Applied Materials (AMAT) 12 Feb 202020 Q1 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 the 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 first joining of Good being recorded.

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

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

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

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

earnings peers that entered ahead for our especially will and Materials. good our a Based report see confidence Applied to years calendar our markets top-end the fiscal the market strengthening. revenues, the momentum, the industry, that for exceeded the pleased give us we I’m reflecting XXXX. environment we we Mike. guidance, Company XXXX in our be quarter both of on year execution the signals and for outstanding across with increased in is first that Thanks, outperformed direct and We very believe

give of highlight profitable needs key changing the components In and how our strategy perspective Then, I’ll address for our customers I’ll my the growth today’s markets call, Materials. provide drive on of you outlook. are evolving Applied near-term and our to sustainable our

we direct all the outbreak. started, continuity activated minute address of implications the the operate, a take our quickly response To a business comprehensive get I we teams. across I’ll regions where Before coronavirus to

is of and health the families. our Our employees safety priority top their and

minimize everything doing business. to their to disruption support We’re our need to the we provide they customers also can

work. humanitarian where we’ve in In addition, and Wuhan, equipment they the China, and communities Foundation for created Applied is Materials employees medical fund live response and sending into the our

the for business of be that overall is impact terms our the will XXXX In fiscal assessment current minimal.

do we changes of during However, revenues with the the timing expect in restrictions, and travel year. logistics

managing customers situation actively are the collaboration We suppliers. and with in our

the the peak-to-trough driving the at trends adjustments industry are second eye customer semiconductor companies lower semi-equipment occurred combined less the we plans, XXXX, creating average forward our of are and recent powerful that calendar quarter dropped place the XX% on cycles XXXX off industry this and structurally and between While to in market. XXXX, our necessary which five XX%. the during downcycle the not peak. volatile took revenues point the larger low were we’re making the of than near-term At top in same only quarterly that spending, of cycle’s contrast, combined, five the taking In for companies revenues a

as is at and look spending XXXX equipment we equipment metric intensity important percentage Another or this between XXXX, fluctuated of industry and equipment X%. a annual XX% semiconductor metric annual Between revenues. intensity

believe in value this we’re and of and However, most more ecosystem. the equipment XX% addressing the with We good XX.X% the forward of mean tight going technology when recent a period, to a challenges we’re reflects is look the five-year intensity been increasing has delivering band XX.X%. complex at a estimate to we ever

Dan this than will the Applied our and portfolio of reasons more growth the higher whole, addition device and even segments. for a topic this on we demonstrating as The In we include have is our to the across breadth in peers. provide the color cyclicality see volatility his in market different lower balance lower section. product

of nodes time, commitment demand to get these we’re There rollout as automotive, advance related continuing. demand XG. from the ready IoT, power on for and part the our the same sensor robust specialty support image of Moving see We seeing markets. growing spending At is they to the for the also communications, outlook. healthy to strong near-term to investment customers foundry/logic a leading-edge

appears the stages past down XX recovery and consistent in in NAND the memory X to the be last Progression that’s time X to market is rising to of X with shared with we’ve prices view early this inventory compared weeks quarters. several the levels weeks to to over year.

have and a that inventories pickup back in levels prices to leading investment to signs for appear normal bottomed. get later for see memory DRAM the also Encouraging We bode year. setup indicators well starting in that end-market to good recover. are include to and a by customers These supplier

is can deliver market there feel way beyond. outlook to display, this last our longer the double-digit year growth and We XXXX Overall, our very believe are like about that we In good changes strong the major shaping up no term for provided quarter. business we the opportunities. semiconductor and

attractive navigates expect industry the to display We an revenues similar spending FYXX bottom FYXX adjacent cycle. provides Applied for be that market the as that is We this still believe to of opportunities. we remains growth profitable, even make business good market products for right have the long-term ready the that when up. portfolio picks as ensure to investments of The necessary the solidly we

Major demand at looking IoT, and to data and artificial on layering year it’s growth in this broader its note context that for intelligence in drivers, industry period the PCs. traditional including expansion of and electronics smartphones important of are and back a new is big top diversification. overall Stepping

that ahead, design deliver AI like new architectures, and computing that improvements and and of approaches, semiconductor cost performance the look power, need the I a area and next strongly be unlock past. potential of domain-specific types believe workloads emerging devices. that I of era new to will the for that the big future we system require data. I believe will not The the shape As will playbook new manufacturing semiconductor

and Applied, shrinks, new geometric and new that around connect structures, we ways introduction system At the devices playbook, new to we’ve together architectures, and packaging. materials, strategy so advanced in enable of aligned investments this can our chips advances new new XD new novel XD through

a products company. portfolio Getting unique playbook. across and this valuable. major emphasis of faster capabilities to Applied has engineering more new the been new enable the has is never these to market technologies And materials a

example, For and from speed reduce takes technologies science metrology learning of it optimize labs to performance, new factories, yield, simulation advanced the the we’re time rates, device to improve and and to sensors, Applied’s transfer customers’ data of cost. output using

systems. more In ecosystem addition, with than the we innovation accelerating before, broader on have from engagement all materials way focused the ever to

was yielding Our opportunity. leading a Applied. customers results edge Calendar foundry/logic record node grows strategy is and new the our XXXX revenues, our our for transition further for and current

wafer market available number of our than increases an equivalent For starts, XX%. by more

revenue customers trailing upon geometries. where their build record generating also markets specialty technology We’re from

several is For than our roadmap including edge healthy these the leading innovation by nodes and innovation rather combined specialty with customers, deposition metal materials Epi businesses, means Strengthened delivering that driven geometric and record are leadership of investments revenue. scaling.

