Applied Materials (AMAT) 16 May 192019 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, Corporate Vice President. Please go ahead, sir.

afternoon. good and everyone, Hello, Thank you earnings of XXXX second joining which is our call, quarter being fiscal for recorded.

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

you also Applied's we the uncertainties and that includes These Before risks with GAAP are risks our and could to most is are uncertainties filings subject like and reconciliation page call website appliedmaterials.com. IR differ. Reconciliations in actual I’d SEC. XX-K of to results slides, statements the financial the today's contains to at to non-GAAP Today's measures recent forward-looking today's X-K measures. begin, Form earnings call statements. in which found are that on cause our in press and available release contained remind Information our concerning

we have Before Pacific San the industry Dickerson X, be place will On Applied Day Tuesday, will Time. analyst take host announcement. participants. community July technology in calendar for X:XX CEOs a now, a.m. and like beginning semiconductor, and joined Gary other to you'll to be the us, hardware, at with ecosystem. We leaders Technology data And events and from financial hope join I throughout will Gary a The Francisco begin, by we'll touch call over in software more other details. and invitations the center turn I'd Dickerson. in

significantly to delivered muted call. time top our and results In to Overall, a remains and across for the not business broader of in attention macroeconomic we February Mike. Investment the display guidance we fiscal being, has solid toward challenging quarter, outlook risks. our memory range, execution company continue the Thanks customers changed the pay our second by our end reflecting since environment.

current shape. we In R&D carefully for top maintain broader secular our growth our spending drivers I'll implications conditions, a And Applied our new strategic XXXX perspective of two the remains the on that managing focusing and and of I'll and AI, role call, while driving era. consistent accelerate Starting today's market and to future Applied. latest it describing by view was the the as excited finish near-term and roadmaps, well of at demand powerful as same a begin positioning is growth as display the new the fueling we largely priorities. in building a our the data on the factors. are performance shaped drivers Applied reshaping dynamics, with briefly with with big Looking bigger play these are and trends long-term view positive I'll environment, create markets We're customers' market to about talk priority. strong take then start about key industries, We're by ahead, capabilities our further semiconductor as near-term opportunities year discretionary for the

First, industry the diversification. is in period of a semiconductor

changing. will majority capital look We back believe past over years the see you If is drove that or semiconductor so, you that of five investments. smartphones the

transition fuel AI, to that the for emerging data industry are drivers era, will we come. As to big new years growth major

automotive Although fab equipment we of wafer XG in of we're a build-out, combination cloud the portion the technologies early significant data IoT the of more only see infrastructure, in centers, much and spending stages XXXX. underpinning

levels falling. peak, remain correction although they their levels. still and industry past ahead with NAND and the is pricing navigating as year is inventory still down above levels has this not normal that cycle, several for shows memory impacting DRAM the factor far inventory along from major the is been Recent that data quarters. are in the cycle high stabilizing second The prices

market memory the with and the will of memory before, roadmaps on overall different believe dynamics resources technology As year, past. XXXX. their focusing I cycle is those in in from capacity. disciplined advancing spending healthy, said The are down are customers be investments This this from I've fundamental significantly

also We more environment have in foundry/logic, up investments few be progresses, seen capacity a expect customers' aggregate, last plans unchanged. favorable to high-teens as XXXX. months now In our normalize expect to basis creating consistent view for overall see the from the year. last quarter. outlook of picture In inventory equipment year-on-year. is In percent still year firm up down and spending spending over XXXX to past display, our we levels a versus mid wafer in fab on the We spending is with

display push out XXXX that a level our about third by still from are XXXX's We investments. revenues will decline customers anticipating as

over is the on TV maintain years. OLED the an dependent is becoming of term, more innovation. manufacturing, increasingly well larger attractive and view we technologies longer for which market, and technology-intensive materials several for display as substrates opportunities The Applied our Over rigid important applications next introduction flexible growth that creates and as mobile

drivers semiconductor intelligence. disruptive the AI, big period and will in critically of through area era perspective, be we two emerging major technologies believe and every of transformative, are by we These new data will of we Even communications, form sight almost this bigger economy and big important artificial lose industry lives. next-generation From data softer believe work the inflections. our and Major touch not picture. growth are of do I characterized as it's a demand, the IoT, the

is we to general a applications specialized at new workloads as the architecture for edge. inflection move the purpose cloud AI first towards in computing and The beyond designed systems computing

we and performance technology new industry and manufacturing improvements to deliver will materials, full ways The this broadly We second level Law Applied's advanced XD as and potential and that together. new of design connect deceleration includes strength collaborate new see as to ways address new including a key new that depth overcoming the a playbook. architectures, big playbook key and the for breadth novel unlock chips five feature We is shrink enable structures Moore's that of techniques, packaging data. AI scaling the semiconductor to classic to power, sizes see emerging and components: will and challenges cost scaling system

customers to technology. innovation accelerate doing while new highlight for sustainable our to create are priorities with this. ways we're I'll that strategic Our ways four our important value finding

