and tell line? a be change that baking in back I between led confidence we so would ago saw you logic the in in

A how incremental dynamic. our or was comments, no information versus from between that an the the thought, as and couple QX delta a we going information. today reflected standpoint ago everything so profile out of that's in today what it side, there's playing to -- the news And memory is on was guide foundry in out we we’re is what to thought guiding thought months driven three we market

logic word the logic and differentiate we used foundry. between you So

that QX And was the expectations so foundry versus be just want out our And to is to clear I was our it coming on going view market. of profile. how

our that roll very lead is much what forward, as meet to the lead for comes as the we we are between online three big delta ago. clock business items, the a today driven long is the lead see capacity we shorter And demand. thought being time months indicator So times as customer where foundry in by spending which

that I So us around up as the looks the a of XXXX in good. result think market foundry for set

Thank you.

question of comes next Krish Cowen. Sankar Our from

open. Your line is now

terms the supply market what bit mentioned specifically XX% the in comments NAND about in earlier that. more of and some demand you’re seeing Gary, growth on you little of growth

year Just guess NAND NAND WFE if the the some in that maybe on strong? on implication of back slow see pricing out. continue be would this or there will NAND And pricing towards if the XX you could so to you demand to to continues hence you end you think upgrades of to the because the in comments. end year, the that down see WFE if and would give based do investments of into layers us keep little XXXX, play the And some might more continue and expect the above or back color to of pressure of going how just market a NAND wondering those I profile be some WFE

market. here as back signaled is look NAND on NAND at as we playing see that see weakness half down versus that’s we talked guess We to prepared comments, about XXXX, ago that we make we’re year-over-year And being In the the of the playing I take I he and those out are market expected. some that the demand quarter we demand comment going a the just going would think back driving impact market, Gary playing So out. over for semiconductor industry out data artificial time. expected, are macro a at demand increases step things health as devices larger if intelligence economy the semiconductor to the and those macro those drivers I today, like look and drivers to drive fuel trends structurally as

see keep will There we’re I’ll supply-demand balance be a across to a earlier those into today all environment into substantially But it's And and better the right of back period, job types device in. In we one As And look of demand healthy come earlier modulating We doing XX%. been. they're investing that to questions. we to down percentage strike comment the as of a done dynamic the forward a think ever the CapEx since XXXX. on take XXXX, as profitability, money. customer market profitability, markets their lead a at four a And percentage lot supply have over an And it's XXXX. customers of down that I time look investments. it’s a memory than good balance. the as of EBITDA is adjustments in our are customers a making always the job in standpoint better from

Thank you.

Pitzer Our next comes John of Suisse. Credit question from

Your line is open. now

that your into their were equipment bit U.S. different bottom, as for bit more growth function peers am Guys quarter And be little you the quarter. of is compare December the side, Would at semi you your curious quarter similar They’re i.e. to on look to apples-business. the your January your peers, I a about confident little domestic peers. business not as a indexed calling U.S. X than October January sequentially? foundry a would that over-indexed to be emphatic your just and being equipment or process apples-to your if up nano-meter you’re

that is I couple for play, things thanks So there And a question. think John.

would thing hard what of each exactly know it's were in say competitors’ assumptions is I the and first peers’ me The forecasts. the for to

make to than comparison our a peers. is hard differently guide than as it's our would is So direct see we What broader others. what footprint our reflects see of I say we everything

prioritizing set for lead some which will edge creates which months today long a in XX is for opportunity markets And very We’re items more the tools, having us with of of the time types. time to shorter on conversations the customers. our those we’re a device is capacity we leading nice XXXX. the that and we year, the fact next have the exposed online specific end emphasize reflects come nice a lead and up guidance spending that From world standpoint, foundry for view going our into

hard developing are how try than with and see profiling differently of we to conversations to do with comparative is in be market a others. very customers All what So it’s can on basis be we’re specific profiling. the our how transparent we

you. Thank

JP comes question Morgan. next Harlan of Sur from Our

now is line Your open.

Can guys, I start the to going X that’s foundry universe, some quite understand around just the around tape us looks to of the at big nanometer beginning next so look dynamics Qualcomm, out help as on, complex push-outs? If significant Qualcomm, actually you coverage year. guys AMD, we SEMICON Xilinx, see of

it into half push-out. just of or the this you just what Is you primarily customer here for is of investments why think the also on year? one second could terms understand it us address of views the So the customers? in push-out maybe your if foundry And multiple rationale help breath of

foundry in gets job communicated very the a segment, where take from space, customer And customers demand at coming managing statement the they the look commensurate good with foundry have a As our we guide what from. we reflect done a is our see base. what in supply can