plenty in the and At still secured of momentum at critical where both etch customers. have wins grow. the same In building market continue the room quarter, memory we foundry/logic steps areas we we of to time, major application for

leading and and adoption in process optical Our continued control record delivered products. revenue, business system strong diagnostics our strength quarterly driven inspection new of eBeam wafer our by

great making packaging. progress also We’re in

on sophisticated addressing approaches, to packaging our been As the strategy increasingly industry focus process the steps. introduces most critical has

share. steadily gaining we’ve market As a been result,

while delivered record XX% Our over XXXX well market. revenues packaging of in available business winning our

in an XXXX is for Equipment base. maintenance more added XXXX, and attractive the recurring factor for service growth important to our business. revenue stream Applied our is installed we systems calendar Company Another than

performance, their are As fab device talked finding deliver ramps I’ve to manufacturing. before, optimize customers’ we that accelerate through and cost ways high-volume and value yield, about new in data-enabled services output

base systems agreements agreements. As we maintenance we do In installed nearly XX%. the covered of of this, these by by number number covered months past have systems by XX we’re the increasing grown long-term alone,

over the call hand to quickly I I will Dan, Before summarize.

our We strong for response remains outbreak, plans business adapting the to near-term growth we’re market. outperform semiconductor drive our our coronavirus this believe the While year in positive. significantly we XXXX very double-digit and in outlook can

We also like setup and beyond. the XXXX for

their also Our still only growth opportunities powerful innings. better. ever been Applied’s new drivers markets are better early than in with never have

while semiconductor our design and manufacturing customers uniquely are materials innovation helping enable new to accelerate positioned playbook the from systems. We to for

I’ll now, And Dan. the turn to over call

Thanks, Gary.

and QX the the of Revenue up earnings versus exceeded year-over-year midpoint were to Applied XX% XX%, up Materials margin EPS growth above period gross and and guidance year. returned range. in our last non-GAAP same our with the revenue of high-end

semiconductor driven up during the which systems, We XX% $X billion shareholders. close was revenue to million by nearly was cash operating performance year-over-year. to returned $XXX generated quarter Our flow in and

QX our and Our for half. second continued business strength outlook in calls

XXXX is especially strong. outperformed in market the relative our peers. calendar and we performance We equipment overall semi closest Our significantly outgrew

company in larger that in across has recent years. a And of market variety strong conditions. more investments Applied today, and portfolio well performs resilient made we are our

types, among and specialty portfolio, broad our and is attributes edge including memory, diversified unique and leading end packaging. balanced is Applied’s device markets logic, more in across of One which more semiconductor nodes

process to us revenue foundry/logic makes our in the sales. system to records is more for and quarterly as past cycle. our control peers, strength more relative portfolio metal the Today, closest in which apparent set foundry/logic traditional volatile XXX% as XX% were Our in to deposition of we relative new overall stable as and recent our well

memory this strong us enable in continue and year. given when later to us share have spending Our generate balanced will recovers this a investments to returns profile

includes Applied and our is refurbs. business, and of A which stability upgrades pillar key our our aftermarket Global XXX-millimeter Services

base installed and the revenue Our service growth, nodes, new data-enabled intensity a three higher agreements. drivers, our of is of service aftermarket product

$X recurring return generated of Our customers nearly for our on subscription-like QX, billion. service Applied. revenue a agreements and provide record investment AGS revenue In higher for

equipment in Our this further XXXX. overall of base record a pleased outstanding grown highly and QX a which every backdrop, talented an Electric, team. we’re business, management also a very towards has making since be to the Kokusai acquisition has aftermarket installed new and progress set business large year Against

the grew we regulatory we and as $XXX by quarter, position our the million Japan from And prepare cash for we During received transaction. Korea. over approvals

flow upon reminder, repaying using towards to plan to cash term close, transaction. the free prioritize finance we’re the loan a we help As our

buybacks limit expect the We repaid until we’ve to loan.

the clock continuity demonstrated our I’m our being team near-term the and across decisive and assessing by guidance. customers our of environment around of compassion provide and and has the by on the middle comment I’ll action people the capabilities employees, QX impressed needs our the Next, globe. working suppliers. January, been Since business

the about In usual. risk Our see we million, overall or up QX reflects by $XXX of factors would we can all forecast today. our minus $X.XX wider be QX, expect billion, are be year-over-year. revenue than to guidance which XX% our plus ranges revenue And

be non-GAAP expect up plus minus XX% to year-over-year. earnings We $X.XX be would $X.XX. nearly or The midpoint share, per

around systems Within the by outlook, revenue XX% we $X.XX expect around to billion, be semiconductor year-over-year. up

should about million. million be $XXX around should revenue services Our $XXX be display and revenue

million. $XXX margin gross year-over-year, around points would around XX.X%, non-GAAP and X which expect non-GAAP nearly We of should OpEx up be be

give how the would I about on some products $XXX guidance strong underlying Absent to higher million been near-term billion. at the and compares exceeded Finally, would revenue have you midpoint AGS additional for risk-adjusted will revenue the services. color demand up risks, QX XX% have or about year-over-year, $X our our guidance and our

believe address the majority demand can we the in and unmet While QX we our and for QX strong year. remains vast the QX situation growth fluid, of deliver

products, are summary, In strong our services. solutions and we very seeing demand for

balanced We a and diverse performance market conditions. strong variety portfolio that relative have a in is and delivering of stability broad,

of As is Gary along outlined, growing growth, industry wave customers. new is a industry our equipment and semiconductor the with the enjoying

to growth the part, that stable deliver Materials will in shareholder solutions and accelerate position investing we’re Applied’s new Applied performance, superior new returns. products and playbook and For

