Applied Materials (AMAT) 15 Aug 192019 Q3 Earnings call transcript

Welcome to the Applied Materials earnings conference call. [Operator Instructions]. I would now like to turn the conference over to Michael Sullivan, Corporate Vice President. Please go ahead, sir.

Good afternoon, and thank you for joining Applied's third quarter of fiscal 2019 earnings call, which is being recorded.

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

are and Before XX-Q recent remind actual and call the which uncertainties you with begin, results and that to we I concerning in SEC. today's X-K contains would to differ. is forward-looking filings the cause contained that Form could uncertainties like Information to subject our risks risks statements, most Applied's

found Reconciliations call are earnings in includes page are financial at GAAP Today's our available which website appliedmaterials.com. IR today's measures. release slides, to in also the and of press our measures non-GAAP reconciliation on

now, And to over call turn like I'd the Gary Dickerson. to

Thanks, Mike.

time consistent served markets, Our previously are fiscal in strong, significantly lower demonstrates results our environment execution with communicated. the last by view Within logic and customers strong quarter while third and of XXXX Overall, investments what being. memory our year. for we've is that is spending for the foundry an remains than challenging display

also macroeconomic mindful We the risks. of broader remain

believe are industry new focus drivers best organization the opportunities emerge is on the executing put ensuring that of this future. down Applied powerful big primary will is the I Materials for artificial IoT, for initiatives intelligence. in form cycle, position compelling Applied the and as the During the my in demand data

managing to them, recent of talk I'll highlighting in will by accelerate and the near begin growth then the that near-term In prudently spending the trends company's term, I'll update fully discretionary and we and roadmaps ahead. our customers' to dynamics, in address are brief building finish strategy funding the technology emerging are I'll So on R&D today's even call, new Applied's about accomplishments. though then with underpin a years capabilities we products some market

Starting current with environment. the

unchanged. are spending since slightly the call. Our May markets views display and In our of largely memory, semiconductor softened has

while we adjusting disciplined side, inventory see factory output customers still reduce investments, levels. making to the On supply

investments XXXX in Taking automotive, view spending serve the to mid- a wafer and down image and investments high-teens these effect logic, On for form markets investment relative Based of for about and the on increases of box new a optimistic has more the year. same, strength of the XXXX sustained robust into and set-up We we take sensor communications, in ahead visibility, strengthened on price the in specialty PCs. the to see smartphones per current starting our NAND that technology. side, as that start as basis account, demand an factors In industry of has also remain to the memory elasticity we and both last progressed a Applied bits we percentage with XXXX demand believe foundry recover see the remains for NAND DRAM. nodes foundry will IoT, fab in capacity leading-edge is power recovery in customers their ramps the expectation our for Demand the nodes. year equipment driving with as positive is overall of accelerating spending. logic average of

there being are to revenue display, down XXXX by last X/X In anticipate still outlook we our to relative quarter, and changes XXXX. provided we no about significant the

away from conference key around My few Applied substrates manufacturing. for from XXX larger X main right alignment future the we're ecosystem. across help representing is accelerate hosted customers to have semi, We're create. in as rigid opportunities ready the inflections and getting Just attendees, we this AI in of portfolio flexible than our A next-generation OLED take and weeks with Forum second companies these by excited the technologies, products ensuring of the themes. taking the Design and place ago, more about including leading display introduction strong for our the

First, big semiconductor devices. are from built approaches that new new architectures to computing AI types system of driving and data new require

improvements performance, time cost Second, of in paramount, are power, out when area at scaling classic and gas. the is Moore's running law

approaches In playbook semiconductor has address our design manufacturing for new this, are industry the needed. and view, Third, X new to elements.

new strategy around devices connect and together shrink New together. down the company's traditional to in future. Applied, structures, new aligning of accelerate architectures, to ways Fourth, At the XD new and new new this ways playbook, breaking silos. vision materials, by differently and need geometries work investments feature we're of our to to chips connect implementation

endurance architectures at that high types For yield. But imperfections technologies devices some provide In of are thin which high. significant performance new edge including impact I on XD more the film to stack benefits enable XX MRAM, and these on case significant materials volume a atoms or and device. in memory, new in and of than of PPAC challenging based at a X of only of cloud. the devices the the and PCRAM also can the Missing MRAM, high make potential are example, incredibly and have layers, atoms ReRAM the

we use process created, takes our adoption one The in to one technologies leadership to most up many advanced cryogenics flow sophisticated chamber of materials. keep we can process system. integrated heat X impurities combining processing and wafer deposit degrees. locations temperatures the out, entire recently has To and under hundreds to place new vary different and vacuum process products of memories, each drive these by help ultra-high X This different of of introduced system we've ever

