Applied Materials (AMAT) 14 Nov 192019 Q4 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.

you call, Applied’s which thank fiscal quarter and earnings XXXX is afternoon, for fourth joining of Good being recorded.

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

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

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

congratulate Applied world. on the them and cycles be our combined to employees in without by guidance the down I'm out results equipment semiconductor a uptick report them were this Mike. dedication year passion they hard as the Materials navigated for healthy the across every challenging I a of a results the of and would their Thanks, work end work memory These around solid the would day possible like we and performance thank not in display. driven This of company. at both with execution for rounds to year. strong for top demand environment, pleased quarter to in bring accomplishments

I'll making by ahead. will that we're elements the talk key outlining the industry, put providing current the for context conclude best call, position tremendous recap our our summarizing shape about the past opportunities before Applied the I'll inflections the I'll months including As for the begin the then this broader and environment. strategy our investments with of end the growth is perspective and market on to major brief in our several of over years. next markets drivers XX year the a

by customer Applied’s significant XXXX. was in first fiscal shaped pullback XXXX since the investments

provides However, is illustration how semiconductor industry this the a evolving. good of

highlighted was downturn than volatile have past. second XXXX and and the significantly lasted equipment If quarters semi less it spending calendar the the at than the revenue peak. the larger at was the now I proves lower before, market four and in quarter low services the approximately As be the cycle, to point XX% of our quarterly for then trough of is

contrast, markets. than peak market XXXX through end In drop dynamics cycle. are took due to magnitude. continuing large capacity average growth was of that demand memory healthier to and part the drive It’s makers cycles was drivers This different focused highly spanning important revenue during the The and between also the are the industry enterprise technology in and XXXX, fundamental to consumer place memory to trough diversification our roadmaps more disciplined that forward. twice of note in making this that in their cycle investments

both direct company resilient perform peers breadth more our a market a of portfolio, and semi different our conditions. core as is Applied more and balanced of a of that's the our can to market equipment the business well variety As Thanks robust wafer in equipment this across is areas fab market outperforming well the year.

a Services. year record Applied also Fiscal for XXXX was Global

businesses. services equipment our we're than growing revenue faster significantly fact, underlying In

almost our XX,XXX. and base X,XXX we've Over the systems to equipment semi past display XX by months, about installed grown of

since XXXX. the number base also tools around have agreement service long-term covered increased style of revenues by installed by which subscription We generates XX%

new came two revenues from sales. years ago. our XX% from of XXX sources equipment than XX% just up other millimeter This Overall, ‘XX FY is

timing want recovery, of to our we In outlook, I of characterize currently shape see can I don't three or the with near-term about observations. market exact while terms speculate what the

of and investment geographies First, roadmap customers, in the demand to leading-edge. foundry by by key driven logic strong and XG the commitment acceleration advance

Second, progression the in correction And inventory positive early of a in DRAM. recovery third, ongoing NAND signs investments. of

months, strength Because equipment now wafer to revising our could levels the XXXX fab seen we're visibility with sustained of in in estimates XXXX be the recent step-up the on we foundry NAND expectation believe DRAM. We XXXX have for of during similar recovering Based with XXXX. and in spending today, ahead we're an year investments a optimistic about memory strength of logic upwards.

to expect revenues display, the this anticipated, display a this we at down In FY remains fund cycle. business this 'XX along next market similar profitable third revenues even be levels as ‘XX as R&D as of products. In to environment, generation FY we were FY bounce we At point, for our relative ‘XX. bottom

still of and portfolio long-term believe the ensuring on remain place have We to investment focused the becomes we forward technology market up. outperform We when provides with opportunities the right growth Applied to products customers as the pick display their drive market good technology-intensive. increasingly roadmaps for industry in closely levels working

context are of at transition major new as intelligence. for important a industry, to growth drivers in Big Data, and the artificial it's form the recognize in IoT, period the broader electronics beyond of emerge Looking cycle the that we

value computing of to billions and generation to deployed, new approaches devices next of process all data data we be Over to the decade, and explosion of that's from available. create sustainably the expect edge hundreds and

a lives. area and AI inflections transform economy every also Data the our the to have have semiconductor These will industry. and impact Big on of potential profound the

the and the adoption be how in of technologies. approaches, data new major foundational As we semiconductor of or architectures center are the the will and can of in the power, we improvements area factor general edge. the PPAC and of rate realize move age needed to at A from types AI semiconductor devices performance, cost quickly in computing purpose new domain-specific system