Now, Q&A. Mike, begin the let’s

Thanks, Dan.

the help one can, question let’s and Now, many us Operator, today. of a follow-up. I please reach you are not please brief on begin. of call there more as we ask people lot as know one just than To

of [Operator from from our the question comes Instructions] And first Evercore. line C.J. Muse

now open. line Your is

to you they with leadership to tool -- layer where in? new apologies and as as guess, growth, leverage, Good background. accelerating first love mix-wise I service around around your business the you would look in speak can an gross Yes. forward, you afternoon. the particularly the And thoughts versus side products the on noise are combined that. hear for question, margin of I some

Thanks, C.J.

important the at look the As I we gross time. over think, of look it’s business to at margins, evolution

today. We’re different business

than We’re we’ve a business amount the diversified growth in in significant of foundry/logic, past. we’re driving but been also more

recent portfolio, other us a If to from foundry go and you were performed types us in perspective, Company seen you share in from today, of the the has we’re highly a were significantly but think revenue and business mid-teens. that’s the have really a peers in served very-balanced would back the years, And device standpoint, than volatility a less standpoint, spike in three well I a both gross margin most pretty downturn. handful well the the also XXXX, industry, from

industry. is market trending but higher going be line go quarter upward for Every forward, an to is strong market, on highs a the in driver be up for as a operating growth and cash is won’t in trend is will edge great we higher the and strong foundry/logic and right. strength of lows. Embedded to margins. continue technologies into foundry/logic driver strong volatility foundry/logic a of This a As record, specialty see we less The within devices flow, proliferate. that business nodes

You’re also like broad etch set time. seeing the businesses us of drive in over markets

do Company that making that are gains into share market and NAND market and really And going foundry/logic, significant going performing well, followed share. we’re the DRAM to then to growing the We by forward. continue is really,

change of business. so, profile you the evolution see and And an

It’s our for see the stable and operating cash of great revenues, business also a larger. business. structurally source You margin going flows services

a we’re business so, and bigger, business, it’s change broader, of going resilient time. over profile And the more to the

business you As half year, back a the and half for progression and business three the fairly well a over gross the XXXX. of year, at year, into all the half on then positioned growing linear, the back half see grow growing looks you and into display look business business into rest services semi look our of to a of systems margin this those of

shareholders? half mix looking the where good year. to we’re they margin that levels optimize gross exist our this gross that as into a for rest to for see we think I be where drivers of performance we is value. drive as And as of against sense as for value you going XXXX And around and of the delivering we some continue that we back continually year QX, we’re with possible of result. today? business hard going our of the ever and this so, Are drive much at Absolutely. this to satisfied those the But, to expect Company Are No. that margins guiding gives the of profile the go of rest deliver as to of

from sustain the speak memory that the on Thank follow-up. guideposts the you over to to of guess, visibility the helpful. second a you. Very as and guess quick to and have of I that the year? kind into one Can confidence I you the year memory, you improved through half foundry next gives to growth

Yes. Thanks C.J.

I the think, shape way the best I’d describe the and profile of business in XXXX.

we’re continue recovery to And in the early strength We’re memory going see to foundry/logic throughout of year. today. signs seeing

calendar a in to it’s better systems we’ve a been the really memory there’s we be saying function the think later to a strength happens what the business memory in I depend accelerate. the strong balanced good we’re of an guide in our that that the the of opportunity see part we the shape to our really But and is We our standpoint. half-over-half the be back which strength memory think, to the going couple half-over-half year. for as into now, the systems posted we magnitude going of and quarters QX of see given And very and systems going balanced our to ultimate see, is relatively part ultimately of later from semi QX depend the a continuing And magnitude begins what the Again, of business. what do to in recovery is, on now, fiscal fiscal back I on feel in fairly XXXX recovery really QX, into year. in recovery strong, going year. right QX we fiscal year fiscal is

add Gary. have remarks. bit from memory And obviously, Certainly, timing, is balanced. inventory the demand, our coming Yes. the supply is C.J., And a pretty the what we signals this then, DRAM NAND, see little customers. for also color. prepared the more I’ll on recovery year talked the about we we foundry/logic, and and levels demand to relative

in really way the is to segments. of So, out, comments our going that’s the those also balance driving to is what the all shape and relative year different

Thank you.

Our comes Malik line Citi. the next question of Atif from from

is now open. Your line

a good not exciting you Hi. guidance. display some like of this and my on outlook, inkjet long-term I for Flattish or taking does if the the you Gary, can job view super the have display Thanks at in questions, question share pipeline, and results differently? business. look on products disruptive R&D And this on market? year. the evaporation tools make the the

Company. we display, see market So the still very adjacent a as attractive for

that seen significantly. If we’ve up you growth few look it’s over years, the last at the

The billion, certainly, billion. this very, but $X think, our year, attractive around still little because the market. a $X.X very a of I impacted coronavirus. bit was over is guidance near-term business we’re also up down a And

impacted. customers areas are Some our that of in are

And different will differentiate, terms see next as connected growing devices, and we reduced of that second we the that the But in of year visual happening, to the think years, experiences over also, all several or half being Dan guidance going so, mobile see the And that market’s be about the if they that positive. devices way to trillion our you very grow. continue of QX. said, will we be

being new in over capital So, amount what see technologies the a up rising XXXX, XXXX. certainly we we see as fair are intensity The business adopted. is

we and for we semi, And enabling see in business. certainly very-focused roadmaps a customers. structures, enabling do our new opportunity we’re new So, on core materials just good in like customer our

investments terms those display. we in So, that have making of we’re also

about overall the new new on Not of to on very we’re opportunities. anything today, those call here pipeline those also business the progress the good going optimistic making announce We’re still opportunities. but and

I how to ratio. to should for the for of rest about the then, year? Dan. you know spending peg quick we Dan, a don’t one And And like think on OpEx, a Great. the OpEx

Yes.