First, learning the we our New parallel, In transfer and lab speed reduce leveraging cycles machine beta capabilities. META to Valley. Center new are of powerful packaging platforms simulation we existing in fab. complement creating R&D up center and in Silicon to in new in development with building to like advanced York technologies We're science, sensors lab and are Singapore technology combined metrology state-of-the-art data product and from

developing to challenges complex in the from bottlenecks. manufacturing chip products the address are entirely Second, introduction of of to types most materials the we integration new key process novel

PCRAM, processes and needed implant introduction Some of areas of our structures. The include those to advanced sub new ReRAM critical nodes and materials integration. materials memory engineering current novel scale that enable enable of for packaging MRAM, memories focus interface including at key control materials to combined of to leading-edge in and and improvements foundry/logic new are deposition significant and heterogeneous next-generation edge angstrom-level efficiency with performance power

customized Solutions can tools, unit combine spans to multiple together metrology single Our with all within Material Integrated new way from IMS, we a system. or the process where product processes pipeline

could to in to community. AI that and able continue be you that the Design between performs resilient many accelerate building leading ecosystem across chip fourth, and the the a this hosting I for July, our manufacturing bringing AI us collaboration materials of Third, designers we're Forum, fuel hope And system well together to support engagements from innovation of company field conditions. companies another we're deeper to In systems. we will event. more expanding to join in architects, variety innovation be a market will

business a revenue way additional increasing stream value to deliver while example, providing decoupled industry to For that cycles. has focus customers, our our on a relatively is great from been service

even We growth deliver expect display an where are Services single-digit spending. and capital semiconductor year, their to customers high trimming environment in Applied Global this

Before over company delivering Despite summarize. Dan, solid turn is quickly the near-term I performance. the call to demand, soft I'll

R&D managing spending on and focusing prudently are discretionary We relentlessly our pipeline.

how the of industry of can spending spending term. more we and optimistic both We XXXX longer positive up set to address. be that in highly expect a much about remain terms And Applied

As displays for semiconductors powerful see Materials. we Applied for opportunities emerge, tremendous and new drivers

on Now outlook. our performance his perspective and Dan provide will

Thanks, Applied financial in challenging results environment. a solid Gary. delivered In QX,

still thesis is not industry call believe the much we very ready are to of While bottom our I cycle, the equipment intact. semi

our on four returns pipeline, maximizing product fully thoughts expenses, on recurring cash one. financial cycles. demand And than In equipment focused drivers billion prior taking fab environment, this delivering overall even each our of year, New funding shareholders. shape. and are our carefully in I'll memory share wafer my I'm $XX this spending attractive the our the new to revenue all managing priorities: peaks be correction higher could

also First, guidance. of and in was this was keep increase. month in rein of We'll the only midpoint QX, year's shutdown we of reported million, holiday below our which $XXX to spending. which tight on discretionary merit QX, OpEx our one spending below a continue included a It

Second, funding R&D. we're at the time same fully

in need our and cost. XD systems investing to more performance, ever to than in enable innovation packaging, customers We're XD Gary chip techniques described, materials, addition new scaling. design and that As improve unique power architectures,

addition some revenue give think to future. us our give increase in well strengthening opportunities recurring will the in base investments into to you to these installed Third, earn competitiveness our and about. near-term, more the I'll metrics

long-term long-term Today pillar and The the which costs. generate to than more of the installed systems. largest our like greater Helping XXX,XXX and deliver includes to value opportunity in installed XXXX. agreements. base of customers growth in generating upgrades, most form for base Applied, key year XX,XXX strategic of in semi-installed have of faster base has needs to XX% XXX than This a to chambers field. the covered most throughput is is we higher XXX and from our customers in XX% to especially by our Applied that strategy maximize know generate chambers multiple Many value of actually may the like and revenue allow semi-related we industry is of about refurbs, parts installed our systems earned yields, the more a have services. over we year it the our subscription base, You agreements, by be This recurring service ramps, which revenue expect do AGS millimeter Applied. the us lower and and for business the customers

data comes where use improvement. Our advanced we our and performance strongest achieve growth customers to help maximum from continuous science services

revenue whole. XXXX as first of AGS of when twice the segment renewal the spares subscription year of business expect agreements. services and XX% grow part generated In the rates rate Our over world-class. the a are to the from we subscription like was at about XXXX,

returns. cash Finally,

from the different Gary in today the As is those past. are said, seeing memory correction we

business. $XXX buyback In we shareholders. cash cash opportunistic For we flow million $XXX are repurchase We we our to we we part, and We generated to profitability approximately the operating QX, dividend million $XXX million with solid more announced $XXX returned and still paid program, million using support dividends of and than the need flow shares. XX to were a million increase. X% generating in

four the beginning repurchased we've a In five-year X% we period. fact of that past shares. quarters, the back of Over XX% at of approximately outstanding the bought over shares the basis,

that industry actions Looking ahead. substantial taking today value years confident and ahead, we're excited shareholder will generate about in the the we're the