the to semiconductor and To roadmap is the time five on main needed. new for has slowing. XD critical connect However, elements, believe to chips new together work the playbook future, and to the a ecosystem structures, improvements together. breaking new new of the in ways scaling needs strongly and differently silos. ways to industry This new drive geometries down at Then PPAC accelerate PPAC I devices this Law by manufacturing Moore's architectures, new new implementation playbook, design materials, a classic is traditional when shrink are path, playbook feature

we've aligned Applied, this At of future. around vision and our strategy investments the

to spending, While more managing new we new non-R&D ever than playbook. investing are all products the and capabilities carefully in accelerate we're

our York. novel to technologies This up. fab. new pipeline I'm in shaping is lab customers the transfer New announced recently official us and work accelerating future the excited opening from equally how of our to partners Center We with META of enables art facility about in state-of-the product ways,

analysis all modification, for products removal, to co-optimization categories In addition unit to The these process shaping, bring entirely and and analysis, equipment, new of the Integrated which spans developing to products we're removal in market share materials, XXXX. our traditional and IMS Solutions. and that applications deposition, we of deposition, details way structures as and modifying Materials new include analyzing we new of We'll XXXX products creating, more devices. call

market leadership for winning leading-edge are memory. are were long transistors now and examples important technologies me new and highlight and being, power. power migrating improvements These our Growing is customers serve equally defending applications, and DRAM, developed interconnects in robust advanced to time PPAC are available the applications driving are And finding specialty leadership how we performance markets. specialty ways for where of new IoT, image technologies migrate Applied and investments term. the held markets few our logic demand in near we're communications, originally technologies. these new and these that let introducing to has to nodes the sensor improve automotive, our for positions, expanding In also into a capacity applications. low For

is in The to large patterning geometries, enabler by removal. shrinking for patterning roadmap Advanced of as enabled deposition feature increasingly DRAM. which new critical co-optimization foundry materials is well opportunity logic a and growing as a materials translates and

positions we're foundry inspection, markets momentum. we're for we also delivered year. wafer well the And revenues logic we foundry applications winning plenty logic, at in and NAND, logic optical in building at have won as multiple customers. of applications we've critical we foundry a winning In record etch room And in new As expanding where result, our grow, to customers. memory in where are recently new positions in etch, as

summarize. I me the over let Before to Dan, hand call

seeing finish First, in uptick to by a we're driven healthy a XXXX, strong logic spending. foundry

early call Although memory, signs the it's to recovery shape still we're seeing. the we're too by timing encouraged in of the and

the positive Applied. strong a view Data era have we of opportunities, industry and create for the the about will point Second, AI-Big

for new While ever non-R&D products we're tightly than we positions the more related us and are in investing spending, in capabilities that future. put controlling winning

and stronger, collaboration technical customers game-changing time-to-market has to our and for a the we're set with the and been between of broader partners technologies. Applied working never accelerate customers new Third,

Now, I'll over turn the Dan. call to

solid QX. for set outlook in way XXXX, ended of delivered you quarter QX, like today's Applied and like guidance the revenue, summarize On our ahead. my Thanks and business year for up give particularly and the way Gary. I'll our we're XXXX with entering of share earnings upper-end I fiscal in the fiscal the we year the range. I call, our another sense margins our fiscal

the and $XX.X resilience our In quarterly revenue transactional XXXX, billion earnings and we year. in semi, of Despite of business. a our the end across our of stable, our that, broad services which even memory softer were portion markets revenue demonstrates correction were display delivered portfolio, and

we more fiscal like In performance. quarter in our that which in of XXXX, significant I than earned all year correction. most did also recent fact, equipment XXXX fiscal a we every is included significantly the in relative

peers. In significantly our calendar most outperform XXXX, our market direct we and expect core to

in be equipment Specifically, to plus down semi while the the equipment AGS expect percentage, mid-single-digits will mid-teen year-over-year. be by we down market

Looking ahead customers’ markets the our in the enable growth to our and opportunities confidence Applied XXXX has have we future of high roadmaps. to and unique beyond,

non-GAAP our we result, delivered a operations. this amount spending We earnings while in nearly $X.XX cash in As of over year, generated R&D in SG&A. share reducing from billion record $X and invested per a

attractive fund maintain our growth Our dividends and and shareholders is profitable our dividend to strong through capital returns growth opportunities, buyback. with to strategy a sheet opportunistic along balance return fully share deliver cash

shares $XXX In of dividends, of XX volatility at the average We returned dividend X% million nearly billion took shareholders, market $X.X advantage XXX% to XXXX, an raised repurchase returned we've million $XX.XX. to price equivalent of stock cash our free nearly in to and of by flow.