next materials properties a to that nanometer material, is is measure is this The of complex ways Solutions bringing technologies metrology of are of This bear and also equipment onboard All and the of us Integrated to to created one Materials we they being critical of the challenges. as structures Applied allows broad XXX generation unique address and most includes interfaces. optimize to call system key customers' modified. our our that to capabilities

an and support the has of comprehensive PVD, new where quarter, CVD, differentiated won advanced CMP, integration competed to past of leading Another applications Applied area customers, have heterogeneous the process and portfolio etch approaches. highly In roadmaps technology record of unique most the XX% positions we packaging. for, new securing solutions where and Applied tool including packaging important at advanced has is we breadth products. over customer's we

results process Our new also shrink. to inflection-focused enabled XD yielding of tools that ways and our innovation structures, strategy unit new materials with is the introduction new

positions For DRAM etch in example, etch logic. as we've conductor our critical as in new foundry winning for well been and strength in memory steps building on for new both applications by NAND,

to deliver transfer from of time output One advanced and then using cost. the to reduce Applied's We're finding customers' up new to business. more also factories, value yield, and of ways metrology speed this labs the customers takes technologies to example optimize is data our science simulation service new through it to and sensors,

back While even up and slightly revenues pull growth as our customers Services this we expectations, operating their prior combined is capital Applied Global being below still spending year, anticipate expenses. in and service spares on our

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

relatively Our demand. to of we of performance work the XXXX display view hard weakness across the memory company, our Thanks the and are is in current employees unchanged. solid even with delivering

we start customers opportunities take to excited driving capabilities we and that During down new And these remain long-term R&D focused shape. powerful for move about AI building and era. on needle the Applied will are our demand this in drivers as the cycle, programs industry secular

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

delivered results of revenue, the above and Gary. our Thanks, QX, with financial guidance. In margins Applied earnings solid midpoint

In ready semi-related our reductions of inventory positive and Our during They customers to indicators continues the not the leading And markets cycle, PCs across quarter. memory, discussed stable. I'm their see while growth. bottom future demand business feel still significant to of reductions reported end and output elasticity in call servers. smartphones, I the

drivers trailing driven and nodes the sensor our by IoT, positioning strong, managing focusing Applied One, to both are significantly In our in, on kick we're generate larger shareholder and spending. We markets in as demand will foundry X applications. geometries value our financial we power communications, and logic, new strong is overall tightly powerful by become believe priorities. in leading automotive, demand

the funding shareholders. growth. map revenue Three, installed increasing attractive fully cash our the to we from product delivering two, returns expanding While fuel to technology X, and maximize earned customer helping their base. and road customers our by recurring returns engagements And

For how example, increased to innovation controlling the but future growth. and XX%. spending are demonstrates held while we non-GAAP R&D we OpEx This of outcome flat portion overall this our fueling quarter discretionary spending,

memory to announced our to cash Kokusai for is We acquire plans our expand in This customers. throughout our delivered being the on commitment and And the services Kokusai return Asia. our strengthen including markets accelerate transaction and support the while presence reviewed. shareholders, in to to Electric batch capabilities also innovation and customer we will technology

of $XXX used the including Board shares $X.XX XX average and at share our $XX the During million share. over we March, dividends, we paid approved per around per to an quarter, price X% million in increase repurchase in

at and excited our price average past actions year, generate short, in that the below buyback billion opportunities, years $X.X XX we're Over shareholder we've will million ahead. significant shares an we're we value In and $XX, the on on about taking authorization. remaining our focused have repurchased

Now the We delivered company our I'll non-GAAP summarize was both of midpoint top generated revenue range. gross our QX non-GAAP of million, of our results. the and end $X.XX We earnings held of which $XXX OpEx outlook. guidance above to of near non-GAAP XX%, $X.XX, margin billion, and

operating above margin moment of the take we're AGS. billion, midpoint seeing Systems to a increased non-GAAP XX.X%. was Semiconductor revenue midpoint segments. $XXX Global declined XX.X%. margin what the non-GAAP our and in of to which our was to Turning outlook, explain million, $X.XX and the below revenue which to operating services outlook, I'll was was

QX, our our with Last services, will transactional in expect and reductions which a We services. agreements but growing in of still record. business, output quarter, record growth right service to us that overall memory. the upgrades and our refurbs, parts with set target I forecasts. by for single-digits. long-term in our and low But X agreement subscription-like we're service we from even line and QX grow give outlook AGS, base business, In impacted have for our includes business lowering year along and faster being is is explained that transactional new long-term revenue Revenue parts semi-installed kinds a and revenue