generated I'll which Non-GAAP at delivered outlook line range. relatively above in $XXX across margin We We gross of revenue was the OpEx earnings guidance. non-GAAP the of of non-GAAP of balanced and Now $X.XX our our our results. slightly top upside $X.XX as XX.X% we guidance company the was was QX million summarize was with which and segments. revenue the midpoint billion, held

business a of operating XX.X was systems billion shipped scheduled our was points a operating Turning semiconductor how revenue margin $X.XX Global sequentially we the the correction actually for which is and year to demonstrates to before XX%. record the QX. outlook margin as with systems along the end and was well in non-GAAP services growing was margin revenue upcoming margin are midpoint for non-GAAP the operating midpoint the slightly we revenue Display and of and million, AGS which above Display segments, the new industry. recover expect was above the XX.X%. $XXX non-GAAP million, of $XXX some the revenue declined quarters. of in QX outlook was even our

in the investments remaining $X.X our cash in Turning sheet, with billion ended we and to authorization. $X buyback nearly the balance billion and quarter

Next, QX our provide guidance. I'll

be should $XXX per minus We should expect expect $X.XXX approximately outlook, to in million, range or company revenue approximately the this plus display be we revenue non-GAAP the to million. be around to be million, services billion, we share. $X.XX semiconductor Within revenue revenues and $X.XXX billion, $XXX about expect to of systems be earnings $X.XX $XXX

flat XX non-GAAP should by We be increase OpEx to and sequentially non-GAAP about margin approximately gross basis points expect sequentially.

let's Now, the begin Q&A. Mike,

Thanks, Dan.

please more Now to Operator, reach brief just please of as ask as than question many you help follow-up. one begin. one we can, us let's and not

Thank Muse with question of And our Evercore. will first you. come [Operator C.J. line Instructions] the from

Your line is now open.

to market bouncing whether least be Yes, silicon my how get mid-XXs. you're the to can share? of environment, what XX% on and over good like mix off taking question. follow-up about afternoon. expecting time And how for the capacity lows commentary your and XXXX spending we your we margins the should back think current thinking more through we the should operating into there, would walk at favorable you I you Thank guess regarding the look implications can

to I’d thoughts. Thank hear know a your love I but you. lot So there,

C.J. Thanks,

overall market roll XXXX. we forward and then with what standpoint from Let as me we into expect profile margin start the a

take the So talked down to WFE where sit being as at we we high-teens. mid we look XXXX, a in overall about

on puts view that Our a mid year. about range hasn't for $XX this WFE changed. us in billion That

year, As a on we at going and you memory year. foundry/logic this at look at amount be up a to this foundry/logic we're think look a you setup think going down memory, XXXX. we profiling the be is types good and gives little of across how is device in look profile to a bit That you bit we

this in growth WFE As in as year we look we how unfold WFE. clock to the a we likely view forward XXXX, roll and at is

we nodes, in and in and think going around like we we EUV for of advanced foundry/logic markets. a in capacity purchases that's things metrology XXXX the As the space advanced building adds see our look overall systems beyond favorable those have we nodes setup out

side, a in than we setup going do that, feel and material into this memory memory is of will good a the profiling then favorable the we the and memory that a into and we current benefit way. XXXX. position faster we're it we around Applied see foundry/logic in. the correction combination That XXXX is setup expectation. If memory really The for our see On don't correction year happens about

a growth to Gross invest enabling take will how at quarter-to-quarter. mix as As a Operating and and quarter, look going two successful. deliver margins. surprisingly, margin function key product vary it's how we we to a operating things, and going fund customers and are mix depending be profile margin our we from given of make activity future from and on vary gross to in margins as factory technologies customer any not levels levels, well aggregate to standpoint revenue

talked those structures playbook, that and invest we position whether elements As create see we we're and business going XD materials today, the lead power in to in at or going Moore's look we architectures performance law map, of new past, XD each or a investments and are or see role challenges, there's to industry our and the to making going having Applied is we scaling packaging, road of has and this it's the the drive Gary a key playbook about increasingly our our customers. business play has to to for in forward. new our

in give to Premature see structure at as we our around the the leverage that margin on our margin environment estimate will we markets, this and see business we to on line. to our think in gross but returns Now point, we and XXXX, and into both see growth. a ability grow setup do where fully margin the an expect said, end you XXXX, I recovery like those the operating end think, in to point leverage markets

the thanks question. C.J. for Yes,

Let XXXX about. some me XXXX, go and on and build I'll with beyond to of what and Dan then talked start

favorable While call, we're not do XXXX we for the going think to forecast more XXXX on share a Applied. is setup

A I very And are see mix many to to still struggling and XD have power, Applied – together. confident to our times, to we great talked that is new deliver cost X,XXXx we well ways customers future Applied. customers for a EUV majority and example – performance in incremental drive playbook Customers more more on drive materials, cost. our Dan public. We're positioned in growth of both the spending it is needed nodes, enable based we improvement I've and to we new new structures, with new as chips Integrated non-EUV are that share their in performance connect new chips Solutions, Material XXXX, and current. gains. capabilities that going for potential the While XXXX. in a integrate it's to leakage said power, to help in in additional about enabling with and discuss forward, and even adoption that there our we're new other not and are ways clear leading improvements new is going was as our And costs in address And engaged technologies we're of can favorable drive than playbook very believe trailing

also pipeline that products our serve. positions into including We we that strong a don't markets of very products, new have expand currently