I $XXX think about quarter the in right current the feels a like level. environment, million

our continue You’ll to obviously into discipline us see spend. drive

time you’ve of R&D last that over the leverage is as of as a years, has think, all over right delivered Company. sales. a percent time an for operating significant seen of now, the I OpEx reductions handful high some - of pretty OpEx at And percent

the So, those and discretionary to opportunities very-disciplined we’ll in but monitor investing to right. Company But, and at money feels is time, capture significant quarter guide the us. of a the we a see level of amount being this about standpoint, from I front opportunities right think continue spend one

I guess, one I thing Yes. add would to that.

not investments we’re make the think, investments shareholder we I making. emotional can drive We over we’re we where value. think

So, the a we way point of that do that’s basically look view. this. at We have

and you We to point I this of on on believe based business. is think, you data, be leader, social media business fundamentally to have courage bigger need as drive and of and of going in mobile your view terms IoT AI, a a PCs. how top layering big that

So, larger about absolutely classic we see and to be big data slowing. essential new for and Law prepared going that Moore’s is playbook that in AI that the as business is is talked the I remarks

together for aspects opportunities great best investments. opportunities. and I us, the tremendous XXXX going how many really going make if make we shapes is not those aspects you see playbook definitely earlier, we Applied as But, position, about also up to So, emotional of the that And in we and are investments. look we’re at said see those growth five new come we forward. well different

anything. to So, we’re not married

you. Thank

of the from line Credit comes Suisse. Pitzer question next John Our from

line now Your is open.

results. can this about given market guys. perhaps China ‘XX? growth? Yes. you But prepared of cap you’ve think But, equipment in overall memory, to what afternoon, Congratulations spending Good profile edge help qualitative importantly, you about I the the in is how is us got semi in year. on that important of your we that? spend you a calendar China. comments stuff wondering a Can guidance to more your WFE lot kind of a do grows of in year you I’m how if give of for Chinese situated were lot mind sort logic think talking foundry/logic? Gary, on between sense imagine us solid

I’ll take Yes. Thanks, in and is jump John. This Dan. that.

pieces. So, into break it let’s up

Let’s bit in first that China come we overall growth talk a about and growth little market back embedded and in rate talk WFE ‘XX the about rate. see XXXX in and then I’ll that over and what

for for XXXX question growth be going around of a So, feel rate function starting we use is what really industry. the The think, you We as about point XXXX. to that. year a good a strong is ultimate reference

So, that Hopefully, up this hopeful to can be the of think to I existed light I in break some the and clear shed up, some confusion market. I’m going piece-by-piece.

is, we about talk XXXX, and So, growth that. what’s we of as a establish point important reference for off then

not So we XXXX for mid-XXs. It’s number WFE. know the

I us broad insight is all very market into think one insights gives got And device that different advantage got terms the and we’ve in unique we types. of some sizing. have a portfolio we

what we’re we hopefully let So, you seeing, can me share and with help out.

XXXX validated to was by according a number. Gartner. $XX third-party. a good It’s That’s billion. It’s

the having was to conversations see $XX that as XXXX Off high And So, we’re We XX%. given for XX% we’re range, baseline customers. on everything down at likely number, see with XXXX based the XX% market a up see that’s end XXXX of growth. billion. and to that we XXXX the we of using XX%

clear is know early to too while a it’s XXXX very with XXXX precision. as So, baseline.

for likely XX%. now baseline, hopefully clear, baseline of is XXXX So, that we’re off up the

to expect And type. outgrow not significantly one the market our semi-systems device business. it’s with We

Coming to China, embedded in that outlook.

thirds as it $X.X the XXX-millimeter Of nodes thirds two billion. where we As memory. ended? We about say market growth that look you of $X profile. and $X within to XXX-millimeter business, it’s market take within at node and balance roughly the business. split billion, off foundry/logic billion. there’s about Embedded of trailing that’s that, we about a XXX-millimeter $X is evenly two see I think of it between if that of to that would And trailing is memory foundry/logic, third billion that a see billion $X And XXXX

XXX sense if gives we’re what market. $X we’re factory, foundry/logic or for new what to $XX and $X of a step billion distill billion a $X of China memory billion, $X And of down millimeter, millimeter a were new consistent, the investments take is seeing. it billion you I market, factory billion, within build see so, john, ecosystem roadmaps light And seeing part to back what WFE steady, And We I that with capacity that building, think thinking look capacity XXX we look if $XX it domestic and of is billion modest part that well its with spend we’re $X to in take what of a growth, seeing the incremental diversification shed $X China. helps of embedded the to we in and overall to as across billion billion both that technology in China, as modest device Hopefully at spend additions. that even some costs And types. we’re China, on additions. even, at