Moving to we and declined both display, as margin revenue expected. QX slightly operating

provide guidance. our I'll QX Next,

range to outlook, of be revenue non-GAAP minus company billion, around revenue be display plus approximately $X.XX million, million, $XXX per this be to in share. we expect to $XXX Systems sequentially. to revenue $X.XX the expect XX% up be would $XXX we million. $X.XXX about and revenue which $X.XX should And expect Services We billion. Within earnings or be should Semiconductor be approximately

about We be and be to $XXX expect non-GAAP non-GAAP about XX.X%, OpEx margin gross million. should

markets continue recovery. U-shaped expect we gradual a XXXX, to ahead Looking to and across growth our

to XXXX help guide assumptions only your for time, we quarter early a models. of one While with planning at some you the fiscal offer part I'll

basis, On we a we billion quarterly a Semiconductor a evidence baseline as Systems revenue until recovery. for see good view $X.X of

is as in better indicators drive which the AGS layer that display million to We demonstrates our structural to QX bit positive we remain QX shareholder of merit the we to flat the in increases, foresee, expect $XXX Gary the opportunity display and we've the deliver. be the leading Gross growth Materials described. new technology should the is guidance, we than which value be flat innovations around about strong expect and R&D versus by along that and to bottom approximately we breakthrough XXXX new mix annual flat seasonal, ahead, with revenue In margin QX guidance, OpEx Applied positioned expectation investing increase to with cycle. for in passed with short, our our and a on should initiatives years uniquely products for to see

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

begin. let's Operator, Thanks, Instructions]. Dan. please [Operator

question from [Operator Instructions]. first CJ comes with And our Evercore. Muse

remarks, question, guess, I sooner expectations to you in NAND your DRAM. than about for first prepared recover talked

back there's front, new both guess, comes about versus move as as, are of beyond? conversions timing well availability, As how stack about that multi-stack to are and and and you coming from And so, thinking into magnitude? thinking clearly I how clean you online single on as XXXX terms we capacity that that in room

anything if see standpoint and end. from to start Gary I'll towards the wants maybe CJ, a offer technology

encompass shipping the demand improvement. we price correction a our sit memory Output versus signs This our of down, we in think we expect early market. beginning the called memory you to market then when elasticity see followed to the expect overall in But are exit we seeing down, a If industry first it inventories demand market, the more kick in this And out, as see about is pointed by markets of clearly today think as memory entire followed event event. XXXX a let bringing just were has you NAND met supply When come year. recovery all it's NAND-led stability. it XXXX, DRAM. end and do early we a WFE a inventories see are don't from see the we where as customers' are we signs under memory year where customers of a across the And standpoint by down, we this and we as of bringing as clearly an year. XXXX we we customers little to see the signs me broaden we see again, in definitely to NAND we recovery DRAM. together, we true XXXX the So out specifically. XXXX, so down from and market, about comments But a bit is in standpoint,

we and In any individual see. how companies setup to specific of of up. monetize our capital step be right take of do base there data intensity into see When of think a think We We in being like I see market go value opportunity increasingly currently we is but a really premature economy the data environment. learn our the magnitude, off that these We in seeing the in met that all memory real as markets see customer it's materials. going to forms now as we on to think point new of as we XXXX, what memories, a a explosion going strengths kicks and disciplined. larger long-term market XXXX, is we're up data terms to the we the rational beyond about We we structurally the current see levels and which together, plays that there's it. back in

the good feel run. we about long So

also to position memory relative Yes. in Maybe something I NAND. can our add and in

across XX% a in I to going foundry to think gains more our much you than we're we're share continue we total memory XX% overall confident from logic. many of the In balanced today, spending into to know we increased that memory, of future. have share less XXXX and drive and around

by for is materials-enabled I Applied is increasing. And capital thing aware, positive Another really has that's scaling. driven intensity think memory been very much everyone's

about can Integrated especially in structures, Materials We companies Solutions. new are also with how engaged all Again, it's memory all materials, the major vertically. far, with you scale new NAND,

for So very enable new maps. materials, their strong products, we have performance new cost to customers from pull road and

get In NAND, selectivity materials, specifically, layers most the one last very strong we're is give winning new capabilities high new things etch by where seeing about across new adoption applications have in in NAND. especially important talked are we And more customers to and of hardmasks NAND, etch multiple selectivity TAM I new significant increased that strong capability. steps we that XX%, us of those growth. with quarter hardmasks

going strong to momentum into share our We're optimistic. future. make been that very in new to we've NAND, continue increasing new the again, have products So materials us and we drive

