Applied Materials (AMAT) 14 May 202020 Q2 Earnings call transcript

Welcome to the Applied Materials Earnings Conference Call.

During the presentation, all participants will be in a listen-only mode. Afterwards, you will be invited to participate in a question-and-answer session.

I would now like to turn the conference over to Michael Sullivan, Corporate Vice President. Please go ahead, sir.

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

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

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

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

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

to at those and today's the wishes and the affected by start addressing go challenges the created mind, everyone's thoughts to like the you have of pandemic, the all by topic especially which COVID-XX has best whose illness. directly out around families unprecedented call Mike. been Thanks, My forefront world. I'd of

actions has As our several months, principles. been Applied two Materials the have past situation evolved guided over by the at key

First, customers, partners. second, will suppliers, on our of And the that maintaining emerge allow driving and initiatives stronger to trust focusing us over the term. employees, longer

the our and As and one wellbeing is always, their health priority number of families. our employees

protective use cleaning and screenings implemented allow we've physical to enhanced in social strict and equipment. and and protocols, working home customers of for distancing, for health and safety on collaboration medical centers, labs introduced procedures, are we've logistics from productive, effectively workforce personal many implemented changed highly In Our factories, mandated the remains our those working with suppliers. sanitation site, layouts advisors, close our

contingent incentives benefits All workers and operations. introduced receive employees we've continued additional pay for supporting and critical have our to our full and employees

to certain customers constraints, keep remained doing what supply been we of takes our laser it programs While running their on smoothly and the and on chain needs through R&D have their we've factories working focused track.

of examples and manufacturing, customers beyond operations industry not new to will also going Across circumstances. teams the our set create long customers with moving above only forward and the of provide difficult field ways our also defining logistics, working the term. We're amazing that solutions today, I company, and in a benefits of see significant keep over but

time, We've with long a Applied's line The COVID also positive to where values have their local communities difference. sector. been fund. charitable And equipment address and immediate It's volunteering and global driven fund in the make stepping needs inspiring to initiatives of to forward long-term facilities. passion the the make purpose employees Finally, demonstrate to and work. there to addition, combat and effects help We've in contribution is our to shared created across medical company. these employee numerous held donated we see humanitarian live resources on to to masks a and skills this nonprofit a communities

near-term and summary give strategy turn our performance performance I'll markets. results, me begin our recent operational color on business some our Then a call. outlook. Later, second I'll Now, highlighting the let of Dan accomplishments. today's provide our our to of financial perspective with and on for with a of longer-term summary I'll will a agenda finish quarter And more environment.

and fiscal down negatively Malaysia. impacted and from systems was shelter to locked financial demand our Bay outlook QX, strong. performance affected suppliers’ customers to business place term near our In customers in by orders the ship our ability our of in semiconductor our operations, some as remains with particularly Starting Area

can with operations in flexibility adjustments. closely needs. to ensure our able position better And continue to today. footprint, to they we're global make the we we've However, our Thanks much in meet suppliers work a to our been

supply chain quarter service combined. backlog focus a our orders record a critical record businesses enter semiconductor third Our for of as we with remains and and our area

terms see from the remains build In the forward In industry the of comments what healthy these my currently and in commitment factories customers very we development semiconductor road at hearing customers. a we're and foundry/logic market demand environment, their focus their leading from strong on with what I edge out with to will push maps.

memory, major some pullback provided last there to However, specialty in the and changes in result outlook sectors. a of are pockets a weakness quarter. of we're industrial the as no markets, automotive mainly we seeing In

in approaching continue We trends. levels, positive a and market improvements pricing inventory with normal to see the progression in

as a we we're year. equipment Based that this customers investment semiconductor underlying we we of for we is demand effects robust. In display, to on visibility that the the our deliver when the strength the believe even navigates can into business for semiconductor year. still incremental today, in expect As digit by XXXX double growth as spending memory COVID-related XXXX our our And strong revenues taking bottom seeing to industry close account, fiscal are result, move be through cycle. FY FY have

even display for picks market next we Our up. profitable, in the solidly as invest when remains business ready generation products

out, of well aware we're global further economic Looking concerns.

assumptions close monitoring While I'm guide very our based and going are customers. market the our which speculate scenarios, to carefully to indicators that on staying macro will we're I using share possible some strategy, not on key of to

in is potential driving infrastructure. the headwind spending an accelerator technology At centers consumer key time, from communications that for way. inflections already cloud pandemic were global a for same many is Working home data sectors, e-commerce from including the acting industry. home, as learning under and are the Clearly, investments electronics and

include of business redundancy companies and of AI and plans, geographic technologies adoption big increased stronger companies. non-discretionary use automation the will to IoT remains build which many continuity and expect We data and for

will losers be said will and the entire I've winners changing these As transform transition. and industries before, technologies big game through there

investments. prioritize view personal and permanent significant and we that companies their My is way the in operate see will changes

ways our is In customers. happening already we the this working fact, business with and in are