Some gaining customers. new traction are with of products those major already

certainly the So overall, that for beyond. XXXX, better and is I in believe in and XXXX Applied setup

next Thanks we question. have C.J. can Operator, the

from line next Citi. Atif come with of Malik question will the Our

now Your line open. is

fair at looking XXXX display C.J.'s point, At were market market. about on guys times how recent longer the Hi, XX% talk you talking question the with thanks given a in rebounding bit display year-over-year talking tripling there display lead from for one in footprint Can optimism year of equipment? your next you're perspective to you display about XX% for about taking conference, growth. just a have question. Jose display my a market, At the side. I San on to Similar semiconductor question was third-parties

Yes.

question. for – the thanks me Let start

Let me some XXXX XXXX. with you then into display I'll and start the business, color give go I'll on

from down levels, customers XXXX, we XX.X. with Gen to quarters of So display about third be move to record TV still expect XXXX's the now this a for three business about as year revenue being

the OLED. and demand looks to we expect longer everything XXXX, a forward, display we balanced TV term, see that OLED drive demand broader with business. in mobile on mobile opportunities And customer see and Going year-over-year we stable TV mobile we And between look becoming more today, great base. into growth grow we as see based

technologies are inflections new the of value some Some capital-intensive. create customers. for we great can are where more There

again, being being certainly our XXXX So we forward. see and we as better overall, position also go stronger

I Yes. the think Atif, products. And kind you're new alluding to also of

I think semi products, do, I so the at going SEMICON event focusing we think do next that. we're new West, to we'll really semi be on

So the please tuned just on and products, you. stay display thank newer

Thank you.

come from of Goldman Toshiya will Sachs. question next Our with the Hari line

is open. line Your now

much so side? Thanks provide question. you're Gary, very I the the taking but from was update foundry provide side political you not what given local manufacturers both as much the well in hoping of for of sort you seeing could helpful. kind China change update the technology, Any can be in more so in backdrop? multinationals as on there an the patterns Thank buying would of in the Progress terms any memory you.

for question, Toshiya. Thanks the Yes.

China in a you amount. down focused equipment flattish see let China with spending a in we're China. color small higher will on China. we XXXX, China, on foundry/logic in wafer domestic great of year-over-year devices. memory nodes and me fab still those So domestic give for We XXXX down foundry/logic slightly IoT, on multinational versus versus be domestic spending, a Within see position. kinds sensor, trailing In

of share And China display automotive, in going growth be relative power, the in certainly with customer overall We progress, line a going IoT, foundry/logic would I business, in we display expect are those position maintain pretty global strong devices, nodes. difficult would want say spending forecast. a China. any of in memory on of more we the types to very In our on sensor memory, again, to is domestic lot In see trailing progress, has business, specific and see going down to see we're devices, of communications, ability build in terms very there a strong comment those to and forward. that's but customers the what to And I say China where I in don't that Certainly, more we XXXX. is is growth kinds market.

in because devices. customers, more If see is certainly, is is scaling XD difficult you to intensity adding scaling those nodes as you going becoming letters NAND, and look DRAM capital at up they they're and to customer difficult. capital-intensive presentations more their try And can where also scale

So I many, very, leading-edge the and memory very very, think that difficult take many will in years. is being

you. Thank

Thanks Toshiya.

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

Your line is now open.

Thanks guys. afternoon, me the letting good Yes, for question. ask

I talked is have down of And peak curious, a about overhang going the to of bottom call revenue just to have kind layers fourth that the bottom, So kind back quarter calling ramp with macro services than it bottom? the on Is appreciate sometime just kind this your you to there? in business. seeing in structural the DRAM more uncertainty growth. in the the conservatism in Dan, Or your the the of of what's given to reticence is year to something uncertainty. reluctance book going display, is I'm sort of greater your just But current, pretty hit you're not industry invest guide kind out it NAND forecast? big for full to still macro fiscal and To in XX% XX year.

John. Thanks

it. I at think things how play, there's a process least I couple of at

you on share hopefully, a now. of with little viewing how me a let bit bit and we're color world give my the will thinking So you that of right

the business seasonally our the full playing said for a underpins level X% into we've in that, services is we if transition a to good do in and We with OpEx year. our WFE, how Code. there's the high semi, display semiconductor semi got QX back of year growth teens, is stay that the profile call business, billion ZIP the we In – WFE change terms to of it's to back year, at outlook would a high so profile the company take comment. flat down on it's terms this outlook. in our think mid- do typically market, on comment, overall If our focused no And change foundry/logic the really very a we back I for earnings We our how about single-digit QX if around I to the us, growth and think gave a in quarter guidance we see think we see XXXX. to business. to mid-$XX confidence projection feel material the that's a change view be year. I flat to QX, see We changed that on against of than rate that little year. think no on an move, part no that memory QX, talking an at you in the business out. for and quarter flat right the business. of $X.XX the have is what that in we than our mean good not run And by this about guided bottom roughly in what reluctance provide to business, that billion overall a that And do $X.XX I We our QX. has billion. note call, better will better for look semi into important I that, business that run where profiles. rate the about a did is of I similarly. the we And we're a a in but into see in go our were systems We We step-up year. about little profile little Very profile