we're to plan reminder, close, cash loan free we're a of Kokusai fund Electric. transaction. complete repaying the term the most towards to our flow help working direct of the Upon we to acquisition As using

thoughts semi, we our products memory, foundry, leadership a These strong call, in NAND for elasticity included strong leading In metal Now, in I positive. inventory the on demand Today, demand growth epitaxy, and talked for business our applications future across environment. deposition, more positive nodes. have pull of We're about edge leading both specialty and share On record my indicators previous etch I'll demand new dielectric growth. earnings I reductions also feel deposition. our products, semi and including inspection. for many winning in high logic

strength our growing key advanced nodes in We with in are of logic, significantly the packaging. markets leading-edge and outgrowing foundry, automotive and wins

it’s recovery we to of lead in timing to of think memory, and we way. the hard if, when, a magnitude While always call matter the and expect NAND a not it's

transactional has recovers in we In in should new will QX, of the our and stronger seasonal in of from of systems utilization benefit expect memory The revenue AGS portion base and than in added The installed as we was subscription-like strengthen XXXX. QX. to better the we expected business AGS, XXXX. revenue thousands than portion still momentum

Rolling of the highest year-end our fiscal which new all $X.X billion, year backlog backlog a are ever. is entering up, it we with

I'll Now, QX provide our guidance.

million, year-over-year. of plus $XXX revenue minus about billion, by X% $X.XX company be expect which or up We would

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

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

Applied for fiscal enter I XXXX. summary, setup as like the In we

design our across and IoT, Our The being Big ecosystem product as will strengthening logic, investments NAND, nodes growing from demand. service throughout is in thesis that exceptionally and DRAM. transitioning well and AI making outlook to are new new validated positive is new our business playbook foundry, indicators leading driving the surrounding Data the portfolio the ramp wins we're and

also nodes opportunities specialty the are Our in expanding.

in services XXXX. year in on for Our and growth solid is XXXX record delivered a year-over-year business track

Finally, we talented acquisition Applied of look Electric forward welcoming to closing Kokusai to Materials. its team the and

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

Thanks Dan.

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

Instructions]. [Operator

comes first Our from question Muse C.J. with Evercore.

Your now open. is line

you a But want you of your recovery more around memory. could I timing I hoping as that positioning in know expect product market be you magnitude product in XXXX? bit specific for at and of give in as that to leadership to products some look just when you don't was does too around perhaps new the that you come, well color the the to have little as pipeline come

Thanks, C.J.

we're seeing with technology they're roadmaps even XXXX Applied the to drive memory spending year, supply to led customers capacity when what if we continuing help think and We NAND. memory So, cutting setup demand. really the like in for by is in is recovers, which additions this

like in foundry. saw are periphery, more types in and DRAM if different the to metal more we moving going demand devices, So, we customers look XX is of in gate at this nanometer to transistors advanced drive

leadership we capacitor Epi, Applied in in enabling We're new number steps new and share reducing improving capabilities pattern where module for like us gaining we're create etch. for for large that new areas thermals, positive really placement. multi-patterning also are implant, that's the patterning technologies and DRAM also opportunities PVD, also So, of

So plays our really steps to especially with types more positions. of DRAM, logic-like the leadership

position those forward, And we're as in in go DRAM. a good so, nodes

In new of to to go as need we're customers masks hard XD materials, XX layers, winning you in many as ramp more new high-volume scaling are they selectivity you designed beyond nodes And next NAND. a with and into etch NAND, layers, the high especially as manufacturing. applications

as co-optimization much materials NAND of we we're high hard by etch, new better integrated selectivity is the co-optimization with [ph] in ratio One where and with aspect multiple example etch wins films mask do about customers seeing momentum sensory have we new increases etch the XX% also patterning. We and enable [DAP] solutions. across

seeing in So, products, for we're and NAND DRAM. strong in Solutions NAND the Integrated new new pull across materials, Material customers all both

to So, drive as we're growth continue to scale strong future optimistic we're going nodes. to customers

a If you quick we one. said like I do could could second quick follow-up, sneak in a one,

fiscal On the and the talked the particularly about are of thinking excellent base [growth on X%] about we're growth trajectory from start of 'XX as side, to memory the your here service utilization you installed rates off move how front in [ph], you coming higher?

is This that. Dan. in jump Yes. and Thanks, C.J. I'll take

growth, So, of like this the low is you're that's It's following, over In difficult downturn, market about about cash very a in so current the of growth us. a year, generation. a great that's I'd current year. performance say When a downturn, driven driver grower, memory of services include at flow last a business grower. is the XX% been single-digit business utilizations the for grown source and rate handful per upgrades, years, business mid-teens. things down a mid-single-digit steady revenue compound you refurbs good is a

that's services growth of with sort was fallen agreement that's of the we transactional those year. As a year performance the to long-term about business service this think this the and has business of portion XX%, headwind And down It's business our XX%. been drives the in utilization really of up that results, the mid-teens. portion industry