in several years, investments simulation. and infrastructure, significant past state-of-the science, and learning Over sensors, art, digital made we data metrology, machine the

past transfer The cost our combination reduce to production. and of new enables output speed from customers cycles, volume for optimize of up technologies us development yield lab and and these technologies to to fab product our data months, few further expand remote field tools. secured support and powerful have enhance sharing, to working R&D the and of customers been teams new the with In these accelerate deployment

strategies have of operations. and In creative our many of mode by also utilization for applying lab we own labs, teams R&D increasing productivity new examples assets,

near-term being While advantages cost to long-term our by benefits the way they market significant Applied and working customers. provide and this necessity, time are of as are compelling driven actions for

data decade is next and AI unchanged. about perspective shaping long-term big the Our

for previously strong these we expected. potential of scale see to And elements inflections certain faster than

AI these As I've needed. technologies, to unlock said enable performance, cost major before, computing advances power, area the the in or PPAC devices of potential systems of and and of are new semiconductor

metrology accelerate connecting We're spans shaping, roof. PPACT which T input the and we've of to value PPACT, and packaging framework largest PPAC by capabilities. have broad devices. far, for Applied where stands from And customers, acknowledging the recent lab our market, technologies playbook we silicon with the and and to process highly enormous differentiated creating, company modifying, products one structures portfolio only the to updated on Based time of speed. under analyzing has and

for a and we are we ecosystem. the have PPACT As we the made our The semiconductor a yielding have built ability have advantage to multi-year investments in result, significant capabilities innovations results. accelerate new

VLSI to and in recently outperformed Research’s year. We According published equipment market both services the report. semiconductor last

technology deposition business in our gaining performance with of share. Our strong was especially PVD seven points

metrology momentum We inspection. also great and in have

record group revenue control Our process of in delivered and diagnostics year. the first half the

new our the we that key performance will year. inspection of One contributors this is officially later optical launching record be to this system

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

stronger around guiding employees, the rallied customers, and principles, maintain the challenges actions COVID-XX, the over that longterm. and focus company ensure First on we suppliers, two of the by as Materials navigate Applied driving partners, we've created trust emerges

headwinds, of healthier. on and mindful while we is today, semiconductor getting and what Second see we're hear remains robust equipment based supply chain macroeconomic demand our potential

has and strategy PPACT never to innovative we remain accelerate products fully committed processes better. been pipeline to of the Third, and new our playbook integrated our

I to the call Dan. over Now, turn will

Thanks, of year. the quarter expectations and the activities. Gary. on our fiscal summarize current environment Today, second half for our and an results update Give second our you I'll share

moment. reminder uncertainty, Due to logistics. extreme was because of challenges investors revolving our suspended to borrow the we decided against COVID-XX significant an March operations, with earnings XX, a credit guidance webcast, manufacturing, our global we this to promised creating do also response in on to and our facility. chain, that the provide As on QX and I'll across update a our supply We

first safety R&D in announced employees to our still proud we programs factories the extreme due to below support afternoon, keeping for considering but original which solid our and I'm customers, our were results, both faced our our everything of doing keeping teams by health our running challenges moving. putting guidance, and COVID. QX This possible our and

the in was of Despite challenges original AGS quarter, revenue the than incremental we last in six that experienced we higher expectations delivered February. display and our our weeks

with supply backlog while for original strong. second fluid, was below quarter AGS And demand semi systems in the our company and revenue we outlook, was backlog that plus highest combined. the to due semi and history record constraints Our entirely and our exited COVID-related remains the remains systems environment

grew non-GAAP QX grew company basis, by a increased For XX%, in a to XX% by $X.XX. the EPS year-over-year non-GAAP and we XX% on by whole as revenue profit operating

proceeds. $XXX returned announced to on million X%. billion buybacks nearly we QX and billion sheet, including a $X.X shareholders quarter, in credit $X.X facility with We dividends increase the dividend balance ended During nearly of and in the

several Now I'll includes share encouraging my environment, assessment COVID which developments. the of

designated parts has many been infrastructure the Our industry world. critical in of

recovering customers now All remained and our their demand very operations normal communications were resume to output. close able with in have strong. We've to indications our of been been suppliers and they

the the economy. the governments industrial to global have job the support macro of workers, and impacts strong businesses But losses system. of mindful economic sectors in COVID consumer financial banking including of provided We're and

the have is the sheet, the investments As increase of million environment, approximately $X.X facility, result which of borrowings QX our revolving compared quarter. of and currently billion we end our We $XXX the a balance. credit to an about of assessment fully repaid subsequent of our on balance to cash

continuing to prepare are of We acquisition planned Kokusai Electric. for the

and approval pending from China. During for clearance one transaction, final have the QX, we we received Taiwan's

and potential we're around Turning world, outlook, see business not and providing COVID-related for to earnings there for still disruptions I the QX. the revenue is guidance positive while signs,

in investment operating the concern I attempt providing I'll our visibility patterns, but segments. we than economic is rather investors by our help and speculate, further to of are know impacts what there across risk about seeing changes customer into

and significantly to systems, COVID supply the as our hope chain semiconductor $XXX absent this nearly our quarter have we're the QX QX is related strong recover what In and In improves. customers in double customers. semi semi revenue million were higher single to believe growth digit constraints. in sequentially for second digits, We demand resulting QX more QX We revenue fiscal systems orders based be from revenue broadening again been QX high up would on in could and the our year. up hearing in the higher