towards altogether bring it a flatness we point services highest service. off that a of from perspective, followed the has from take see company followed we display when gross XXXX. as an semi look year, the overall mix business overall that company overall Applied, these we and company, And semi point from forward, we levels display, do all from standpoint a see will at we see margin, perspective part by do this growth the know when latter by grow from while So growth you our the for this the a in

flat gross of creates headwind growing and margins we're with produce hold margin QX. that service, flat levels can into the to we well execute a into gross in look semi, off growing we display, us. going natural that for QX, We So think to environment,

got we've can we into So confidence well that execute environment. that

don't than we quarter earnings see a we margins execute to you and that where know want keep we'll Now so hope But well we one QX. QX. they're margin out, and more now in call, at our to guide our on what from let quarter against natural in headwind

Hey, take the thanks next John. Operator, please question.

the will next line Sur Our of JPMorgan. from come question Harlan with

Your line is now open.

design segment your up of better the driving XX% of outlook? Good you flattish. Strong afternoon. starting know because And better edge to X-nanometer up What's Thanks you. trajectory versus up for prior activity a foundry, to started now or Thank IoT? logic sort here? it any on maybe sequentially, X-nanometer pick year-over-year. I X-nanometer this be XX% anticipate the know to taking my has logic that question. foundry already even and up are Is lagging guys foundry or we XX-nanometer logic, view you see

Thanks, Harlan.

As incremental No were weakness incremental a where at the driving from memory we a said WFE. look what's versus by foundry/logic improvement in offset ago. to It's we change overall quarter it, we standpoint.

too resilience by at and but ourselves Still line we're take that, and broadening beginning thing we to. more of but As X-nanometers. spend in, encouraged and a environment no point from of to see specific around shape think one We can foundry/logic, diversification to. We leading-edge we across a the to don't any strength market a nodes. point that early extrapolate X-nanometers, we end do capacity that there's to trend element double-click nodes I one and adds mature on do see find the

Thank you.

Thanks, Harlan.

Thank you.

Our the next from UBS. with question will come Timothy line Arcuri of

Your line is open. now

in little XXXX. you to that By share to prepared about that's math, year-over-year remarks least couple you're comment. a Thanks points sort It basis flat Gary, sounded WFE a I And like come of industry of at dollars XX% was I time share same gained you follow has EUV. year. up of and where billion like basis in lot. optimistic it XXX next worth ASML in on share more about XXX XXXX. year in points guess, pretty peaked a it up last my with In lost to seems a the about at the for the wanted year gaining close and WFE

more parse because EUV you bullish year? that So through, capacity risk trying the to you maybe see are I guess or just of next on NAND the some bullish addition wafer Thanks. about side to you I'm are

thanks for IoT, for their at better adoption, also, think if that's The initial Again, there. customers and innovation. position of five different certainly one going think the We performance, we're markets, that's pretty those you we different a believe look the us. about more definitely X-nanometer growth the materials mix favorable business, at roadmaps, that's – one foundry/logic just all EUV buys question, the XXXX. is that XXXX, drive in I the way for but we that Certainly And EUV there. customers to power Yes, we if bigger be ways those automotive, the for at is we're communication, to in look in of terms when see driving you for a setup up talked improvements five. you percentage we power look again, in sensors, and well about set and

transistor there leading-edge longer and positions also that going new really we And are we that's positive see us are adopted gaining for us. that's of foundry So we logic. to in that and opportunity then being growth the in term interconnect, be memory, terms for good and have both steps in

let's back of period memory. with that foundry and PVD new over XX% If new because DRAM go very the areas, gaining positions CMP, strong for leverages great have we're thermal, processes we our the like also positions periphery, of in customers five-year those as us time, memory implant, products, are in all we're XX% driving that's leading-edge of you we the spend. say now probably a And are over and memory of devices XX%, spend the

again, of more longer these the pluses XXXX much are the that kinds we to And more of nodes come adding we Integrated Material Solutions, are term, positive innovation, scaling structures foundation for again, in where there have all to and is So because, a better is major devices, the like all and Applied. in their in tremendous getting definitely and materials more customers, will beyond that much roadmaps We're things architectures that XXXX up us difficult. technology certainly traction Customers time overall, of into engagements with but materials all difficult. set again, at all and becoming we drive have is new takes of optimistic XXXX it to some for together lot be there. and great a those

markets explained there Yes. And in other thing. are that dielectric host he add dropped more other was just strong then in When that in and thing, reuse in customers our specifically there said one processes. why batch said mode. were of etch Tim, don't EUV one a that I Gary was reasons and earlier, said want participate one we he XXXX, very to share said we're the He year-over-year. two while He coming were

we XXXX, that expect continue see nominally in So reality, do much those other we do compete but in, don't will be to of that not. as in good we but areas EUV

conductor reminder, etch, a right. we're dielectric, not in As

processes, single processes. batch in wafer not are We

part two-part So equation it’s that that explains that what describing. you're of

Thanks Mike.