As a to the of from going we we transactional levels industry the we XXXX, at We the our setup long-term transition And for we us a into to service headwind around recovers would or our forward. execute to growth agreements growth business and utilization historically. to really on think expect XXXX. when business like continue can in memory, drive we've in continue that performance seen at profile services

We team us XXXX. we sets in setup well the up like the it of environment. really and the So think execution this for

comes Malik question next from Citi. Atif with Our

is now line open. Your

and guidance. results the on job Good

and Dan, some in and fiscal are about And the construction Samsung you at up, of We your AX flattish if China the [TV as out. talk profile LCD of So in Gary, and takes point? OpEx you fabs] resuming can this ‘XX? the is puts between outlook hear kind pushing display [ph] display talk OLED for about my first, can of follow remainder the

Thanks, both of question. Atif. I'll your take actually parts

what that the and a expected. we about into it going is of out three, market market And think of down to embedded market TV that we set the exactly the probably go to really XXXX we we as as is to played next said for drove levels. were incremental we expectations and off going up. growth We market handset performance incremental the market. year-over-year about handset ago, the as in sit Where third in how creating recover as handset the We're play exactly ended six expected. We and So solid year played see incremental these recovery would forecast growth company. out where that's was think growth months out, display

the build we've What's the customers in from seen several inventory our in there's bit delayed is TV a interim some of is, side. TV the investments headlines on of happened side about news

we've Third-party headlines. the conversations And out research has confirm this come firm what in been our and also dynamic. confirmed customer reading about

And as the forward going date. all the softness the on to in that TV some XXXX, to out incremental of we we so side that's there's be think into look market reflects news

recover That's We to we expected, I similar seeing expect that levels to would the describe as what way originally gets it. revenue handset profile, to best and flattish the year. this we're us

We at I shutdown get we don't and take full then that there's to this impact quarter the all the came think know QX we're from OpEx an we benefit one merit, a over to into And season. going profiling holiday the perspective, of the time, XXX. of up

we year. then XXX goes typical sense QX of of neighborhood maybe level rest those, aspects transitioning gives we that where to to hover from That in that a of to for QX probably out the you and the on seasonal so, up incrementally dynamic. And reflect that

Hari comes Sachs. Toshiya question Goldman next with Our

line now Your is open.

into was remind XXXX? of your at share these of market? preliminary with What I Thank some expectations have And follow around year. you to expand about into up bit talked Applied kind related serve XXXX. into new the you you. a quite when how obviously, nicely of to products today that Gary, outperformance a what percentage then XXXX in hoping I and new expectations of And going to WFE you be picking next kind us roughly your you guys you seem up. potential could would relative and are your about XXXX that, products think

Dan. is This Toshiya. Hi,

market the drive the the the our new think time. depending to going code mid on. the I But year-to-year towards in low end be addressable current vary on some we mix happen over one, is, best think of low going part of XXs year. to range begin I first look that mid depending profile that maybe that it's from it focus or change end spend any our to That's depending products zip going we and it’s growth the again of going think of bringing the WFE higher to XXs to On help we percentage markets markets address it on, on to and a But the what way profile market, spending serve, maybe the there we share customers. we to the of customers still and to that that pushes in any up be to to that some in year year-to-year vary it from a can given it’s is mix at, about on and in given adjacencies

little add can I also Yes. guess bit -- of Toshiya, I color. a and

modification I to deposition, compete innovations removal, unit we processes analysis. around driving the we're today, think different and areas definitely relative and where

got Law as and improvement some watt for times for that, new we before, pipeline the with big in scaling momentum performance that enough XXXX have driving. to have needs and those in products new talked Moore’s some products Data per AI-Big not classic We XD we've about really performance a need meet you've watt. we're beyond But per major

Material only the we've not driving So, Solution. one been are driving thing we're that also Integrated unit processes,

very with with enable again multiple integrated do strong and steps, really best these some not processes we we how But our my steps products single shape have R&D power customer pull momentum. Again, and create structures, is where unit I’ve hard across emphasize modify some we a to I the in pipeline, want it's to and analyze we're with tremendously for driving in leaders system that, a really from co-optimizing new unit do the even not integrating or just with improvements structures. just some how beyond vacuum, performance -- we in enable spent customers. processes the base, lot under materials and see structures, are high big removal, pull future. strong processes both And already in adoption, for of We and time Applied position, early

different So, pull of both for tremendous, those tremendous areas.