Within resilient we in growing service has company's we of the slightly agreements. revenue XX% in business and services subscription to during like QX. crisis, revenue service our ever revenue higher could highly our be or In grown and first of services semi XX% semi-related billion AGS, Our proven AGS and to billion nearly from its $X.X generate from proportion revenue. parts has posted to quarter higher a QX coming flat agreements. AGS believe with of QX, business continue again sequentially $X dollar long-term

size VLSI service the and begun research compare and the in of revenue to companies parts has industry.

our Ours a is strongest a both basis percent as and the peers, our on of revenue. semi-related dollar among

which semi-related business, parts, has XXX-millimeter and systems XXX-millimeter of includes based revenue. to installed semiconductor total refurbs grown our upgrades services, XX% and Our become

is This points our peers. than ratio higher five about

see as the the year QX sequentially we likely In higher flat demand As display nearly sequential Gary in segment. Based and our is revenue from should then to short, second to chains to revenue expect weighted still and everything indicated, last. revenue We be in improve, slightly again to this we in if indications higher and revenue to believe be growth our same supply hold QX. this growth translate QX. again in would today, in on customers each half we then earnings continue QX, our and have

and So customers roadmaps growth unknown, and summary, fluid committed are their the remain situation still technology impacts for in remains macroeconomic to signaling Applied. our are while

to strong ready our our the again, will our changes. that stay today's and the both future. innovating support to respond safety R&D our proud technology theirs vigilant, and I'm of be in strong and We health demand their labs to customers, factories of remain the if environment in incredibly of and close and commitment employees to meeting our customers for quickly Once their enable

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

of people are Thanks, Dan. the a call today. There lot on

going So just to more to and as one help you to we one of ask you many as not question brief I'm us can, reach than followup. ask please

let's begin. please Operator,

Thank Instructions] Muse C.J. first of the line [Operator from you Our question with comes Evercore.

line Your open. is now

you that in memory I And confidence perhaps terms what both well Thank sustainable world expectations afternoon. mix year. starts in wafer versus as on through I the you as between that, first from talked good for is Yes, elaborate and question, hoping DRAM that question. about strength of NAND strengths. the this gives COVID? was of for you new you incremental calendar guess could the taking

C.J. Thanks,

proportion a quarter and good foundry/logic We that into As of continuing throughout profiling and broadens, see base the customer that. year we in as strength year standpoint our a about order the feel spend from similar we see year, book we we ago. look talked about the pretty

we memory, year, As strength seeing both about to some talked profile incremental DRAM we NAND. this and on

I think to that, the balance be of do an spend from similarities road I standpoint. technology we call focused early think maps. across primarily types is a it's of too do in there but device being terms the year, going investment magnitude XXXX to And on see

month capacity saw we actually year, year, last starts don't we per into both year-over-year NAND. strong And DRAM And go see wafer this and down actually we in look as adds. really XXXX,

their driving that cost in It and customers recover. maps. cash flow to Because technology is, our road them allows effect, see margins to structure. when industries drive continue We their

system see we month before. the continued we we per but investments technology than map year from standpoint, So a the did wafer less out probably road starts see of coming

So margin. it's sort on of the

We continue to stay close.

do defined quarter want continue be be we we're let as that's as transparent. we as our We each to open is uncertainty, seeing what environment hearing and situation the And In things to we'll what possible, to customers and share it. will watch the an and we'll know investors evolves. helpful from by try you see with

a could considering margins, half That's gross AGS? what COVID-related that that? And How the supply relates see should how into thinking quick into follow-up, trajectory positive $X I second expenses. Is can speak sustain helpful. the I and you from If a to On looks you that the be both mix sneak something million also you Mike. silicon be about of Thanks. chain, it think half? as to should took out back we to

Thanks, C.J. I'll take both.

standpoint. place first mapping the in points personnel conscious the of decisions As of ourselves and implemented we we going took team February. middle a early out decision risk, process. company And we made that potential standpoint of in of the planning manufacturing January. probably about We as and the decisions put position And were think made to in continuity in made the part week made an capacity about contingency was from surge and environment, very we to the decisions business operating actions how were our current from

we a things around recovery. what can standpoint is rate of withstand our times throughputs to on COVID. that planning. par the that supply of we we So saw are we cycle care and the strong impact And and care optimizing teamwork we so customers clearly can't That's the and before an really and has a a can better of disruption from is were certainly But maintain where it serving headwind pace we're that standpoint. which take and and margin taking with things a of from result execution control there chain

it profiling some that. through to segments happy headwind. there. the And I'm a So you does of of But and it's that create bit feel of share but about see thinking, a we that more certainly good definitely

is affected our order a part From a Area of in also material material impact. look a favorable supply was in six-week a by experienced Bay what as say would I'd improvement Malaysia. and quarter disruption of but it was a weeks a a gross mix in shelter-in-place we impact chain, most supply what environment was a What next normal driven chain margin margin we of recent into gross standpoint, that the standpoint. and segment we It our signaled quarter concurrent create six from

full supply we've QX, a as segment becomes will into chain of that healthier impact sort got offset of XX-week a Going the favorable the and bit mix.