Tim. Thanks,

you. Thank

of next Our will Lynch. America with Merrill question of from come Vivek line Bank Arya the

Your line is open.

growing you and TV opportunity. to Gary, sounds growth mentioned make my display wanted like question. mid-single mobile digit next a just for of sure That side. And adoption the I Thanks display flattish on kind kind taking that's it with perspective. line in do think business XXXX of term, grows you way think your more longer about the the of phones. to a in from right year OLED

conceptually Just what right to about think display? in is the way growth

the the Well, for But is we year great is terms going this magnitude the growth believe stronger into market is be I would opportunity. of a of longer any to this see certainly giving We're it not we estimates next term, than say that in year. next year.

semi, for annual were growing technologies The like are XX% row, in difficult. a just growth several year in years – this Before very those we rate. display at compound

Applied, will that increasing. for be And the it can is more base great of supply OLED, at broadening for at look And those out. capital mentioned the mobile also you be we there customers If types devices. will that that are customer as intensity great will look be I adoption

that it said, our value for high in the in expand goes very OLED, two. of And flex factor customers business. our I As display up about by further a certainly market on we're problems working

is the a we term, that think good driver this very for longer Company. growth So

you. Thank

Thanks.

Pierre the our you. come Newstreet Thank question will from Research. of And next Ferragu with line

Your open. line is now

my taking thanks Hi, for question.

million understand semiconductor for $XXX mean you additions, about market, what's of in you the terms that if zero in rate the capacity the money like market kind you in added so flattish in I that's in happening the run call but spent my run your clients DRAMs, Does the like want rate, the capacity quarter this the reduction? to you that run see is that of And does at bottom, your we of sequentially. of next be capacity $XXX I happening with million, NAND, mean are quarter Dan, kind base. rate? question get being to really, So So, don't what's – what this anticipate in where that installed

Pierre. Thanks,

find end think look we just way it right coming the as in environment. environment the to overall elevated recognition in talking prudent be the willingness to a again in. intended is seeing expectations through bottom, now the set it's in it's in a this a what to as market the take we As function risk and which of call a and way we of at environment. reflect ourselves we're that the the only you that's market And business see I about And we're think just prudent in just that that much

at today, are competitiveness are transitions As technology memory look additions, going as a forward. at of Technology we fundamentally, going we we a transition think investments types capacity of customers nature. about and the our cost investments more both as in take the look you know, about

year at recover. keep markets. the each recover, as those those when at need as be are some those so to you both some we in look is If to and competitive we them standpoint to conversions markets from they're markets, on in lose markets look flat of a roadmap for capacity aggregate you capacity. those capacity And slightly cost going to to pace of a see not as technology convert, adds. down What This you tend going

very way sorry, are customers in a acting disciplined to I'm I So are difficult keep supply the demand year. a acting in the in investors – profit-minded balance mean, in a

what customers' additions well channel, demand both those that's this as our think under-ship good customers think end going their the down their in up for as of I But inventory that in a sets the markets. market they work as inventories exit do into year, in we and that inventories us year, expect we two as XXXX. either well setup don't we capacity

Thanks, Pierre.

Thank line you. will come with our next of question And and Company. the Sankar from Cowen Krish

now Your line is open.

understand the call the and services are fund bottoming just a so on alone But buybacks, like looks phase. Dan. Dan, business for like hi, reluctance probably it the my growing, it question. question thanks easily. taking out that And pretty I you had bottom. resilient had to for one dividend looks I the your Yes, is a in can I

wouldn't why attractive you of dry as M&A or think like powder some for it is the change be or buyback buybacks? more is with assets So, methodology there a it about because you keeping there – in aggressive how out you're seeing the for

Thanks, Krish.

from the about is quarter buyback. best not think in terms much way a do we of read in to too this any think I one what

always priorities look need to allocation to and capital capital done. a a it's hasn't approach changed allocation. you trend line term has That over our what three We've talked at for think longer I company a take consistent of time. about our

First fully this organic an company element of has it. component fund and to to we're inorganic that is going growth

cash will be the it And to majority balance strong flexible is the sheet. second shareholders. The back priority third vast to excess take to a the give of maintain priority and

see In trend cash five industry about given the gone last the at what happening we look unfolding the of data Company, quarters you of last years We've take just XXXX been close to the saw of structurally repurchased back we going semiconductor four X% business, larger, the the markets we market larger. we're Applied our three a will in end result way. company, a of very has shares, If industry last in think purchasers in implication, even benefit our to economy for By that in a XX%, and alone a excess very around to diversifying XXX% off as big end our about and demand our two-decade takes of structurally XX% the in that's levels years, the we've company. material shareholders.

purchasers And drive to shareholder approach significant in out – think of unfolding. long-term this quarter approach value. right I to to So a think our we've light shares take we been of what we steady see is in, the quarter

an extended into read wouldn't period I at strong. just quarter any So record much one I is and over track our quite of look too time, think which

Dan. Thanks,

Thanks, Krish.