As and you come place. now, tape outs put capacity in gets

there's meet market capacity the as demand synchronization in statement. business that gets deployed so materialize, And pretty close a to that

from a today pretty to capacity absorb So space. demand the the that's good market we that into foundry the standpoint feel is able what's coming in

public The customer over month, second we’ve with foundry about the we have your question, reflects past of been the part adjustment in reading on the conversations base. spending comments

You’re that forward. from seeing customer. not been seeing one now reflected what guidance about, in you've primarily our we’re exclusively The going is but reading adjustment

comes Shah from Romit Nomura next Instinet. Our of question

Your open. line is now

was me, comment, would and said bottom ago guiding part two grow XX%. mean I and months business your October fluctuations. October going about now guess down the July But I in remarks you is that revenues and made from prepared the seeing the that less you to Gary, three you’re be

So it more and the to guess DRAM what [Technical spending, a how to price business DRAM going than indications be is we’ve QX. that the second as but I in that part down all aligned is cyclical seen strong, understand And I Difficulty]? less are was that

this next you not the is confidence gives what So that year Thank to DRAM the isn’t drop? you. next --

spend. there take guidance of to When so that was of market. conditioned there available information we about in in about Materials. was in of an became talk be talk today. information we specifically WFE spend and the and talk adjustment reflects contemplated July an the both, profile, it to a that's our step set profiles XXXX on going a we’re strength all apply new October where I of Subsequent out and to how foundry re-profiling memory the overall space, that, knowledge When over all conversations let's in in space less back the and then and year. foundry guidance our it was was set with we device XXXX an is to environment up about Applied going ‘XX about resilience and talking across record was markets types cyclicality, all-time and the

seen think industry is statement an think market end that's standpoint a And used Applied pretty more a forward. and at time prepared EPS do larger pressures a in less a back from I statement the that the will And in than so When that's environment pretty is memory spend. step quarter and We just business I is that benefits a I about short by strong talked look specifically and full a same company accrue re-profiling what cyclical we've than strong evolving those characterized our us take think an past. in now ways that resilient to we this ago. going foundry in comments my year to single in

what context statements. about second that of was part And pretty in feel your we question? Romit, those the So good

been in given I'm curious that about DRAM, in like decline in has spending preclude was year guess down. weakness NAND Difficulty]… DRAM saw be I And a looks NAND we the that spend. And it I strong, earlier QX DRAM but could prices [Technical in

types, device from And foundry, logic, today Difficulty] that Romit in very [Technical Difficulty] the be guess in been making has I way back customers silicon, perspective So something pricing what [Technical can DRAM from they’ve all been drivers led there standpoint, demand address a the stability. is I investments. what It's we’re the an changes granularly. would the longer DRAM, very supply still reasonably is monitor standpoint, NAND, I balance always giving term think it’s markets disciplined, The are investment around to there. step on demand Taking best we're market. led seeing demand

don't there of markets I And long-term it disruptions, are so these takes short-term view changes think evolve. -- our if it how

still view market so And is healthy. we the

you. Thank

Arcuri of from comes Securities. Tim question next UBS Our

Your line now open. is

Dan, I share. a about question SSG ask to wanted

probably a share even well. be based higher. of that year $XX which like losing sounds fiscal assume if a still to this at lose upon are after I bit guidance So billion you’re this $XX It little billion Other as little not to that, least WFE like going for saying billion. if last looks or guys QX year, it the your $XX like going bit still it’s year

with $XX you're billion or is line now model. billion it you normal. your if XXXX seems billion like even is on is that old to comments your look WFE. your was But model, at be about SSG something. too that or going maybe I the $XX high at higher, that, number And $XX which billion in model said Now new But the $XX.X still is saying

into it has what’s So down assumption all bit, so that? the Thanks. your seems like come I’m a share read wondering

think so down. wasn’t I the last year, -- share So

the I six was the up mostly think of go previous all if you years. previous flat, up or six in the years, back share to

at an over the So if years. last the Company look few overall take you

better a much across device balance One of driven the is we've big types. that things all

foundry, if XX% we than NAND, X% So grown share than share in go XX% and the almost only Xx in less XXXX, revenue we’ve greater back share growth had in DRAM and and logic. to Xx XXXX, memory Since growth logic. and revenue

about across XX some perspective, AI over markets beyond. reiterated next would the a and And Company, the the material we if capabilities came that position new going pipeline some how really I themes we Data a many tremendous that material nodes, just I opportunity, DARPA the same say we’re solutions, Moore's the I last look Big exceed certain products technology introduce would months. and the new look being major the we’ll balance new at AI, for the months compelling Dan versus at talked time, out strong all of the in two from model forward if what types we’re were that focus. across that solutions a for very also, being And products some Law's XXXX. again, more in device and of of And So in at next in And the positioned, Forum great Design the around macro of significant and foundry speaker you a and was that challenged. conferences integrated

power future very new Data, in about people many current conferences, of materials, at structures, a performance at examples see and AI, improvement new power And innovation, patterning the packaging. there’s leakage magnitude you being lower those And driving orders area conferences gave including talking of future again that capabilities, value I XD large time-to-market. and cost, logic, future enabling So about memory, Big those three of performance. provides one

integrated when you Applied’s packages, structures, process position that materials, going never tremendous deeply And to use So in whole to new accelerating single to to systems, about these from enable better systems. to feel I our really breath process test, think to materials, devices, materials value from to to capabilities. to going there's a been in

line position a bottom been we've in better from So never standpoint, a position.