minuses If So to is can standpoint I But think look investors the think what the margin our think from flat. the a planning business and a of it about take see time as into best pluses we at view way best better, about it this of gross QX best ability our certainly we and in assumption the our do as we we quarter environment. and give manage to we to we'll will. one

C.J. Thanks,

Thank you.

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

line Your now open. is

have for Thank two. you taking my I questions.

First for Gary. And is show markets deposition. your recent this markets I'm end shipments. year? growth for by what year on last confident year you or take to share Which as and the Company outsized licensees and equipment gained Dan, technologies more X.X served point are of future led follow-up, Department China of variable Commerce's equipment curious a next

the for question. Thanks

I'll take those. of I think both

really to any leading the us perform across with market that and things of So that enables is perspective, to we've of mix. let discussed share. very ability trailing me company one before in gives regardless starting an all have environment. we well the DRAM device pretty including It This much device perform overall good And balance segments, logic, and from start well us NAND.

if a So for good XXXX was at us. look year overall, we

a also very question at is We us. XXXX. setup think I good as Your related for look XXXX to

this in a travel significant XXXX. And I phone what to amount. we environment, CEOs, I said growth say used leaders. in in I'm strong remarks, Applied the frequently prepared double-digit anticipate And is would still on that As new I R&D very with the for

fact, CEOs the And is of for have Applied one to things PPACT of I call In morning. that's foundry this both road accelerate their one really and is had and with a real with the that traction advantage for logic. for And customers the maps. a memory also we

about that XXXX, and the X.X points we overall share. in WFE So serve in point markets we performance gained a two

see new strong we traction capabilities scaling look strong gaining XXXX, where investments setup leadership memory, are with epi, memory patterning growth applications. double-digit the to applications. etch double-digit for memory We in if foundry/logic see in in PVD, for growth our in business, at growth we we traction have So products, continue key that strong currently and strong new

So overall, relative pipeline different our again better integrated segments. materials in road across PPACT would maps we all to these of products for customers. that has I have our never new accelerating balance say been of our solutions

I question export second around, think the Then controls. is the

on So fair this let me said I've geopolitical Applied the trade and a start map on principles. rely situation. one, perspective before property and with protection. The semi believes road of intellectual overall And ecosystem these in innovation

regulations Department advisors our trade able new U.S. closely industry the recently associations by Commerce, the were better and working that government, the to with of to announced for be and the we're regulations. new regarding to very the with the comply So requirements define

the rules to-date, at June is required is this very our without again to going footprint rules some the government's end operations and flexibility standards work to and meet developing effect we going people believe to Applied disruptions have expectation be the standards But contingency in able come our be to working could If good We become when to when on the we implement. significant into of able on we're our current based we the we're meet have required significant government's effective. needed, global plans overall, business. that our

Atif. Thanks,

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

line now Your is open.

for an you side. us and Good very I memory logic you your in the was update could hoping the on well as and thank foundry business taking both question. as on afternoon Gary, much the side give China,

But and guessing CapEx, give was you update it what would robust your the continues us to the side if a expectations be near what as think then One an on great. half you're second I'm $X got pretty activity on term foundry I've your for customers are raised I well. memory billion can And just plus. yesterday, seeing of be the quick that follow-up. by

in jump I'll Toshiya. on question. that Hi,

let's into use and to China, as So spend. what domestic as about see China ended XXXX think point where it incrementally a we relates that talk about talk about we we XXXX to as jumping-off

a XXXX if quarter So we domestic billion for the sizing our China market of $X spend. $X ago, billion was XXXX, about back set we an into And look incremental was $X.X expectation to billion.

still in that XXXX the high to now, Our the given billion. at $X billion is we're of news end But overnight, expectation range. $X customer probably

about spend, spend, types was And balance millimeter we foundry among so foundry/logic said decompose trailing we quarter millimeter. XXX ago incremental node one-third it XXX of with as think a as it two-thirds device the And XXX that specialty of in roughly you millimeter between memory. memory decomposition the about spend, was and XX-XX logic split

this now, think And think I at the of best end us foundry/logic. now we you our what $X.X as point of billion the of see we're is we evolution everything higher that talking end And in profile at about. about more in the trailing spend millimeter based That's that XXX spend the gives $X range. the to have that on range spend customers high incrementally insight market you incremental and how node toward with about an billion of think the

think That's Thank to is one this just on for I your you. share Dan. up I of then comments. Gary. some wanted And market helpful, follow

spoke also I your you I in you're optical side percentage said inspection. share. product seeing share to of points etch market terms PVD. in what curious And you was gained in think on the new of seven you

kind market you. the with great. aspirations in speak competition your Thank and factors of next over be for the the of are can what you couple to differentiating tool your of terms of that If share, some years would