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

Your line open. now is

where comments your NAND customers that? are should it think we're NAND stabilization generally stabilizing. kind thank when I about heavily of question come stabilization, your talked to into second the but there's of – about when guess I you Great, to the numbers want you. about a talking half. we here forecast, of you NAND just see margins that segments And is that's had just sure, to NAND sort in the but upfront, weighing talked true, I of talk I you have about not like kind just down half, make upside continuing that mean, back spending that about dormant that's or in is fairly how there your seems –

you into see thinking of we little ago, insight a and our reached on the started a to time NAND If our pullback that margins share where it time correction the call when an about investment will a from and hadn't a hopefully their was first talk this still peak. me at was customers we bit standpoint of let give year we're Joe, Thanks, help that cycle.

the were that in And behavior comments, I time but talked think history reason moving think still created up industry. is level. the begin And the the I the bring peaks, elevated customers where about we their our it's the back industry's you confusion. still at time think I when of so correction along pull industry point it being the a prepared in first off NAND further that I some is, of And And cycle to an forward. disciplined inventory than margins at saw data DRAM

of stabilization, tense, stabilized NAND would that so past we're that talk is when So it's yet, those hindsight, or stabilization hasn't good in we feel the early I but stabilizing, say, in of think seeing and see fully I process cycle about signs signs we early the DRAM. along we not correction than in in further

do but as more for from levels, the these So we've roughly a profile we an work semi again we business year off industry, we system flat got standpoint. of as forward to the think the roll rest

you. sense. Makes Thank

Joe. Thanks,

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

Your line is now open.

on a by etch gains just your to foundry/logic deposition like Are much. Thank are they the across board and market growth leadership of Gary, or maybe you you your with share driven some of segments some process of some very about said positioning. as the follow-up segments the as and Applied's commentary the well?

give question. me – you the let Patrick, thanks for

maybe products. color I some terms see about Applied. that, you overall talk give within And the how me I'll Let in of different

forward, performance that when number strong of drive can I I see a So for factors very look Applied.

X – At As in see AI, increasing X driving we wave the and as of earlier, data area the many popped the and getting capital the having creating is foundry/logic. customers Again, about an roadmap, wave in and harder semi of see is market, I biggest customers building harder. memory And seen classic XP, two on is we've that's market. said years Law. big up we've as talked time, you plus, power, indication about I X, foundry/logic, improvements momentum pluses. performance, at see next the about strong think some talked intensity wave. semiconductor very In the before, And this you could talking in same end biggest that we're beginning and the earlier, cost I a in Moore's ever

but that our some the about in memory both drivers those and see the drivers driving talk and business with this We've peers to customer forward certainly area and we've this we're and relative path power, you they're really of five of really, and some customers the similar performance, beginning see to of the about evidence improve how can terms the we this, how you're going cost behavior, drivers. in new about in talked So foundry/logic talking business had in devices. of

setup it's that us. really look So in improvement we at Material for the Integrated Solutions a like X,XXXx our If that's great a have look we at the we unit great for leakage current, processes, setup us.

also display display next said is there talk me over a up bit two our will and little intensity years. business. We've pick Let market broader Capital the increasing. our about go

Our increasing business the is of service becoming an company. part

service. We have base installed for the largest

very semiconductor Our growing if market go this Applied. over revenue subscription growth to is for the the business two And next type fast. years, back can strengthens also double-digit

memory we the new logic, power, put devices, area, IoT, products have are memory, you our foundry the communication, new in scaling, the leading-edge have the problems customers targeted addressing performance, cost, automotive, for like So sensors. power, biggest that that segments and

combination a could out service things those of stronger position, performance two really Applied. look growing, if you've that for together, you from of now, great years All stronger markets, got overall for be still factors

Thanks, Patrick.

line will with And Hosseini our the Mehdi you. next from SIG. come of question Thank

Your now is line open.

but are converted past from DRAM. basically been over there NAND-fabs been understand NAND are follow-ups. of thanks fabs. XD these initiatives that All just I One I same existing the question. layer like greenfield for Gary. taken greenfield fabs and Yes, better for to good would a that my versus help fab have for have The there the you how of couple that two years have are fabs, converted a being want asked, with some XX are ones to taking XX a

on or have to at opportunity is for a going being be future you would So these the the turn actually again, follow-up. a same all past a given and in to going R&Ds as fabs, are greenfield fab the of sometime as bigger that I that converted, create

is I the are biggest enabling the that the for certainly greenfield create But bigger think those when technologies us future fabs they what opportunity – Yes, greenfield so really bigger I for ramp those devices think us. factor a factories.