Thank were it’s overcome? then with you you the as acquisition I us in still Thank look you obviously give you. future squeeze processing. the of What exposure I update gaining Kokusai like acquisition? you need this on And then or product table? hurdles on And can an complete you regulatory follow-up. your can the across portfolio that this feel the to if M&A to still point, some one some a Dan, batch is you. When and are do at guess, technology

the to Thanks part. first transition jump second on Yes. I'll the in Gary Toshiya. part, on

the to timing the transaction. We XX in geographies. what had the announced transaction. when the We're timeline making month received close timeline when we're Kokusai, change those the of progress and Israel. Ireland the change announced in in We regulatory no no And other the We to geographies. announced transaction. regulators we but stay continuing announced to For like four we the from we approval there's we

services and to our customers. accelerate Kokusai, Yes, with to batch still Toshiya great see we as it expand for opportunity innovation to markets a technology relative

hasn't to changed feedback what the versus really beginning, create to the value. opportunity from strategy of M&A, nothing we we're our all So the customers getting at in Relative to has relative changed. saw

we but potential. that to move synergy we and the We to and financial have growth still something we're believe continue opportunity, not M&A very needing continue a very to organic focus customer find that great that criteria, at leadership high. we will so on fits bar criteria. growth; And remains accelerate look if value for fits a return; good market also And that forward definitely we we that our our anything three investigate things: and

Company, Our open. line comes Krish Sankar now next is question Your and Cowen from with

of I either for one Gary. maybe them, Dan or have two

I it. think in not, about as about around out for If past of a XX%, If talking have kind NAND next your the trying maybe to I'm this you guys what if analytics expectation year, business? year maybe you business, two NAND all WFE, those want think spoken just year growth same put about being numbers should the it, the you to AMAT is up WFE not. expect data semi or

then a up as quick Dan. for And follow

I give your guidance. DRAM and between NAND? any think you quarter mentioned foundry, Can Thank Jan you this you. in breakdown logic

Krish, part I of the understand first didn't your question.

something You about analytics. said I about you talk NAND. But heard then

syllable. we you're Maybe in I a missed know Europe. So

is can XX%, if give simple. semiconductor or me else if logic, make XXXX, And am NAND also quarter, break it NAND how some by AMAT out just you up in foundry, numbers business driven Let WFE should on the there, NAND? Jan a outperform. and expect between be If down being just I DRAM everything if equal, to perform putting

a become balanced This of very in get we into types. of is, a would want has company a as penetration company, From next say is we've device what But very around balanced don't to come WFE standpoint, year. our Krish. guides since into company. I terms Thanks, Gary

of that that very I hard, uncertainty. create environment we I it time a has type. one of think portfolio in the company device to lot the type well device we're made inflect of as in seeing balanced think And from The to surged another. by worked benefits this a investments company

being thought I how fairly we're gives how you that another. device so And types specific, that to that And things. leave without one agnostic would with flash or you think I parameters to just quarter about on think in some these contextual

type, guidance highlight will on record I given. us that type. guidance we would guide by a device device based but a logic is, thing guide typically we by the quarter we've don't in next standpoint, foundry, quarter don't But From the be for

Credit Our next Pitzer with question from Suisse. comes John

open. now is line Your

Gary, talk you this device about just hope is out important talking kind you first question, probably update relative China your to to type. as XXXX, my calendar on China you relative But growth a I job just how year? year? trends great have far of And for if optimism can guys as give to when to done next

-- it's over Our the on anticipate And growth. think stronger at the over view domestic from We what before. to our similar the we for leading around conferences in to steady see up will of last think Longer-term we there's very, last projects, about of to today's market. in our investments. We either the been several The several international. we going very market what China to next is Again year be hockey but positive We're still again, we or is now view expect the again be years. don't different at many view of market. been we and in domestic all another we pretty of the growth year will the about years, I’ve is We're is as year position $X.X message had look range But what indicators past. positive last within do meetings billion. stronger. I've and my we China same is the the year, similar what our communicated domestic beginning than incrementally China, China expected, so incrementally be the sticks. talked steady And about

accretive global market share. and our continues to be overall to Our share healthy

that's for a kind So, of top-level China. view

what to a things of add John. couple to just And Gary said,

we our have As planning, you we upsides. think always always base cases, about have

this We've planning Gary about last We our will but year. roadmaps. We it a for in ready development And that's assumptions. if ecosystem upside it now be year. highlighted not technology follow an been baked respond currently talking right. there, into years investing there through is our We saw exactly see steady base to on several to case slow of

not geography. in will it next see investments sticks for We any year we're follow associated a and with hockey again that on through planning

as think have guess there looking up implied given calendar fourth back foundry, a I about 'XX, that of just year view my the the into for half just you I’d of do run come your your comments in the next quarter, because a things a going on levels you of sort comment logic Then follow to level community to I comment? and the sustainable run the now, rate rate Gary, back picks slack? strong sustainability hear of perhaps like you. down full weakens QX going sort And current in raise to concern TSMC so CapEx investment year rate of up run XXXX. it’s lot from foundry Was into about your go as the year kind from just will guess or is that. comment calendar Thank recent logic the