I’ll PDC so question. start let me Yes, then edge overall, business and the the answer with

momentum. We've where about record for business the – first of above half had measurement talked best previous strong double business. in got inspection our strong far FYXXXX. have the half strongest is the our we in overall new the and measurement businesses be semi. momentum will for foundry/logic. year, system. XXXX with this adoption highest Relevant launch one inspection business. this strong it segment growth the system, optical we last this segments quarter growth very this one will to inspection have we and of we us year, achieve later of And We digit And We'll the is tremendous very, the in that So year

the relative other is in thing PDC say business I'd that positive e-beam. to is our

strong capability there, new We highest have a the customers. position with also and there imaging new initial resolution we with adoption strong leading leadership some have capabilities in the very industry technology

we're a that position again, relative in best in had I start So we've to would that to ever say PDC. And XXXX off business. great the

history Applied strong And the in SIMX. to share. we XXXX, think, Etch we this the also had half a and know, to overall XXXX, point ever as is Etch. anticipate XXXX. best also probably product between successful And in revenue digit about I growth XXXX where of gained growth also, in you tremendous of Materials about we growth Etch terms business double have product, in we've in most conductor etch Xx a the of Relative to

foundry/logic where traction very leading been the good momentum significant haven't have customers all very it’s high past. We with shares, in we low had memory, in in

product new has a strong We momentum. that packaging also have there. in And significant traction really

have grow confidence new XXXX So share to going that and and momentum overall Etch’s growth capabilities strong we're we with anticipate good forward. continue we to in going

you. Thanks guys. See

Thank you.

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

now line Your is open.

question. supply seeing Yes. from understand to think are try just Good I for, to impact guys. afternoon I of you the the COVID. Thanks want me better the Dan letting constraints ask

sort You fiscal and and it you million both talked will to quarter. up supply a answer weeks But quarter XX like have in be issues. question have that by $XXX you'd the these fourth then said make third fiscal that of about in headwinds of also you the quarter April because some the in an able margin gross to impacting you you'd third said

what think is supply third your you I where you can to books? we so how get you actually And by my situation on fiscal meet that's do the And much? guess quarter in ship the impacting so question if also when guys demand can a

Yeah, thanks John.

Let how that it. you And me please to for and let me give the and you question. we that try something, about gives if unpack a addresses of I bit insight you a it I'll follow-up. think miss little know sense Hopefully definitely

So the time, important think up chain it with the as gets these healthier and it's we we'll components. how each And supply three buckets sequence. is to into where deal think, about supply break I over chain of three in

third first, logistics suppliers set bucket time. over get how volumes? for and And levels then our their a the That's up getting output. channels is, staffing levels bucket pre-COVID they back of business, raising The of healthier the is one. of in make how issues sort to they back Bucket and two, quickly lost can

to game, our and staffing we are each and levels vectors, as all about of overlay the of back so sequence think of suppliers pre-COVID percent back to output. getting those they're And back three hundred of levels working the time in

exiting us. QX, behind portion, a that fiscal think good disproportionate a I our I will think, share be of

then can leaves robust the which the That up bucket, you is lost that second given see. think quickly environment happens we how make volumes? for I

QX. I fiscal our QX think that our fiscal and over happens

the see exiting read calendar activity, can like we be looks on that and business it market on based of through true year, should So the what our demand terms in trajectory. today, a direct

the system is the the a full say industry not airline bucket, I that's longer that reason we're there's correlation full be logistics, go this system, we mean risen create a logistics associated a ride full of issue A have margin a something commercial third lot between and I term if is going to normal. And The to channels. shipping the What commercial get is to alternative to back on do, freighter had We've a and of systems, the headwind. aircraft. logistics the belly with special channels. that they'll pivot costs short will that a aircraft. of And and what to in freight

of foreseeable the one we stick and for the active is likely commercial healthier and Given industry, with get until future. versus with those us to more costs the to the see commercial aviation us levels today. logistics begin think, this correlation And increased freight the to we're can much I in freedom health of degrees have the

you I health if of headwind of the from my being comments for that while, about chain. the around So fundamental that supply margin a disconnect hear sort

current levels our pre-COVID I the fiscal think we're back back, of output exiting suppliers to are quarter.

volumes, year to what lost something the up how some and think things shed to your free up I John commercial point light answers to that the Hopefully when at for to balance make channels question. the on predict of pre-COVID. this seeing hard we saw similar we aviation calendar we're begin