Sachs. with Toshiya And next Hari question comes Goldman our from

as solid well. your perspective, you talk I bit from well about seeing Congrats little hoping could on Gary, as big well as of the term the on a China business exclusion. both in DRAM side. technology as It near your to in NAND peers' as was you're the continues part businesses a pretty a what be progression side the

a as I've if XXXX? So in of will as preliminary of the for and you about follow-up. expectations terms got on technology can thoughts XXXX progress be That well the rate front on talk helpful, and WFE your

spending. We is inflection our XXXX. any before. similar see in flat what don't see versus we we XXXX, So relatively major China to on view communicated

is past increases months China, stronger view few our a some memory. the with little domestic over If you in look at

we For higher our customer China be sensors, the display communicated in engagements. down a has I see strong for devices. very been years, we foundry before. position, in for forecast. what communications, of technology whole, a a again, year as memory. In types we from China, slightly versus and team the very, global roughly display relationships have on logic -- our with going don't great semi-service, great to With to we we've focused think, that's the really display Relative spending in Overall, in progression, China, foundry us, anything IoT, line logic business believe those in is XX changed on

continue We I As foundry grow. logic is to believe think is trailing going said, we nodes where of see the this investment on market we year. will the half domestic the to over that

If you sensors, in market, those going with types look image increase line products. demand in the at see there, investment we rational to be the of and being strong very and it's for that's a

-- road technologies to produce difficult very technologies, to a and those performance cost. a be at competitive are long is a for those and Memory it's level able

don't before, we before. see I journey going We any forward. really communicated incremental be see than sticks. don't we've big spending long what As hockey saw to different going much and a think it's we

And years? WFE. my into you Is within market bit quarter number of guide Or Great. the better calendar business we a slightly 'XX guidance gain share. wanted acting than your actually implied a to a markets the are take get you SAM what the market about and I from described segment function up January guide in the for share your slight that's better we serve? you that Systems picking the If overall your than follow-up, ask little share prior October as Semiconductor I quarter, revenue Dan for guess,

the future. there's for have no great very favorable going And the to a into a in so Toshiya, really Applied. we're strong that position confidence I more question, XXXX setup momentum is keep

to spending, on that in or mix the was batch all etch, higher look where the of you share, back where processing, for heavy participate. at except If flat places like last very we've data the the we been year way trend don't litho dielectric XXXX, see overall you'll third-party

more us are much We're to we so this year. applications. us for favorable heads So absolutely the not year, set better for head up going this mix predictions, many especially but to is the is sure winning for any specific in make and

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

more And Some improvements lot deliver cost. I to struggling traction spent customers. than clear already performance customer the them, are I they're and it's anything gaining that's products to else. in a of with power, leaders, what with R&D with of time do my major that those in discussions love and

I playbook new ways think it's ways the the at together, AI month in future's new products about believe, enable structures, this Applied new working. And they and evident with in new with clear, And to that the really we've chips I leaders, position also create, modify going to XD structures. Forum like was shape, isn't to XD ever classic the this Design drive in to the costs. not interactions materials, last connect all breadth the my been look analyze is and deeply scaling best we talk R&D have of to past, new

us And and and major with combined also, power are amazing deliver Integrated ways integrated this customers is performance this solutions. material drive currently with we to Solutions, memory new foundry these cost. year we're logic and talked about engaged unique, all and new in to performance area current, in those capability Materials Our MRAM X,XXXx enables leakage capability, last improvement we talked year about

put playbook, combination drive IMS products, capability new in great for and position to growth that for the Applied. us customers a roadmaps solutions, future new of So enable to accelerate new our

future. also the XXXX I'd setup again, like and So the into for

comes with next from Citi. Our Atif question Malik

a the down memory on being CapEx couple year. Gary, have of for execution. next job about makers Good talked

these your peers your optimistic and share recovery do sound How or you memory based and same. reconcile in what the X is You pricing view the have said on availability? on NAND

this is Atif, Dan.

take I this. and think I'll jump in

have and modeling market view But prudent recovery bits expectations with a in the imagine, it's So out device the the bottom an it's based conversations for forecast we can to this as well but the customers we be XXXX customers those is and together. all the industry benefit our time into U-shaped we're And the market of memory from than our we our do as year contemplating, to spent And a we a standpoint said, currently about expectation, in consumption expectation the into when talking things modeling into matter economic the in That we material will and into to us, setting boxes environment, can events, of in it all lot better forecast then as If forecasting. as that an it's setting XXXX as to on to company, the a information out and WFE are not bake and those when, of do be way, as this, best we industry very well we and our future an future end-market year-over-year. see, a we, all think out, It's does to date, event you up we of a in we that of net we and and triangulation a expectations for set if. view, our comes memory. for top-down the gradual like have are setup. recovery. the we for

question Crédit Suisse. Our with from next John Pitzer comes

driven given down? How edge little is? industrial, more IoT. Is guess, big spend foundries Gary, that talking importantly, is time for at that if sort driving longer, wondering does leading-edge? results end reuse by trailing do about slowing what And market solid that a stronger, a of X you N actually do auto, bigger the spend with the at the because on staying the think reuse I all opportunity Congratulations macro. foundries you nodes in the the being of uncertainty for minus bit could

that especially going for sure, think, continue is for the market to I future. see Yes, to growth, this, Yes. we increase

of that generating the significant about devices Applied. -- think is And market. really amounts a you If smacked right, opportunity of to of type for that's talk about and great middle people this growth at connect a data, trillion