Yes. Thanks, John.

that in give jump Let me and perspective. on you my

QX backlog as company. levels. a We record foundry, we and logic foundry, foundry, solid had for logic the market. led. year what So ended QX this the in now, quarter We see I for in guide a at would in record consider with characterize logic right the the Implicit is demand

and nodes, second a We pull of sense the risk of logic one risk foundry NX, foundry the view foundry, the next XXXX. under XXXX at half NX+, us take tools. market strong multiple a There first the phenomenon. of customers customers production, customer of comfort. first follow-through ramp production is see year into volume not 'XX, gives multiple the volume at the which It's it's production in are well for of the and as one we a production look half in a So, production half quarter in from NX volume and NX and and

other technology logic leading could at You comments exposed edge foundry, make similar leading about edge. nodes other ramping to customers the

customers, multiple nodes. So multiple

continues. run. have In strength that positive edge, full continue while geometries specialty foundry, on addition very don't the strength seeing on and node to year, on trailing And to perfect we're visibility leading market see we over the nodes, the long logic the we for

We've XG semiconductor sharing proliferation and new the outs, in PC next We growing. of wave devices intelligent in auto We demand mobile see and edge is already industry centers, got compute is a demand the of what form new to cloud the of recovering, kick demand. compute are is there to complement beginning lots data layering tape of architecture in. in

and so talked But for We the in as as foundry, as We profile looks next about year. back, year. next the us we factor a on next step recovery. good about set performing company about strength a of is XXXX, take we into talked is we I see run. And long AGS the backlog strength We're Swing into really more entering about continuing talked well. year year. context the up the little We logic. the positive timing provide memory

if. when, matter a it's us, For not of

transparent be as really to so timing as And open as to that. and help it's the And available, and can information close stay customers. we'll close to tough stay determine market, magnitude we investors. And to our to try we'll of be the becomes new

from with question Harlan JPMorgan. next Our comes Sur

Your now is open. line

On long-term in January, would the quarter performance strong model better part I assume the subscription predictable. outlook October is that the AGS of into and very in the

So it foundry, driven? of memory or it customer back was the your some idle they incremental logic more that, rise, business, as back transactional maybe are come to bringing capacity? some And utilization starting is strength, to starts the is if

Harlan. thanks, Yes,

a part right. transactional We talked against of service business is You're performance long-term nature backdrop quarter, getting this along. transactional seeing beginning the of are that's is to strength back a and about tough customers to market. continuing foundry, last environment. us spares logic. bit in the number to with flash normalized the the The chug agreement just the more of customers We we're and business, dynamic limited a really temporary being of the Clearly, liked of

think go memory NAND I led we backdrop, by hard customers’ good for I in setup would it's seeing general, parse just XXXX. And that we're about early as we and setup to look business. signs forward when really feels around in some positive like that the against they feel minds some as what's setup, say, of with exactly it contextual we good a drive part momentum. DRAM. And the into transactional

driver up when back a And -- it’s and if. not to mover tool. close Dan revenue of certainly as he we agreement the big factories. memory. as agreements, not is certainly up happen really per to said goes XX% the utilization if higher I when and will said question utilization, Yes, Memory memory when incremental be to spares -- memory comes said, those first. the and maybe in that But we expect think Dan a we’re agreements as have with earlier, in where earlier, needle NAND big of service And

we NAND So, the here XXXX. some it’s definitely hope and in to happen in starts going time

think And both when declines dramatically. pretty between bit is we of NAND, decelerating the memory, and in declines per rate cost DRAM those

more is customers a So, your team a by the of to help is is focus, drivers else the one improve acquisition. the Kokusai big But for doing customers and systems productivity? what focus batch-based productivity Applied

Yes. for Thanks question. the

co-optimizing hard about with improve earlier talked materials etch I mask etch to So, selectivity.

aspect that's incredibly important. Now certainly high patterning, ratio the of for

We I have on while we're earlier, pattern able placement. we’re In mentioned the to reduce we're patterning. other also to cost reducing cases, multiple cases reducing the XX%, where -- better a we that are patterning, some enable working cost customers and with of

for So, driving. NAND, in are we're some those memory, the areas especially

the memory to with is periphery that products in the in customers that's speed see logic area Another especially from performance area areas. structures, our more tremendous traction to those devices, like we going certainly an leadership plays and higher

you about new creating, how do analyzing optimize it's longer-term, think new shaping, structures, modifying, structures. I

customer those lot capabilities. of that today a where have have tremendous we're A pull. amount doing very in We the co-optimization in we strong pipeline

in on ask people question you. from little we're more a queue. we you. to and we going no go right the on a people of there so one just that time. I And know, and short Thank running think lot the the call, now that hear can that to of We I'm is please, operator follow-ups