And geopolitical might really has That's the of some Gary, helpful. focus associated opportunities with lot my just as you the of perspective. a maybe investor risks on China have been there follow-up, then a that from in and

the how you this your leading it coming drive here potential it's of out some the a U.S., edge manufacturing of be edge as be this be in of but over that capacity, different redundant guess only semiconductors, articles or manufacturing more we or on about weekend the I'd leading thoughts And domestic Over kind that sovereign not some think I'd early, would out for of there that in perhaps years? I love know got do growth to think curious, get would opportunity, you I flavor were about your arguments that with of of chips. plays sort capacity Japan. more estimation,

thanks Yes, question, the for John.

situation. don't they different into have If of creates topic, but with opportunity specific, mass we'd our has this focus with be a can't, a the I've about also not share But increasing us. United does anyone same for course, the a us is concept while. a opportunity service they geographic certainly good had look And horsepower. discussions we and location, or we has talk of technical different go look I'm details at the regions, when the geopolitical geographic going been of nucleus anyone it opportunity in States supporting of If sure critical any create any of So customers it for discussed where I this our for as to supportive for major current for a some on but a Applied. the great good move really at making very – into success. the customers, been for

moving as aspects some geographic their had the that thinking of are the support with So of of about making. key locations, discussions customers we've of course one into is decision different

opportunity. And a standpoint, again, be from for Materials. for I could really certainly States think, thing opportunity for a so good Applied a United the good this And it geopolitical

John. Thanks

you. Thank

the question next and Krish Sankar of comes line Company. Cowen with Our from

Your now open. line is

And Yes in congrats for on operating taking tough hi, thanks question. with my such environment results. the a

half said either look first second that's going got of there's the that Dan, million going half to I flow question April, in impacted at that through the second So you be for this when to $XXX year. in

have of And a million, revenues? If second out the is then assume lower follow-up. first $XXX I half would it the fair to strip you than be revenues half

I to necessarily Krish up is Yes, that's I pull why give Yes, a just go the true. second model. there. me And here say wouldn't

getting back our pre-COVID throughout of output about to First chain, supply levels fiscal QX. we talked

true with So our implicit in exit backlog Gary that's that well. comments, an semi-related fact exit supply able comment. record And AGS to actually the about we in QX as not comment record prepared in in QX, throughout QX. demand exited plus as orders SSG And business, talked that they're and is end rate market rate his

QX. up healthier QX. then exiting the through get volumes strong unmet continues I'm and fiscal QX So be sorry, demand – fiscal demand to make to and chain date will QX And supply from

calendar think market the we year end we So to true demand. shipping exit

this So next there's year. fiscal into of a the a over bleed dynamic of bit

what I QX half standpoint an entering given order think back from we're so the what perspective, in backlog our and still from seen with year. think we've of we see strength And a I

in and nodes trailing strength as we be by consumer relates we device that edge continues strong. like multiple order and geometries. some multiple industrial, We it foundry/logic, on talked that's down do auto, type, year seeing more and the see to about end see? foundry, markets to we node customers, we book What softness leading things we're broadening If the talked about about break We talked what of continued in throughout our logic.

holds of year year about standpoint, As memory, the swing a ago visibility. second of we QX construct the still memory beyond is quarter factor. being calendar we think about from half the talked a the still that horizon And

company quarter. and the think recent think – in do without XXX we the the so And that fiscal meet strong unable a environment to the most year we're the back million we half in well we in performed pretty of were even the

Go ruling company, to helpful a from happens or how if I’m on the as things commerce side comes when negative the then services on have much semi-cap it. in the And of revenue pretty there? you go existing for you And revenue tools follow-up, department side, have your foundry the department the service on thanks what color view especially your for commerce with the the view you Dan. curious just for out a That's China? U.S. ruling.

Yes.

So thanks Krish.

little try of just a walk to me bit Let through a construct.

there As in today, business both we the and do semiconductor display we about do we business think business. China

I'm So a China. to done through how walk a is how think business of to framework a it in sense about bit service much going you to of get of

So framework. walk I as just with through this you bear me

semiconductor and you do we So China. business, display as in know, both

of of business The display in China. if overall take you done company majority that billion add large So year we about into almost a in XXXX. vast vast, fiscal XX% $X.X, got China. $X.X XXXX, We've our goes revenue business,

If business, service take look done semi then pool So that from extract XX-XX the in and the or it take. you out business revenue kind good at the China. you overall China pretty that size service to I if the that's kind systems service that of systems, of and and corporate gives the it's you semi think segment split about of of a give average disaggregate a

of also you business and that as And industry. a multinationals And you so you service both the disclose point China decomposition you a gives the how the sense. the insight you a display how business. it of But you a think order That of don't it systems helps that the and little dimensions, sense extract hopefully the XX% you level you of up framework maybe the about And give business XX gives those without across multinational. that detail. rough XX being business magnitude two that of splits domestic, systems on that because to split clean about a into business domestic And have look that to think revenues, of when keep a XX% rough service, in in China. mind then specific I how about to semi-related get think business through think we gives

Thanks Krish.