That’s my correctly. great color. make And to then, follow-up, I heard you quickly as sure want I

kind XXXX, $X flattish, of or that year just roughly math would million full Cushion you comments with expect said to on because are confident the that? is guidance thinking about you it coming panel slightly mainly flat kind in run as prepared Is of out a not right a half curious the of the $XXX about you headed the which fiscal mostly for by April the coronavirus if second to had why that? to close I flat imply year-over-year billion think in you panel rate be over. I’m of

Yes.

the me let math. with start So,

to confidence had in point correctly. terms that of increases in that the today, about the view for XXXX the in We’ve similar the is a math we see we thinking in in couple business what be revenue we outlook. display going to are saw of You XXXX. have market Everything quarters

change So, guidance. full the to year no

As risk the temporary we think to our year full think assessed is we’re look -- we all, think outlook we’ve we taking as first there that. and part is of of no change outlook, at the the of a fiscal a as result risk year coronavirus, we

unpack by we’ve would across our it about being $XXX but talked quarter, virus. we our we’re as of have we reporting derisked been in billion-dollar and segments. think about our so, derisking the in recovery million million QX, guide services, We we those And QX, see revenues on based first prudent $XXX

of systems followed the first, terms In our our service most business, by business. million, is $XXX by business, our impacted order followed rank of semi display

you how display of I think without of three systems if more some So, specific much point any be will those, being our of pieces The a will you we’ve business, sense $XXX incrementally that. that, equal more million. derisked will incrementally those together on be and put get services the semi than one than

being or being around a -- display market I’m going the recovery thesis or Our TVs in sorry, a market. period -- through digestion

nice of of profile year see into market. handset and the That We see recovery in spend XXXX. return the growth back You’ll looking Display the holds. in of the good both to still and markets part profile framing of into XXXX, we think we

you. Thank

the Company. from next Sankar from Our Krish & question comes Cowen line

open. is Your line now

really peak curious I some a April around for is sales If shift now looks Yes. is to sustain when SSG, so for rest off. your Thank for versus you China. think stuff. based I in understand prior that with right, year sales $X And minus fiscal Hi. billion billion, growth $X.X the capital It question AMAT’s the or $X same, XXX-millimeter probably your I this surprised is in versus industry said intensity on at then that guidance maybe kind Dan, high, up look I’m year. of rest at how Thanks was from the up your But number $X gains? is thanks Two-part did you point, like $X And the year? for taking the this all $XXX remember of the I number, looks I’m your million and China given billion the specific plus kind question. semis of one it’s again, question. terrific roughly be my color right, share a the then, for ‘XX. your trailed billion on second fact of which can last WFE. it cyclical on billion overall, remember much it you number of and systems, semi the time of the quick third jumping like housekeeping of XXXX, numbers. guys China vantage there I the about XXX-millimeter much is it going you. was last fiscal color peak is if on why about for going Number

Krish. Thanks, Yes.

geometries trailing of devices Things. the buildout we taking we’ve strong about of the one about see billions about helping nodes, term, trailing sensor in first, been of supporting second a and node specialty edge place Internet are we’ve out and So, node intelligence play near edge ecosystem in way. a talking on question can, in that the been geometries, that talking China been talking technologies their is build to the And disciplined the role we’ve

framing been And the that so, capacity about development, ecosystem ecosystem development, support technology we’ve to with and that talking it fits a investments disciplined in from standpoint.

And it’s consistent standpoint. from framing so, very a

Yes.

question. I part of can something -- the this think, a on I maybe on add

is IoT, If has you power innovation. market, And auto, at high it rate. look very by very, a driven communication, this sensors, materials innovation devices, growth

will the everything you data machines more data times generated when five next see And CES, machines year than forecasts first more the than generate that people. to years, XX was XXXX the people. In smarter. So, you go getting are

is market. big this a market So,

roughly your I numbers to are correct. question your think, in specifically China,

of lot And correct build bit in there’s numbers a can of devices. but growth a little those types in different, China areas. these Our they roughly that are

And companies healthcare, by you retail, the are trillion that the a very growing if these connected transportation, see at the quickly of are education, companies transformation so, edge explosion centric fast. areas that X devices and from standpoint look of cap many And data are of the growing industries, market all XXXX, really you companies. at data

So great what seeing that’s particular over Company the large the team strong time. very market. CEOs in customer a year this again, last And very, Applied leaders is example I is R&D of One market the sizes. leaders where wafer many long think of And personally the put thirds really sticky for XXX-millimeter of position. we’re of market really, won this smaller opportunities I one very really a we in period this big has of meeting two we and together momentum. ecosystem. very have a is explosion a We available is that a am data. in and strong across

correct So, growth IoT, the it’s is auto in like a really really communication, is Applied that. these market. from I a great Maybe innings early we inside growing has markets, perspective. that. sensors and And that position market that particular surprising of But you’re think think power this the

about talked of back to how coming growth much versus Chris, where you intensity. of first is And gain capital question and the it part share your

Company. Gary’s and go to steady XX% important time. device to in mid-teens a a I think, took over were balanced step front all types. around Company’s strong the handful the foundry, the over around take that a made on handful it’s the of other in has If we three of Company Today, back back over The across evolved since years, set device were progress context and years how we all we’re types. last over of

referenced -- Your over a in we overall I’m we’re probably an time share in WFE a We a little over Today, specific XX% little little -- were period standpoint were that question high-teens, over XX% XXXX, XXXX. from XXXX. year. sorry, to

significantly the feel market made the the XXXX. really good So, in progress about we peers we and outperforming and

see the you in accretion out environment. some playing share current So, definitely