XXX-millimeter have of across and technology. products great a We XXX- portfolio

dynamics, look devices don't in is If you growing maybe communications, driven innovations. power areas sensors is there XX% again, IoT, and the foundry really some at by logic, understand materials and auto, people about innovation like

of on team the again of are with a across increased developing. has to enable I visited So mean, last significant where lot have key the or tremendous these maps. We've over last I'll pull and Applied company leaders we're X markets, those you happened technologies one have strength. that personally we the customers give customers work that great this areas their a these a road for I X focus months, example to of situation a quarter.

many We won Once time. where are this X/X at qualified, major in long of the the market sticky many, opportunities of a a you're for in selections you're period revenue very over customer specialty years.

where are and a of currently a a spending, we huge terms percentage lot was case have an innovations developing and for that in all technologies. structures, new were the opportunities, markets, and and there winning technologies materials, again, this particular focus we that of of unique So those again, in have we is, these about increased

being preferred for customers, partner different of roadmaps, culture those enabling their all is for focused on strategic really their future Our our enabling technology markets. different the

really Solutions, a Integrated these position. is technologies to the this us with Materials in good great puts a forward, customers, really opportunity partner breadth us I think for Going of with combined

significantly front the for about a couple years would as a talks And view has the introduce a to seeing that do what then nanometers put look leading-edge, we're XX have and statement next And, the and think was industry. way investment door to big node. walked gone different I of level spend pattern industry, then to the said at equipment a place, new customers total to out had the mature as footprint we looking the and has know, that When ago, our the build couple the you falloff industry last in of John, in a I cycle opportunistically on up Gary of I reuse And the capacity follow-up the the little node. reuse point think the that We're node, implication you'd add work, used you'd they years. on and just in evolving on in investment a a you'd for nodes. capacity see which bit what

I think investment and years going of what the being in reuse larger as that, more size profiles, is that's original to relative do node, rate introduction historically to seen many think to impact after I much than expectations. we're mature the continue the seeing these of grow we've nodes our

the of term on like implications market and us. the really long diversifying, the has industry is the broadening we So that and this attractiveness way for

signaling are do rounding kind Or little former, fiscal the us model? XXXX? you bit that would Just quickly, the curious, guide us start year as which going that but you weaker give fiscal it's margin But you is are in revenue some off these you entering clearly errors? up. quarter in gross suggest of my leverage I'm start sign, if levels, reestablish more to kind follow-up, when for I but kind one out, at 'XX, know guys of the and only just sort OpEx operating color a of margin of flattish to these

John, so operating just and maybe a margin and view gets you're asking. how OpEx little perspective we at the on the that commentary point

So we're margin operating time. a on percentage increasing this company very over focused is

very fuel the is most company the are over towards R&D to a at growth I and that things approach compressing to think disciplined time. the you quarter the going of discretionary in OpEx recent engine, our channeling more spend, We're we're what saw OpEx.

And map statement every get and it's QX year, into the you for we see Law so XX% set high record enormous What the but industry a is is of annual increasingly a profiling wall, around an discipline. this hitting us. we merit of company, we the a increase opportunities new talked is define power is Moore's the creates performance playbook feel going that good about opportunities road has about to for Gary also that that a see. that

next power the than and to as are a we semi inflects The seen year-over-year. are and we historically. expect our in the decade R&D, into drives we We leadership up different invest in business where drive to from going road map over we've to growth industry very today, -- performance way sit drive fundamentally going it way this be

that our expect year-over-year, be also these structurally our display expect and industry We we and to we into business off recovers, next the of grow I outperform the company up larger, going our operating expand services see as think the to to year. recovers. take we're And business as making we levels margins company us that industry drive that to to future today you're as and the grow allow leadership investments should

next with question from Harlan comes Sur JPMorgan. Our

on job quarterly Nice the execution.

sequential growth just the early large-screen can And help we levels at fiscal how versus outlook as you sustain year, in display fiscal into mixed strong that the do understand QX see us next guys mobile in OLED? mix and into On the year? look you next

Yes. Absolutely. Sure.