Street from next Ferragu New comes Our question Research. Pierre with

open. Your now line is

you business some logic sense nodes, have TSMC your that And change of node kind critical in one X on TSMC Intel, the of answers lot I in of at when between give and a the outlook a thing, so additional the is remain you’ve move lot EUV that mind get but session. given EUV us guys way layers. there more the heard the in type image patterning the Is to or you’re to things expect different. could well you you some two XX X X specific of moves from you on evolving? nanometer I Could interest us plus, I very to have give this but with you from dimensions EUV heavy EUV exposed when -- a and you so understand how nodes nanometer same see how multiple of nanometer new I you nodes, node,

that you for could describe So please? us

Yes. Pierre. Thanks,

it’s important are I customers structures, are when together they areas new architectures, thing to connect scaling We to first shrinking shrink. of different remember and is So, that five one those say -- new chips is ways that new where driving five about areas. the would materials, the talked new different

we're of very, constantly, of performance And enabling the technologies in power unique one the for difficult. tremendous pull tremendously another next getting R&D I'm playbook. with one have new Again, our that we it’s driving because week. with leaders following and very very, again, one So week, customers

I investing, enabling with thing new the playbook. where that say where customers. that’s would we're That's unique have first the in is we capabilities So have engagements we tremendous

call talked able steps to with think by cases where on if number reduce of patterning. the increase pattern placements. multiple I you where about XX% earlier about we're there and customers the we're So working And then shrinking, are on

you're important in, EUV So some layers other is that's growing. also And co-optimization. steps and to another still and multi-patterning area it's also remember come we're doing as that scaling to need shrink

steps to replace steps. So our not with Applied, the EUV steps that are other are coming in

in When are being on steps, steps, opportunities reducing where So and is this has those adopted replacement some on we're there's focused winning. Applied of costs. focus reducing EUV we multi-patterning

this foundry etch customers. wins see another -- growth, etcher. EUV you're significant is we customers, grow the very our going leading foundry, in adopted. XXXX as we our have at adoption. We're think wins anticipate being the have, many we're faster really in growth I business with continue highest in and seeing very across another logic, with Pierre high X, we are than And to these new strong the And based sensory definitely on technologies to example in X momentum market seeing much where sensory with XXXX that good we and is

history of foundry into logic. shipped fastest them just going Just another of many data we that's X,XXXth SymX, chamber, Applied, point with in our the the ramping product and and

how key So scaling all XD would down, these sweet that's spot do that's slowing power for technology is the they a thing kind top-level and the the really view. say, of of again, drive customers need to roadmap, the new performance. drive for for Applied they I ways and roadmap Materials. is

Ho Patrick Stifel. from comes question next Our with

Your line open. is now

I Aside X and etch the But much. that, guess X leadership it where I opportunities? are like Thank continuing seeing trends well you intensity foundry, capital and your already if and bit your we of growth go question for you logic from little you growth are trends of just else products trends Gary, foundry think you the leadership like with What from businesses, to say you process some the intensity area? capital as eventually in as capital increasing that are to other or you to intensity very it in etch, on aside tools, from your are control as helps seeing logic the SymX both provided that increase, have. seeing areas in deposition, a seeing the from color X, products? the

the Patrick. for thanks question, Yes,

leadership our have driving a outperformance talked XXXX, a more position, tool about at much and very about peers. in strong diverse that's foundry, a process And our business logic; foundry, record talked And larger as look XXXX. business incumbent we we logic we you performance. in than if So

in we foundry, year at ever, revenue Epi the logic highest if will we metals logic, have highest revenue this calendar look foundry, and ever. revenue ever, So highest

those areas part our that of So, leadership are are products.

customers materials new on deposition, That's for Applied. removal customers like with selective growth working tungsten performance structures we wins. are key gaining We gains our where shaping are for and with enabling

growth. where of areas are some the seeing are those we So

And product. CVD, also about we're see inspection, new growth introduced we XXXX of terms etch, besides strong talked you area In in just where an that's thermal. a

seeing grow XXXX. in momentum and us We give to that will business in very are that strong adoption quickly

of sweet spot forward. area around not cost So, some of momentum and to that but and driving anyway, these us that's more, processes, for also with tremendous is for and and get just it driving. areas bit integrated and But performance power a really the going we're a color more really solutions unit customers gives does Applied with little back

Timothy from comes question Arcuri with next Our UBS.