DRAM. of customers capital in thing in the of That know I you intact. thesis would time it NAND, intensity, money thesis our you foundry/logic, The increasing around our a increasing is see it are intensity We second it lot investing you WFE. firmly capital over in see say, see

has XX% a of And a is profitability foundry/logic and since WFE percent dozen their EBITDA down in XXXX. profitability WFE as memory years. come as so, down over half -- of last percent their the of

And of so, a they’re but a they’re lot making spending lot money.

the of as so, it’s ever health customers our good is And been.

intensity WFE capital around what at bottomed a overall from then, of XXXX standpoint, percent see we a is And industry X%. as revenue semiconductor

his point ‘XX, data it ‘XX of table. band, the a referenced we’ve five last one we’re XX.X% course XXXX, for the around taking been tight in centered downturn the years. X%. prepared X% was Gary And the in around comments, Of off

larger are Applied demand our firmly overall the semiconductor Materials this driving and data structurally as intact. indication, intensity. kicks macro drivers industry by implication, increased structurally in. clear go going industry capital a industry going experiencing to the are it’s economy The So, are larger. Semiconductors And is

looked do are think and in never the they see. we us as So, we have we today, opportunities about what of front as good really excited

Thank you.

Our next question comes Morgan. from the line of Harlan Sur from JP

now Your open. line is

Moore’s Moore’s strategy, quarterly is whether at like but stacking. manufacturing on the job the combat still improvement to performance of One of package, that’s Law drive die way the front, use through Great afternoon. advanced the Law chip chiplet level these Good multi-chip the execution. traditional on slowing

how the How have a strong your guys position segment your to these size this roughly relative in You markets. to overall year? And segment advanced of business? do this semi is big expected pretty packaging is

for Thanks Harlan. the question, Yes.

is those shrinking a for is if couple years, playbook right. And packaging one and speed you’re increase just from this this get playbook, new power in is, a product We increase last new really, Moore’s was of beyond you released in So, talked classic package. in package really, you one five and very example is really the lower times about XD and The that going new drivers take the Law. speed, the of and X over it XX% Xx the important. GPU

of definitely, really So, new the as playbook. part important

we revenues momentum From had an in strong we Applied XXXX. perspective, in really XXXX have record packaging into and

products. broad heterogeneous new plating, support XX% won roadmaps the the customers, the and we have portfolio packaging we solutions we talked CMP, our integration have to differentiated highly and In have PVD, CVD, with and of this as approaches. over for, you most XXXX, comprehensive etch we competed about, We where portfolio for of applications

very broadest products We customers. are packaging whole things. deep has have are lot of enabling yet with announced by there’s really driven that new focus two innovating engagement portfolio a that deep been leading engagements haven’t architectures. really we Those One, the perspective. and on Applied very of And have new across current with engagements the with ecosystem. from a packaging

the have end partners. entire codevelop can advanced where customers and packaging we new end lab also and most with We to technology leading run packaging process

the And very I -- in I area relative the of of elements dollar but So to opportunities growth think, ‘XX. than playbook, terms potential new it’s underappreciated people haven’t think opportunities and momentum business say amount, the are we record one would relative and this strong it’s again, bigger what here. would of as overall it sizable. in to quantified And growth our with

memory guys NAND return the servers, way with leading pricing steadily in this with now Thanks about talked for But you’ve then, got especially and visibility pretty half DRAM starting looking in recovery, sustainable, you this gaming console And growth strong to and some the there. rising, you insights to second also platforms for half graphics new a are the and spending second customers spending your DRAM by of year. have mobile the of some guys be driving that launched Are DRAM. on demand get in year? to the

Yes. Thanks, I’ll take that. Harlan.

what the about XXXX. think, I WFE into in see we growth the talked see, we magnitude year-over-year we of

Our view on that is as broad-based. it’s

logic. from a profile see I good you’ll foundry think that

types. memory. be see profile DRAM profile those from a types different memory to think, we you yes, start you across good I will going growth balance think year. within across seeing this The XXXX device into is device And see will I and

you. Thank Great.

very Operator, we to have please question have number still one a people move queue. per person. I’d like Thanks, to us Harlan. the in much. of Thank you

you. Thank

Research. Pierre comes line Ferragu the from question next of from Newstreet Our

is open. now line Your

EUV question. was Difficulty] much from coming today, already you are like being nodes? how where quarter, and of On $X.X a see curious how from surprised EUV deep capacity of Hi. of record to that I added Thanks, lot much guys a I comes the for foundry/logic, -- had taking is was billion. [Technical my nodes revenues the new

couldn’t Mike. I is hear. Unfortunately, This Pierre. Hi,

the you’re on maybe phone. think I cell

tell getting to about you we of question. unfortunately the But, number a your mix the of were and the rest of couldn’t hear X.X. foundry can like So, talking details we

So, Could one try to respond. you we’re not sure more how please? time,

it Is better Yes. now?

a is little That better.

again. try Let’s

Okay.

for that. Sorry

the So, from X-nanometer how EUV the and the at how being deep is moment and I added today? wondering IGM nodes EUV of much foundry was much nodes ramping revenues XX-millimeter [indiscernible] where capacity and coming is from

Yes.

Pierre. thanks So,

add see at if a that take and stab wants to anything. Gary me Let

So, billion. foundry/logic how what would I breaks internal forecast context out is, the some around we say of I provide nodes. color But, in share let me think, across won’t $X.X

to logic think, at of And X node-over-node significantly they adoption the equivalence what talk going would see technologies. edge strong build we’re the more X-nanometers environment term gets about think would in while deployed that a the standpoint seeing as foundry/logic, that. near-term in balanced as these be out that I more from nanometers to I capacity adoption we you weighted the we say a leading market strong node, in near it’s and

the the And so, we performing like business really way is node-over-node.