Thank you.

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

open. now Your line is

Good afternoon. Thanks taking my question. for

of the the side Law leading has industry their has moved on path Moore's down supplier from benefited steadily certainly foundry/logic migration aggressive On foundry the the equipment technology cadence.

that executing cadence also like your a lot three looks large and migration, customer and two, half year or to of is it logic after track getting on probably a pause back year Now four to node views. a a on two about

over over memory large are at WFE foundry/logic years? multiple moving you you next few an mix aggressive the cadence in the the of now thinking versus few years, So foundry/logic how have spend customers about that guys next

Yes, thanks Harlan.

what at but look forward. XXXX then a in then take we in what I happened want project XXXX and about as talk see to we So also

we see out ago, $XX.X $XX We well. it billion $XX earnings So Subsequent ago quarter the our at sized in billion. WFE VLSI call breaking a a of came think just little a XXXX talked and we XXXX. about kind billion, down bit, to quarter pretty about market being

in the thinking we middle of right So how about were it.

memory, XXXX. two across memory. decompose So think it's that about and WFE it's XX% the in and that number balance good by view roughly device types type. And about good how number we around feel you a We XXXX device XX% foundry,

rough XXXX. And into the a you go reasons to we to the premature I while that market size variety in order of market and for the balance a size the it's type again, structure what gives split premature think That of device of can of XX% another we rough year market think by saw in feels XXXX memory types. between the XXXX XX% to order foundry/logic, so device looks of with we similar in today

talk the We of backdrop important roadmaps. company new talk to technologies, drive bringing suite the of enablement to that customers over the our strategy We time As faster. incredibly about to onboard market, we we positioned playbook. those do the against company of capital by element drive dial sensors metrologies being a There’s time, ability to really and time cost rising think well and process look in about ability to power, this forward, clear to this. innovation a this integrate recipes the we're intensity performance, is area, with that

we really our a playbook. that We position competitively. dimension with have customers good position, to terms and going of time play the of spend innovation, going in the capital dynamic well valuable the where as as across Foundry/logic strong really And role driving the And the in that over market opportunity is to market puts about that new market, intensity, in us the is we a time. think where feel profile rising to time

how forward, thinking about terms today. point as gave trend company, off in going are I this of we I you can't while insight specific I think, some sit we, be where So a of

fiscal the remainder for from of your half And the Yes, within there. year, framework from should of about QX perspective, revenue we second extremely then the year the levels? a the insights helpful. how think Thanks OpEx for for trajectory fiscal the the of

last year, So of quarter. if of a we a said from we assumption quarter, go the $XXX per for standpoint, OpEx fiscal planning we million quarters would, think our back three about

million. XX%, that do original as discretionary than As standpoint, OpEx clearly, is perspective. the And did most a spend company are savings really travel from a recent a $XXX percent able you spend to in XX.X%. The good better environment, is but the company R&D controlling around quarter from job a there're current almost good of doing job and we can guidance also the see a in discretionary

an think I we in the by good and and us be bit This I higher a to do to to a company always is, operating is think, we do expenses, There's around is it. way cows how today where disciplined no keep it. sit $XXX defined environment no what planning given think million we for sacred entitlement as that right the little will a spend. assumption that's about

fuel resources fiscal million There's We we will. that for spend is of back future certainly sure year. an disciplined will We $XXX growth. those assumption and to the our part very do be But right around make better. discretionary to opportunity channel the in

Thanks, Dan.

Thank you.

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

is open. line Your now

would to very Hi. a about good to hear Thanks optimism. of refreshing through I with, trying to say, downside the the to seems I taking dose against year And current a you nice lot just would be your nice well see – what rest risk engaged. of It's think the value question. my talking for the view. was a chain – It's that be

there. That's So the of if in you're thinking out in being a context XXXX. XXXX with could uncertainty of still lot line be

And to general a end is micro the and it's me economic demand uncertainty big environment.

affect is consumer very you consumer And think of second another so going it's the half and And the down the particular and go capacity, which revenues by way to be to through? actually, plans things you world in hit. the in to significantly smartphones, has you. the demand industry recover in like technology I actually going if happen, adjusted much now investment clients? wondering for a put How badly was in maybe do it to the and your get macro on for see And you in not and environment down electronics how do could driven for of it Thank to your it's fiscal volumes? PCs, year, how manufacturing think end is between has train on do much scale is difficult,

let just me these. hit let me there's – Pierre try a in Okay, there, lot to to try

in framing I profile first want was types. said of XXXX, we the When just split across the to kind address to of maybe that percent similar So XXXX, a question. device

aggregate communicate we hear point to that our customers and then about we're on towards see from WFE market. of a and an amount But and our dollar spend. early business extrapolate the be communicate do see and is we hear helpful, specific in think it's to I though too be a what on in want to what what attempt view

our So SSG AGS, our businesses, we're chain strong what semi-related year-over-year. Despite limited. two but those our year-over-year saw we in demand, we in fiscal businesses. XX% XX% actually business? that, see supply We of see and up were year do QX up we QX