Your line is now open.

million Dan, a gross hardly incremental gross but margin you doing There's is little yet lot is $XXX a just segment guess revenue a the in the are margin SSG drop on guidance. like margin which I Thanks it's surprising lot. year-over-year. up through any same. more I year-over-year, a question had because is highest

the are January, because SSG basis corporate margins like in at something So, level XXX should margins points it seems that. be like lower a higher

just through So me walk you Thanks. can that?

share let with but by bit a let -- Tim. in won't segments. of gross Sure, me do margins, margin. me what little We we guide gross But you see

our revenue you function level, customer are All cycle. peers quarter-to-quarter product know, it’s going going a mix, mix, a given activity. favorably factory margin. to think from quarter, be with segment and mix, vary go the performance of gross into As few to gross in ever any our so this things, We margin compares

into And to down part peak also down gross closest profiling I over on the XXX. about calendar a quarter-over-quarter as competitors think basis back that was in down the the space. pretty was XXX the basis we process performance margin to this on XXX, cycle good. basis, tool our looks was of year were relative trough gross margin One Our next points another

Are and Are like Absolutely. improvements are our satisfied driving with on structure? the cost we maniacally ever margins? No. we improving we focused gross how So, executing.

to are going keep We at it.

breadth portfolio the sense broad a in We continue of think depth and to the are are and seeing hard margin our of out gross going in over to course play work cycle. resiliency you the I

you the thank asking Tim. for Hey, question,

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

now is line Your open.

my taking you question. Thank for

year. you're that to quarter implies starting about your of a conceptually margins? and through gross a memory year really of foundry, just sustains low Does the think your low incremental if thinking Just at terms I rate and run sales that is next point the in say January logic but year, is growth model, and the the level,

it. end. got repeat this want full Vivek, cut to I please could sorry, on question, I out sure the It you sorry. I'm just make

Sure. Yes, course, Dan. of

in that you So at does and said it I from the on, if and starting say memory logic point sales the spending of a terms of and in side, is incremental January, as model should sustain, you're that here the gross things could and your recovers. memory foundry the the to on think even low in January quarter year margins point actually outlook is low conceptually year get better display

was So to time, is the just it at very performing the the than today I quarter backlog ago companies entering clearly to do is well. a got going me one guess, think what at going we're we're environment best highest I We've quarter say what guide way And better a level, would good months the and or I for a because year. six describe it, to ago.

said before, the market. really swing I the the of out year. foundry going services, memory what swing happens factor it's in the the it to essence in logic pointed be issue, the You strengths factor for year in is

to starts a DRAM. close going the one hit, stay customers, respond we'll at to time. market when it by to going we're So ready take we're to to quarter be And NAND followed

quarter to from timing to the don't to shaping So things multiple memory going and when are see standpoint uncertainty given some a we want like we year the giving full flash. on of start start guidance I think

- Michael Sullivan A

operator, take question, more one Thanks please. And Vivek. we'll

Our last Needham with & Quinn of question comes Bolton Company. from the line

now line open. Your is

would to I 'XX, assume the quarter next just, that seeing at quarter-to-quarter, so follow-up you're almost guidance at quarterly that of every that it teens, Thanks. foundry guess that if of And quarter logical revenue peak that the there to I get that January well illogical on sustained up level not necessarily into year-on-year, to business guess John, through probably sustain just XXXX? fiscal want and seems so each strength quarter in question's you're in the us for assume I not not XX%, asking the you again to foundry going quarterly probably and it but the isn't

to not phenomenon. going foundry, Yes, be year backlog, nice right into probably logic. to and for QX that quarter, really meant place and a was to set think to quarter level. one a record nice it's my a would at to be QX going foundry, a no logic not really in record be question, every us got next is We've Quinn, expectation quarter quarter think it I be is will sustainability be the a

a have the nice, be And level can record. activity so it while be doesn't always to

would great, at And the hour. closing. we're our like to you, thank of almost say well think Dan I you Quinn. in anything Okay, end

Mike. Sure,

like year-end of Just for thoughts, the quick like business. way ended I backlog a we fiscal the said parts Applied at see especially we a with the of the and year, I XXXX couple the beginning, I'm first the momentum that pleased setup in and in given record key

going to look to we I forward December in be Suisse at staying Scottsdale. to the Second, Credit are close investors. Conference Gary and Xrd,

a I'll all and the happy Conference be let's New ahead UBS after with in and have week Mike, close In call. at we your Next York. the you hope that Thanksgiving families. meantime, safe go the

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

today's Ladies Thank you and calls. participating. concludes for gentlemen, this conference

You may disconnect. now