X we relative into we really the think node-over-node. In positioning fact enhance significantly as we look out and like nanometers, position can our we

So, in within diversification see the the the and we given the on is really around performing less And balance what foundry/logic strong the like the ramp way of near-term you still trend in is is near-term, environment, market X in intact. the X leading the nanometers business long-term edge. but

relative to drive new about that I all area PPAC only these cost new are all of driving the materials, And structures performance, that’s would customers to improvements. the Pierre, leading is add really performance. thing and Yes. foundry/logic power power,

-- Dan nodes still, record really Applied, -- see adoption. And leading from achieving said, where so, EUV we’re perspective is for node But X-nanometer a perspective, those leading it like that really revenue. as it’s you

driving so have We materials, architectures, new those all new these we’re of opportunities many areas. structures, when new different

revenue So, we see record there.

we we also lower participate didn’t In growth in with we’ve line not critical we We’re had seeing but our areas steps where have many multi-patterning in patterning in leading products, EUV interconnect share soft and only of won, have etch patterning the new wins we that really etch, some past. where also growth, steps and transistor new have

our the nodes are EUV business as about new area as are at we that seeing is five we’re extremely foundry/logic, as in also etch drivers one even optimistic look adopted being So, we of and the adopted of performance cost. power growth

e-beam. other The in continued I about is in have talked control, thing process we strength

this that We last adoption revenues had record we inspection and market in also of tool, new quarter. have strong a

again, along vectors, products. new power it’s about are five really that those performance So playbook driving and leading

been areas, we and better than We’re us for our opportunities grow, And the being adopted. been today. never have better seeing never new room to has some steps position in to have

Thank you.

the of Morgan next comes Our Stanley. question line from Moore Joe from

Your line open. is now

that and Just you up $XXX supply you you or tell I getting getting issues customers kind kind revenue kind deferral? getting just next sort Can you can Great, them, address it quarter. have that driving of is running, issues is pushes of what’s that tools? the if constraints of us it could to happening? logistics of million assemblies with that’s for the Is your thank you. to tools about sub why build wonder deferred of talk

Yes. Thanks, Joe.

part to country. way of describe it led from the to is, best contain travel things We taking and as the temporary, of China’s to the think, revenue being restrictions our virus spread QX impacts those I the it fiscal the the moving logistics year. around reprofiles back has actions see of to and

that stages signs return Lunar early back Year we’re the some to encouraging normalcy. workforce after the China by of of some coming restrictions seeing And New so, government, early after are in the the the imposed and

early a it, early environment. but It’s indications of we the fluid to draw we that like too conclusion some see. So, from

And some it. the in that XXX, to to factories into our And out semi same. it’s you business, break getting is We’re puts being near service and an able display our to services. It’s restrictions going again, systems, in semi impacted about monitor situation region the update That our it, closely the the Wuhan rank systems, then, continue we certainly the and the getting as order are necessary. equipment. people of as into on We in display term. more know important systems that geography factories

prudent see. And so, approach a that the to know, think it’s environment we we we everything given

the continue monitor think and our to better full we it. there, year, We an is outlook we QX, fiscal intact. demand recover to remains do QX. And to customer opportunity going that do in think year We’re There’s QX. in

you. Thank

you. Thank

Our Bank Securities. from question of Arya line America comes the Vivek from of next

now open. is line Your

to surprised of services are side. the Thanks last on for importantly, slowdown the to of and need see lot that What say, strong wanted that? the I can few or A for for growth you. growth drove color growth in how kind a next much targeting And does to you all more that and how congratulations XX% gave. in asked you’re grow Were taking about environment? AGS let’s product XX%, AGS you much question questions ask in for my year, grow the product the services. on then, quarters? Thank

Vivek. Thanks, Yes.

business the we Those long-term absolutely of of execution drivers it’s framework intact. the installed significantly talked billion base, the are of underlying us against as the and complexity growth quarter. have So, record quarter service that’s size over in at about agreement look been of comments. last prepared the have. QX was opportunity This $X that our services, a growth we seasonal. for above years. in the QX grown is first leading-node a double-digits business technologies, strong It’s and the would handful it’s we

so, And a team job is executing. great the doing

reflected building in XXXX, XXXX. with XXXX for we back and at business of and strong. the particularly, into to take look the We XXXX has seeing a the our that in the also of correction utilizations throughout industry the business profile come the transactional slowdown we’re component of is function down, near-term know as the half look grow the demand and the utilizations. we about the to is service in Those opportunity the tailwind a of in agreement half grew into year long-term like continues still that happening hold year that to begins team executing throughout The what’s industry-wide nice back into as setup recovery to foundry mind-teens momentum through XXXX. to the the as business provide as and nicely What are logic memory against memory business be that we going services

demand drivers we like executing underlying the forward. So, profile intact, well, going and team is

Yes.

is -- I agreements. tools XX% those that and talked the tool. point. We type increase in under service also us Just higher data entitlement prepared remarks. one a subscription gives for revenue very sticky the in And about added more

last based on customers. that’s our years, change in So, we’re a And value been growth. the really a providing it’s been big tremendous that focus. significant It’s few the

you. Okay. Thank

And have please? we quick more just Thanks, Vivek. can operator, two questions,

you. Thank

of comes question Arcuri next from the Timothy Our from line UBS.