you patterning to scaling. so demand materials like many saw at in see things, In So layers, have so about new processing, I if scaling formation, logic – And of is similar XX-nanometer you for you etch DRAM capacitor on We're most thermal formation, strong one In what more in selectivity things have more multiple in layer foundry, have DRAM. new implant, new we I/O more within especially Applied in NAND, applications important we PVD CMP. that as structures, to periphery strong type see XD you the mentioned, the inflections tiers, lateral the look DRAM, where winning moving very focusing high layer capability. is DRAM, is thickness, for lot positive NAND. structures, we scaling things NAND mask hard memory,

by we We material have nodes. XX% hard a in selectivity already qualifications future technology increases that etch see and mask new

are are our So technologies, enabling that memory customers. types lot Mehdi, those a ones of of

multiple new in Integrated It part performance, I vacuum. that before, have about the and to technologies engagements about types we be in integrated mentioned similar improvements Solutions, see combining competitiveness. I into to our large same We technologies And thing, of And customers the with want some under those power that's foundry platforms their of other you and of structures But if a announcing logic. takes node. time again think the many for a customers. key talk then are for Material

enable We have technologies improvements power, that performance. in

fuel large We future with will our again, And many there have years. growth that over the customers. traction also

to it's what around XX time. the look greenfield those time. factories of beginning to Mehdi, WFE talking them the over at $XXX over about represent, of a add just the dimension, on early of in bit couple build little a We're about take equipment only billion opportunity that some XXX-millimeter very There's WFE And Gary facilities to tracking was that currently aggregate globe. the and if to are we almost stages of

our out something Applied time. to So industry are is play Materials trends structurally customers preparing we're and we over larger think as for going that macro talking about these benefit takes our

conversions as build-outs really well time. encouraged technology future by So as today, and over the we we're both greenfield buys see

topic Got looking half? should I And the quick come if OpEx Dan. up, already follow-up think of it. apologize Thank into you. just a has for second And what you, this we

perspective Q&A, So just about I year we guided. two to to the We'll in this I with think I think we at now. between keep quarter help want to one guide up one did Mehdi, three printed ended we the some we've give a time. flat QX is quarters on XXXX. you months say talk we've What OpEx it, And from where the expect quarter

of I the rest to think year a where likely gives that you sense unfold. of the is

so Thanks it. Got much.

You're welcome. Mehdi.

time think have we one for I question, please. Operator, more

you. Thank

Company. with Bolton Quinn line Our last of Needham and question will the come from

now is line Your open.

for question. thank Hi, taking my you

semiconductor Just for wanted into much follow-up. much the a up I've of to in comes systems How field follow that AGS prepared and comments retrofits on the the opportunity script drives that upgrades, quick Dan's How got business. parts. then about and of the

some let data pull Yes, the perspective. let – me see giving me I'm right just up so you

XX% look, rolls that if rolls semiconductor systems through non-system refurbs. upgrades we maybe the well number of number roughly XXX-millimeter AGS, majority as say our which business, includes the vast of I'd So into as

or take. give XX/XX, roughly it's So

have in quick the happen taken Again, And the a goods – at you. follow-up cost tariff with just thank on any uncertainties. of might a look – Great, the to done escalation then recent have you what that billion if Thank that insulated cost? Or do meaningful think tariffs the of event, on $XXX imports, should from you're you happen? you. get we pretty China well on it impact next would a

watch net going any about that's Yes, It's impacts immaterial to think optimize of But pretty our becomes the given have what's in to and supply the we everything place tariffs company. an to The we thanks we We'll right We impact. what continue we've discussed the that. recently, of the of to follow-up. we our the net offset our good know today, be most been at and to and for operations those organization clearly very is to-date immaterial something we where to of and results footprint, to to geared closely. the going overall got we're continue been sit. impact company. impact If sit we minimize plans enacted logistics think feel look where chain impact the sure we make now, how we

Dan, before it kick the we to Quinn. you over call? me just say Anything you. close Thanks, to let else want

Mike. sure. Yes, Thanks

Just to a quick the of close points couple out call.

First, on about talked it call. we the

While I'm still that's not cycle, I of ready semiconductor something of the stability encouraging. find the believe bottom signs call and the seeing do we're early that to I

display services our doing next business. like be WFE I these is I team we've our can believe think executing talked setup Second, XXXX. job year. the levels, I about for in the against great grow of and revenue higher into recurring off also can

into as setup So around XXXX. Applied look we I especially like the

spent a think as on summer. hope at pay in takes making we're Gary talking wave next big Design over during a of technology I with lot We'll I conference. more call, what we're doing the believe off that off, new share us the the it of standpoint, AI the way Third, of going computing Forum the you you join time I they're to a bets a from about lot

of Europe the seeing We're over month. will let's be then Lastly, and going ahead that Gary and go be also close York I at the weeks to of BNP. end to for Mike, New travel call. next to in you. Bernstein both the I for going many and Conference the With And the couple the are Conference Cowen of

A replay interest in All like the of you by our like Pacific Thanks, thank Dan. And everybody available us right. be website thank p.m. we'd will to today. call Time. And joining your Applied Materials. for on we'd continued X:XX for to

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