me color gets display So question. and this the on business give at let your

are remarks, see but As about what Applied still about don't XXXX. than see we XXXX basically the next display X/X year. prepared fab guide said customers this XXXX. we for We telling equipment, higher We is us in play this down versus being

year, market the mobile long next and we of expect of a so to year. are as expect percentage overall increase roughly these we XX.X, that there the many Gen pretty visibility TV flat part And lead into next good of also are We have investment to times, do market. OLED be

eventually based year. next be mobile TV cyclical, of display and like believe see being markets different do TV, about up including to be that's on to Longer trends, OLED years, going we take the to continue areas. still we've those but smartphone, all term, overall Gen and market OLED the RGB optimistic many of foldable we the XX.X size innovations going conversion So business build-out the

OLED, adoption For more is think the also you capital-intensive. of I of Applied, many know,

to drive So more see not growth and this we new and We're those as the are making in of We're strong, adopted our areas. very from today take opportunities customers those standpoint. progress technologies that's XXXX to into But into types TAM large together, still in pull about for from expand specific to intensity in investing a business those also any Together, good display products beyond. capital again, is color we're all areas. devices, growth very to us products. good more drive give

just prior maybe content to a Great. microcontrollers, IoT PVD years? platforms, just there's the the for SAM new of your need questions. one given of much as platforms, memory density for embedded architectures, On for MCU. storage here high-performance and in opportunity is class industrial automotive semi tried applications to memory X increase like team for memory out and the higher opportunity MRAM size there in the as as storage class then two of next sort the follow-up and growing new MCU processes looking over on legacy your and And to a X has Seems

question. the for thanks Yes,

endurance, So Semicon many see many, to so many personally, you it one things. going you most it's replacements, talk then devices million do for $XXX of when ramp power, go something at in flash new to we for think that replacement making not Because a but I with from structure takes you the It's to excited a about LX was to paper growth high things performance see the when you overnight, this years like yield, think single this all right from devices, replacement. these incremental kinds I I about. billions cost, to me, small. mentioned, of I Again speed, was of of for and us, AIDF, this of was far. bigger the those market type know, publish very certain think around us those future at to think many, is But And moving that's applications. device applications going DRAM especially strategic in as market. cash start we of it's customer lower We

so And Materials Solution about the talking Semicon, all had system and this that vacuum. ultra-high have at amazing Integrated X technology into we you

temperatures where You have are to the degrees the layer atomic properties -- different of you XX a on wafer that printer structure range you're than a like structure of they the key materials, C as atoms nanometer. have measure to XD X some more XXXth only ability materials high, an and with a almost, XX XXX being about layers, created

the structures really all and this to interfaces. this, And all of critical of material is optimize

the drive you faster yield, reliability, the So can market win applications the the the performance, and better more again, certainly, can you ramps.

excited being cost about, we're with, scale right very about, high companies right And to so we're technology yield what performance. working into high-volume, excited and is able and that a certainly, and like they're the this

So again, we very see this compute future architectures, to market small important. today but certainly, relative is very, it very,

Arcuri comes UBS. question next Our Timothy with from

want October, a saying if it. have service to for you at July, on was Dan, in or, then question high to service, of like it single million had I you want Gary, know kind But take light been I you like July. don't take year. if, the And look $XX I digit

thought like So number would that about $XXX the million in of would is you light at it that be. October what coming imply

a over that's So period. $XXX-million a like X-month number

that's part revenue. the that so of of said of half and is the like like also XX% But had AGS entire AGS the segment think And revenue. you spares service I previously

and XX% portion. like spares of it's really, service So the

So a I but I to consider of number your think little better a sort think a seeing bit be are I get the quite trend memory production cuts, people for huge peers that's stable. but there. business, And

I'm if talk can So about that. wondering you

a Last high-single we've the digits. last, over This XX%. the our strategy. compound X share a perspective. we XX%. of strategy, color about years, me rate got about gives you into it at Strong is a hopefully, it's it, it look bit and and year business a that some tuned a really we year, great business call team a the the at over little business, let was expectation take views with year, grown If at coming we've my business services this of Tim, execution grew has

the business, that's components service of As more its of we and that's there's the revenue. underlying an agreements element subscription-like, business look long-term at

at of look QX we performance we As that QX, thought. exactly business it's profiling in and like

mid-teens QX into QX. and a grower so And

the year, more of a classify if -- work this factory for induced to outputs. looks going has low double single our related, the were and business for and a like to the connection that an output digits the business down look the thought at low we industry. year. it now correction. we factory double initially inventory was as down to it's mid-teens other gets the part flattish memory combination in the service and business others utilization to down of its in We structurally The low industry half the and falloff the being you overall of business be to similar spares transactional, a has grower other QX QX digits business, the as brought industry digit grower of When through Clearly, saw we