now is line open. Your

Thanks a I guess, lot. numbers you I through guys. with go wanted to some

think of XX.X% last So, a you you, said I year. WFE

the assume is sort flat, that billion put So, versus range. to billion SSG would if flat the in second that of first half I $XX the $XX.X

you So, of think either argue numbers with that’ don’t guided. I what since those you would

saying assume imply lose billion WFE and you’re that I any $XX then it’s like don’t be So, would gain year, if that I probably share number, more of we’ll, going you use a XX. to this sort that like or

said, average and WFE, just figure which intensity and take to if required it at is two I about I revenue that Gary and peaks WFE what that much about totally if agree XX%. out to I usually So, listen much XX to with how I support those try

over of like if need million year-over-year. So, take would year, $XXX you be XX%, that semiconductor XX% that imply worth would you revenue up this which

So, to WFE I build is revenue revenue. support some you how line incremental can But these into of of this? WFE, enough don’t have YMTC get that’s guess, definitely growing WFE that much a of the have to revenue grow long It’s take levels. the they and kind see hard path going this. time Thanks. to a question. to to It’s off for just I

the Tim. Thanks, Yes. question. appreciate I

couple of things. a So,

of the then, assumptions. systems environment We would in outgrow is going insight guess modeling very the from what at backdrop we And be of good how get we have think we’re business the year. a the to confident our a standpoint, market. do in here’s our to Sunday some And We can see. ability XXXX significantly I I against think really

the expect market. outperform to We

together model. One of changes you’re differences you is what make assume can market the share. the market putting share the that in And in big small for model key in variables

we see And quarters, depends saying shape we as it memory we’re opportunity in QX. do to recovery have got of then outperform that momentum been more currently memory strength we and the fiscal from an in on year. year. foundry see in the think I recovery. into for, planning our continued We’ve the for we’ve and and QX logic if ultimately, magnitude So, business signs that in couple our throughout than a the later of And

isolated so And performance. as net-net, an see of pocket we don’t being, this

performing half We’re we half. about we’re and really our year. And over how good relatively this balanced feel positions

Thank you.

comes Ho Patrick Our the from from of next question Stifel. line

Your line is now open.

new much for just in both spending you as How talked revenue additional which the some the can position about, drive introduced, follow-up I in. is you wins terms maybe process very wins continue as and for control next competitive Company couple be being for a the Applied, products you believe well a outperformance? and record influential squeezing you the you, as at competitive year. mix, of on guess Thank customer me the of share do years of to Gary, this design on look

Patrick. Thanks, Yes.

mobile, top PC. relative demand more I would So, media and that to optimistic I’ve new been market. drivers the layered have never say, you Again, are on of social

And past. less see the seen last is you can market the in the also to bigger over So, market is the structurally be few than indications going volatile. and we’ve larger years

image and good across different are devices. auto cost. have other we area strong share improvements markets, spread very, like have communication, we We specialty In the or any in very nodes, performance, have the all driving of foundry/logic, leading whether of as very power, customers power, in and IoT, it’s momentum positions, segments, sensors

We’ve over share. the points several there. Dan relative grown a DRAM amount and earlier. strength few in in have NAND last talked we significant this grown to So, We’ve years. market about

say new path around had year this is ways playbook industry and last new new And forward really also to strong we have new materials, would the strength we again, we and So, very balance. is, strength. record structures, where have new what I new architectures, for packages, the

cloud. important power, the or different these pipeline thing and and the really that that’s and say solutions, are significant things have technologies of other for in would have opportunities. some in significant products drive combination with But, integrated multi-billion pipeline types the really improvements we the materials crucial dollar are So, very product the the that we of targeted at throughput the edge currents I driving is

them We capabilities combine some these to have technologies, vacuum. of unique under

So, interfaces you’re electrically. damaging not

So, area. that’s another

solutions. We integrated single with material across have every engagements customer

that besides good have products momentum very have in pipeline. the We products current we have we there and the the

the leaders perspective, customers my personal huge relative think that to improvements power ever spend been optimistic. never and my They’re So, a again more Applied going our entire time I this I’ve from performance, the ecosystem. amount for position through with opportunities best needed. forward. been ability we’ve R&D is to struggling are I our of in drive And the to that growth drive the

you. Thank

like Yes. Thanks, your question. close Patrick. you to us call? would Thanks for the help Dan,

Mike. Sure,

First, situation. is our the also our their has everybody want thank coronavirus to taking their are who our sympathy outlook employees been communities of XXXX for remains who families all personally affected by while to positive. I Applied’s of really really and care customers. good helping

deliver systems this significantly end growth expect our markets. double-digit year, outperforming strong semi We our to in business

what really Looking setup. the I see. out I really the into I like future, like

close we Continued to in our see strong year. into like in XXXX going of the fuel transaction the to pull over business middle elements in I of XXXX, growth and services half memory, time. the of are foundry/logic, display, those and I both what Kokusai second into of expect increasing and improvement drive in this

forward really as setup and many like look and week, and East in you I I’ll see the I Gary XXXX tomorrow to Goldman. seeing And next many of the of on be to hope well. at you XXXX. So, Coast

Mike. call, the close Let’s

for Materials. Okay, today. is thanks. Time. for our you of we be us by available thank And joining continued our like to A we’d And your Applied to X replay would interest to going like call website o’clock on Pacific in thank everybody

call. conference concludes participating. this you gentlemen, and Ladies for today’s Thank

You may now disconnect.