material Data industry a and these solutions, very inflections. integrated foundation Big new strong of to AI, of really We accelerating have the Applied products pipeline

you. Thank

next question comes Sachs. Our Toshiya Goldman from of Hari

now Your line open. is

how was term view China. on you I Gary, in going near Obviously, lots and opportunity to from medium there's hoping update your a get on an political/trade perspective.

the I think on some are progress of some customers making technology front. your

one the had Summit think NAND I a week. customers your pretty big last Memory Flash presence of at

you. pull-ins customers your and China? what any today, you've seeing if from in Thank curious just So you're seen

in Our faster mitigation a line XXXX we people be is plans, know current is about. assumptions. China from imposed on our forecast Applied. see for are market. with prior for going don't have I impact meaningful tariffs that great any than grow the year to We’ll And our that based wondering

So overall, position in strong China.

domestic to geopolitical foundry to to to impact than see towards more has we Applied. Similar our get Relative memory. time believe China don't to resolution any current XXXX year, incrementally technology long monitor market we we This China to was foundry fair versus logic. is ecosystem. actions any hockey-stick that’s believe more will mature any leading-edge. before. positive chain situation logic. the mitigate a But And the still investment. continue see very supply will what going to positions, to to we a certainly, that for to XXXX anywhere important But customers. the the Applied customers to really definitely see incrementally outcome. the Applied logic business believe we And foundry is future continue invest. and think to to take situation, nothing close again, ultimate in their needed likely still and I will Regarding incrementally, changed take for to thought future as continue successful it’s China weighted technology -- of and the overall developments we We relative weighted invest. are Relative heavily more trade impact that Applied, to we

you. Thank

Our Patrick next of from comes question Ho Stifel.

Your open. now line is

by past you where Analyst in you update think and Days, Gary, this the we an the will when which be way Day have Analyst when. year on the

Can in the You’ve about Applied industry core and impacted XX layers and update and share? its gain the trends, Materials gained you disposition edge share you’re that’s you and looking past us control of in particularly and on for as how above. little give a also areas talked intensity NAND an but capital bit industry in other Applied’s process the more where to moves like both to positively CMP businesses position

intensive. it about about X%. we’ve increased was NAND earlier, XD talked business and talked So revenue moving as I the our I Xx, we and grown to And memory we’ve the think inflection it intensive LIFO about XXXX XXXX, maybe was -- deposition the XD from edge XXXX -- share from

And We’re the the optimistic for is enabling to for us business scaling continue going that XD we is grow. have capabilities, some tremendously continuing NAND. edge really to

is share edge conductor position. a Our in leadership

that have to We market capabilities bringing we’re new in NAND.

on we're optimistic very edge. So

NAND. in We’re optimistic CMP growing of in steps are terms XD deposition.

optimistic about and the market So I’m position. again our overall very

update I'll maybe guys Analyst on And an the Day. give

that thinking a we got really we're a probably finalized venue one. if looking choices next I’ve on we I’ve SEMICON got sounds we at give end the date. What the two squeeze that, that Forum. I’m is year. York about. Design we’re for did One term before we’re New So And in haven’t is lot a the at and that’s long What going of do is it what the we to thinking outlook about AI like hold.

The been able we’ll some that other to If next that updates of which choice what for initiatives meeting describing, Gary might we we've is been alluding and some a do the is to save of some the on also has year. that, benefit. do be give the you to be products

and am leaning do from me I sit determination year and we ask then here, a you we is make final you where notice. to if calendar what So need to a next send

do that, I promise Thanks. Patrick. to So

you. Thank

Joseph comes question from Stanley. Morgan next Our Moore of

Your now line open. is

outlook. three-year the on question a have I

What’s that of a since talk you. about number? the with little the you rationale lower some margin you Thank and can the FY’XX shift impact mix display guidance the that bit shift? mix maintaining services the $XX billion with gross What’s higher. $XX $XX billion. for the then expect number changed for what’s billion you And WFE We change, gave was it’s not