In reported addition it's to record refurbs than business. for an year growing us, that's growing upgrades low the business. XXX-millimeter the and single-digits, stronger to segment a bit quite is services added all-time and our This something

going look a necessarily absolute profiling. next performance something growth that got and year, recovers wouldn't way leg performance and nice I think forward. business So executing the is to or business relative We is team think at utilization a of the the business, provide there's deficient industry our well the we've should great as into in

service little bit add me color on the a business. let just Maybe

But mentioned starting more strategy, impacting XXXX, revenue reduction Dan As that's spares question successful. with parts you been that's our in a in one that's to major the this memory and change talked so very been customers, and customers, certainly, thing the wafer been there's subscription-type drive also in in business. a with about, was starts

the subscription and in has Dan even strong agreements down had larger in business very customers, talked output then, If growing we adds been fair you that go from accelerating than high-volume is rams, accelerating X is year terms in our of Since because and service that R&D, with revenue manufacturing. transactional a net at business. part growing still amount, -- rate spares now very this and yield WFE back really pull of cost about longer-term to our And 'XX, that's very, a contracts. fab business see optimizing service from high part that we fast, of and continue to

We also in strategy analytics. have a strong data very

strategy of Applied. customers and opportunity to today to have and creating customers' continue in to value that to creates growth drive also thousands a create We for that's us tools great for data-enabled drive fabs, customers over connected for that for value

being service the business, refurbishments and flat. XX% at look counted point, that over and things with data you if this other spare again, you more parts one our business, are spares if and just look business, separating business last at and out has transactional our wafer some people, subscription our X that Just equipment revenue years upgrades, by is grown fab

that growing. a is equipment that business wafer service in growing, case shows where even not that So fab is

going and we're value at to we're at that So our very drive rate more this a create optimistic Applied, high customers. going business also forward, for

Awesome, Gary.

follow very generally, don't on maker pretty about next Summit. numbers modeling. China around year were They year indigenous more Can memory 'XX. a anybody's China as that talking billion between the Just guys? I and up, running China WFE there you major XXXX think efforts a from whether spending in Memory talk was Flash memory big just Very, $XX and be about could big

now. on We're giving color not right XXXX any really

I half IoT that this be 'XX spending communications rational of the believe this I've we're there few is seen those for all with I any incremental years had logic on certainly, also, see around spending relative a some kinds the foundry That's a will pass 'XX. XXXX to and of see a forecasting not big domestic we is going don't relative hockey devices. what hockey relatively of year give think said think honestly, that last the to over call China. but sensors, I 'XX color I today little we over earlier in flat stick, to big certainly said on the stick. And that call spending to haven't the

Sankar Krish next from question Company. Cowen from comes Our and

I us given Dan, but the them, revenue of stabilizing give to your performance semi some been versus And then is would margin the what's the follow-up, towards eliminate right of away. two Can I'll how and thought have side? at gross logic you that margin that has the mix business memory, foundry is levels, on a it ask have as more better? I shifting gross going

You some 'XX display FY on guys gave color relative XXXX. revenues to

where FY of late you deal how think to about 'XX on months the 'XX FY did $X.X just was relative billion? should that Given we visibility, X

Krish. Thanks,

order. Let's take them into

First, gross margin and foundry the on showing of signs the logic strength.

a on those the be if think few And maybe incrementally years let start into we we're is seeing a business a about laser-focused gross by I we'd we margins little be ago, bit driving mix going we margin some margins. with given up help of you factors see higher that today. company time. over saying me may are Let this But the mix gross talking me from that's who

it of two growing up a businesses, those So than we've businesses, expect margin that's gross of them, as those we we expect growing average, corporate we at we two business done our lower of but know and take part a those and we as those each a look services portfolio, the as job have XXXX. great and in businesses each a businesses to that be display look our into

I And And our really, our really to. semi would leadership then a are doing as is couple our grow. within there's well, the business businesses portfolio, semi of profile point we things changing of but

job grow gross driving products as the of we're that we're the high a forward. doing business we that but These memory of expanding footprint. margins, beyond etch other portfolio, as our in And new opportunities parts are foundry our gross logic. that certainly and business, with First, are the that as changes business not into be may margins great profile

the XX-XX logic Second geometries. talked a last foundry we this about ago fully and when XX-XX, thing XX% leading-edge trailing now and XX-XX%. leading-edge, spend And and was it I'd to, 'XX, node 'XX it in split evolved years, decade diversifying. the on was a call, is it's technologies on it point 'XX, then time to between X for, There

products offer the And XXX-millimeter a pursue. those that's and little us. of we lower where market, attractive some might technologies of margins other businesses operating really to see cash differentiated that of opportunities the where and our systems. we node also products And market be and for in are But while with the key geometries bit we super compete brought in with in refurbs, some we XXX-millimeter equipment attractive gross the trailing enablers business margins being compete that there's than flow,