first half in business. we're customers, So We on And hearing of in we're seeing planning QX. growth two year, business. our our the we're based then of up QX, year-over-year record our backlog expecting and is enter year what we're fiscal double And semi-related those businesses. for XX% QX about again the it to sequentially. digit up to view be in systems be up from And our fiscal strong for

frame leisure. going infrastructure, like industrial, Now, we from as best framing what's of can our hear half It's and auto, we center, travel, aware best see to pluses the on. be WFE data that half the showing strength. things We PC, way signs offset com what cloud, I'm in by of and feel customers in know see we what of that the are customers back of what two There's do we of hear, the we And back What good environment. does WFP, the think back influence economic, WFE as you, then gets the factors going healthier. – of we the of We're think, about sorry, year, there's I and the to business. the because it the our aware there's give about supply half year. see chain are I and still minuses, independent consumer, and softness in macroeconomic what

do that and in see a environment macro market. pull from and we we push standpoint playing So minuses pluses the and out those have

our us said, of influence out. feel to you That and we good The for decide about of half have back early to the the supply the into WFE chain. looking shape will Too Then sit where those on that the we plays our overlay how of we combination made two comments QX in QX. ultimately the year.

Dan. Thanks

Thank you.

the… from Our question comes next

one know you. you just operator time have to don't mind, we I wanted Yes, you let for if that just more Thank question.

the Moore question from line No Morgan of comes Stanley. with Joe problem. Last

Your now line open. is

terms of give in gave just about you characterized wonder I you you. you've then quarter, specific didn't Can segment but that talk thank way guidance. guidance, coming the you just the fairly Yes, the we a the message should be just and if uncertainty from away guidance, but case? guide range with it not Is just taking segment the around why that that wider that's there's that? there's

There semi what our earnings weeks about at I had thanks it read chain. think to call, $XX time million was wouldn't we than backdrop, a we against issued a we AGS. quarter we We the was knew and really the into months back million of our if systems. Yes, AGS. And other go in Joe. three part of fine. well the and anything were why our executed in yourself, QX shelter at million $XXX then six concurrent ago. time what Based for display it about million you short. talked quarter order that a And systems, rest That guide in material hotspot China, fell fell being we a we globe on in guided the semi $XXX that $XXX ask supply was we de-risked and place a impacted and we short was in unknowable saw the by display in we of

the not this share in to of aspects right business. other for spring was And putting without no the to up attempt helpful, potential supply prudent COVID but of. strike in there there's to chain. And in of share health our six we're the way a given our impacted pandemic We seeing that And shutdown an out of tried and between happen execute of and our we back openness places, complete to unexpected to guide weeks that it what number quarter. can't we be transparency balance to potentially we trying be control it out have helpful could things nursing a that felt

an guided. at was event we time unknowable the That

So it's the balance today in strike an recognizing elevated where nothing sit and macro between we of more that than right the environment world. prudent transparency trying to around risk the

about like then Okay, of and a of solid as your they're still, but to being for basically – spending, it's conveying Thank And the talking guess when second that's you. sounding QX of pretty of a to variety ready helpful. leading customers, indicator. companies memory a And terms fair the scenarios. is getting I memory most back to I are uncertainty half memory not in amount seem talk them half be

spending that to of about kind half? any the think technology feel this is just enough what's or like some vulnerability conditions of you you pricing environment, it, pattern, as So pretty it of spending that the regardless memory solid – is of, guess in I is worsening second

from would today. customers So that we're what and what I with say to seeing is shared you is, we hearing

to very think and at we what that at in hard respond the what we're both I and you know but is the the exactly continue this sides to that just be And of We're seeing be with there's at year. to ready let to that ledger. quickly call precision open we see be market. to quarter, play of about going would unfolds We point be going as vigilant to to say we're will and minuses back in We'll each part it try the I evolves. recognize on transparent, is, the profiles pluses situation we how continue what business.

at time we take the And we'll a let's you along what it quarter so one with and share way. see

Great. so you much. Thank

say All anything you'd Joe. Dan, we like thanks before the right, call? to close

best been They've environment our strong our – employees sincerely affected everyone share our to like customers. by best I'd we to and thank COVID a to I'd it. I'd and our wishes appreciate like for truly a situation. showing also to share Sure like job to done difficult who adapting Mike. has the strong support for

work-from-home mindful a is but the now. enabling those technologies the than the half privileged. privileged year. more big see of and pay business in the We're And second past. in world that resilient risks, our company Our to of throughout needs role strength right our It's we macroeconomic continue fiscal broader, it learn-from-home to has enabling the is the and

We to situation. throughout the will this close investors stay

couple of attend and and Cowen in BofA. I, going to going the and be weeks. a events I'm Needham, we’re Bernstein by hosted to conference at Gary

So to Be the close of many see Mike, soon. safe. hope let's call. Stay we you healthy.

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

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

disconnect. now You may