As in talk We at sit at XXs ‘XX just relative combined just new we from Analyst the ’XX is. about step was and billion. we XXXX of a normal was terms and what where last what the WFE take $XXX look back to standpoint. communicated exceeding a high Day

points on And industry us what originally out I contemplated nice long-term was model. with went to larger is that's proof get think three our that there visibility than we first so an when

norm the new So second going we feel your the part billion question? being in $XX pretty forward. the good of about And industry

mix impact margin with gross of the shift and Just display… the foundry services,

business, business, originally a by in on XXXX. natural That on of display business. by the creates drive So deliver working what gross and business. in service our And shortfall while as falling we gets commitments. made the services is margins a our fronts semi of they our that to our management in number disclose business hard up headwind our the are, you target our to team shareholder is contemplated execution rightfully the out point And display gross margins short order our don't of was business,

last progress where it's gross years great up are our journey or lot XXX so work five has this just the on. in we've been And four Company points. a margins And made of basis the on underpins hard the that

feel ahead. So the about good journey we

Thank you.

next West comes Our from of KeyBanc Capital Twigg Markets. question

Your line is now open.

adoption. to wanted I ask about cobalt

you X-nanometer. if think you it, the was You’ve opportunity integrating risk. or get a could traction yield far around on on of XXXX see seeing. you customers wondering will million do said there activity? $XXX in customer do detailed just it you’re And are ago, you successfully couple think months opportunity that of any the I And How into based current you comment

three, cobalt next So be the continuing adopted over years. see to we four

Just business. for incremental million of one adds $XX layer cobalt about reference,

It’s we’re over probably in adoption. we range now, terms of continue million years next few right see million So to $XXX the from business. in at where incremental $XXX

question. think Wes. we one Thanks time Operator, I got for more

you. Thank

from Company. & Mok of comes question Needham next Our Edwin

open. now is line Your

business prepared patterning, On you growing next are years. might talk some we of the patterning talk And guys you reduce you adding a investors, patterning worried that remarks, over the TAM. potentially when have actually about guys five and billion to them $X the you

examples new maybe et slide guys you can gain, possible, this didn’t some patterning Is new process, is cetera? architecture, business grow? your of by So why it share driven think you

products patterning also a have We business as patterning more are strong in of the SymX the growing Selectra, and is number CMP market, adopted. the steps

deposition We capabilities. have new

over talked you dollars market grew our last as two a billion years. about So the overall

have We and additional to a dollars sight of line over the next of lot confidence years. billion two

about you significant look if the share our overall, is Certainly, at XX% is memory. market So growing a amount.

the You positional logic. is in overall And and X-nanometer our share something foundry especially our at of XX%, up and in foundry will XX%. leading up, patterning. go traction. about in have we trailing patterning logic in also see our like geometries TAM X XX% look If significant versus share we goes X X

perspective, the positive really replacing areas, And So as so present steps further positive incrementally in other the those multi-patterning in for are applied. Applied today; of growth multi-patterning gets of adopted that for the EUV and Applied. EUV both EUV, that positions all adopted, growth is are placing steps are say isn’t would pattern or industry alignment to big really features; for in position. this one focus; but from patterning. look major And an are relative the challenge areas There is you if shrinking the to I one placement customers. a features of is other is overall thing right

and as good to adopted certainly future node. have we very of the processes have are position new So a good we these some of sight technology line

have of good positive are positions our to additional positive, sight line is EUV applied for So and growth. that we

question. you And closing. to add for Dan, in anything Edwin would like your Thanks

me comes To it three down things. to Mike. Thanks

a our business proof than our to to First, less going sustainably now in It's In a level how ago. quarter points a diverse, is more while full in we we the what forward, can intro cyclical less talked we used been my that past. going same Couple about do at. and in the to of larger. it's single short be we markets company look earnings do year see volatile, continue of in particular

this that the quarter with any Something quarter XXXX year, else will XXXX, to spend the EPS both more made ecosystem, believe. record tech have see XXXX, be second, higher Company; our lowest in in more and about; the adjustments The than continued and of we customers to think the even talk which the we was an others all-time for strength. we in customers

of new beginning what a Those trends wave. the depend Applied on path. We’re powerful does on critical is the best. Materials Applied on

in track us model, the behind new well there. set on up pipeline also Third, we of opportunities pipeline, a says it XXXX targets new have scenes, new to What that the extremely out innovations, the exceed financial years beyond. strong we’re building products,

than as As we’ve Gary positioned we company never today. a said, been are better

close seeing is to just know. to any many if coming that, go we’re conference up in the We know few us you and to a ahead Citigroup there. With call. questions. have weeks. just let be let's us here let Look want you help, Mike, Lastly, helpful of And forward

Okay, great. thank continued joining be to everybody we’d Pacific in for available Thanks And to PM replay A of X going this is us. like interest on by for Materials. Applied thank call site Time our Dan. Web you your And to today.

thank Ladies conference. and participating for in program. today's you concludes today's gentlemen, This

disconnect. have a day. great You Everyone may all