drive we're as next margin to to stay over into the grow to continue to particularly gross revenue semi business business. forward, year be AGS able grow the going the think point drive the higher year, going focused, we're this industry going we see going So we to into and next recover, time, we we're from do display continue business to

we're to then question? on Yes, part the lost... execution, apologize, So I repeat good your of focused the I and display. stay question is about business feel we and going profiling. you how second on the Could was

display specific on relative Basically, more think we time. be at to to than it. a anything going this do little to higher going can XXXX. I what I Yes. give is in XXXX, said as don't we XXXX earlier we're point think

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

I bottom. Is it from your capacity? when preventing add that? think you see the think, is visibility? order in And will I'm what you customers And do memory -- what environment call, environment? you what the curious, not to calling Is still comfortable started the the start at incremental do doing you mentioned you're that macro you

Vivek.

an set -- earlier we're environment I risk a an the like geopolitical, I think, see what around as come in it's in expectations around it's characterized that's a environment to as think environment macro the in well I'll that an little in environment elevated we we one way. macro just prudent today, modest comments think we do back some by made defined profile the to

expectations on We think see those this, place customers, a if you through different would give have But again, I a to conversations like environment come prudent that's just at read back don't would direct be. set and the I to level. with think conversations, I

we set we're if portfolio the in way. company these Certainly, We're material a more benefit modest expectations the of levels. faster setting all expectations going in U-shaped So positioned off a how setting broad that that's expectations if happens. given than to a very where industry way this we're to gradual markets, want and our the for in is recovers and

when about stability about the be a and when, just of good feel we feel it's opportunities advantage of matter ready and they finding do we in take good those position, business we think we'll So to the not materialize. if,

follow-up. Okay. a And quick as

last heading of guys you to that On XXXX, think -- be do down market what positioned side, recover the that and I recent share? best in will know into starting but to share progression share X in is were is you impact impacted? that And you're AMAT quarters, EUV gain the areas year, point which how

even overall So find also a in growth if Applied of see as look adoption. EUV EUV, areas and you WFE, we growing patterning we see at in still

last a As we've year, was before, EUV communicated headwind.

to gained positive and very memory, have XD small opportunity. great drive Applied to recovers, forward, our impact In share I EUV to scaling, different at to about be we segments. materials look As has is When a and we that's very have relative memory. going you on memory very the for Memory opportunities enabled engagements really look TAM continue share scaling, in good a enable NAND, have to hardmasks. we gains. with deep opportunity talked about to customers new

a IoT continues And the X/X spending. are to is grow. processes gate earlier as customer, an talked where DRAM, metal about with periphery, Our recently high etch the about. have share in communications, the that's those and adopted. of adding area talked I that's sensors, position won We XX% logic opportunity about we of and TAM here this where they're I foundry

playbook. this these that in then all thing And other momentum I So new areas. would is we say talked have of about we've different

New new things many really new new technologies of areas. products new ways materials, architectures, different have connect new and structures, together shrink. to and in to those new We ways

the so why on of also color that's going different many I've more and forward. opportunities, given we're And call those about today investing

in the we of capabilities, sure when grow those to very invest already big believe we're to with main unique which adoption We to CEO customers in going point The areas AI, markets We position strong some future. are those ways structures, as right unique the where going be the are with where a by seeing playbook, materials, of my new we have new of to And traction, that, areas. the future. that make areas strong new technologies, focus products new is in have data has we're all in view. devices, have is connect market driven those to Applied

And we're close getting of the to end scheduled time. our

So Dan, would the you close like to help call? us

Mike, Thanks, Sure.

quick a end couple the to share just of call. me Let comments

that I'm I'm risks the leading is by to I'm keep and First, encouraged very long we slowing business. been stability not to enough just I'm same to seeing still we've given eye by we're At on. need an is computing, But as call this Law macro encouraged. happening especially time, long ready Moore's the the encouraged bottom, time, in our industry positive down. in memory. seeing the it's we're know and that the a new something in indicators big happening that in and

believe see position industry. we a is we help growth coming, So and to in Applied special this

you going outperform market. create grow to we're going finally, seeing going to look of in of at the close to be and this here we're meetings the we're Clara conference. in and the I, to Santa So to forward and many beginning going York some New stay invest, company Gary city the And value we're quarter, September investors, hosting personally to I throughout and in

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

be Pacific replay for joining Thanks, Materials. Great. we available us to thank you of like interest thank on And Applied in will and continued everybody by to call our Dan. for like this today. we would X:XX A website time,

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

a disconnect. may have You great all day. Everyone,