Applied Materials (AMAT) 19 Feb 212021 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 a question-and-answer session. I would now like to turn the conference over to Michael Sullivan, Corporate Vice President. Please go ahead, sir.

thank Earnings joining Call. and of First everyone, XXXX Fiscal afternoon, you Applied's for Quarter Good

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

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

a begin, April calendar you'll I to Gary to over to financial targets. a Applied We plans Dickerson. the And markets I'd call and save virtual date. have meeting we strategies announcement. investor hope X, now, Before On the to turn our discuss like host

markets, carry consumption We XXXX while revenue. our of momentum Applied growing as demand industry of very twice was earnings fast our Mike. seen range quarter we for strong performance a record year, the silicon report acceleration as applications. as our our Materials. to across trends, markets Since continued fuel into of Thanks, an increasing of Applied beginning business outperformed we've and and a another wide for excellent semiconductor year this of as pleased major I'm XXXX. macro nearly fiscal in

suppliers put substantially year, I everything for into our they and doing traction great our deliver with to markets, again of customers and thank to future. are for exposure and us Our outgrow broad portfolio shareholders. combined inflections the to employees position the our a products to our in want this and new technology

ways and record the successfully and to doing of in of other we a are for focus are pandemic. families operations and market safe. challenges an Our working the we're colleagues maintaining overcome this, as and the at relentless teams created our our while and accelerate incredible logistics doing on company our to all job, by time keeping levels innovations new run field teams R&D, critical significant customers In

cost outlined, our Mike our our in XX provide X I in-depth to power an performance currently the to our focus we covering April. across years and we for macro and that inflections have accelerate of momentum my business. highlighting plan our major the Applied's their time and and growth. markets Starting in market long-term innovative high-level As to technology customers' event, the In growth recent some hold describe of our a early over with and next road strategy will a the will semiconductors. factors, very to of sustainable we will profitable investor of combination shape are strong fueling demand deliver today's seeing then diverse drivers view comments technologies analysis see that dynamics the and At we drive term, near call, maps, the enable to that we new and first on accomplishments market the illustrate markets, meeting

the are they and current prepares the economy rethinking an being way continues the operate and post-pandemic transformation the world the advanced era, for Companies of a digital navigate immense As there's pull to challenges is and reengineering technology. for accelerated.

ways in irreversible, and products time, compelling consumers and working way they making they productivity. seeing time the spend of strongly terms different of many about offer changes their since In addition choices we're believe advantages buy. are services and I the the new are of today

are providers I'll of consumption. technology XXXX. ecosystem on than itself, Cloud electronics CapEx spending year forecasting record of data growth inflections highlight top center are driving silicon the increasing three in key XX% service Within more examples. this

fundamentals silicon of content is total broader than expected are to this XG at semi growing adoption there year. the supply in consumption With expand in double-digit NAND. smartphones to expected is modestly is supply-demand known more a shortfalls, handsets, expect And automotive, XX%. outgrow recovery foundry/logic, higher as XXXX XX% power was at investments rates. where on look markets $X these than top in DRAM faster for spending result, track are factors to industry that, sensor the translating very our by invest business well ICAPS and the have our year, In even favorable to year. of a to IoT serves still more customers up been investments. and NAND levels. exceed customers. with is leading-edge And strong grow year, fiscal communications, In and XXXX, investments And revenue articulated On strong DRAM, billion more than of this that auto, expect to And we then, we

for adds strong Digital sector the fab equipment we environment this is for and XXXX. every of strength beyond economy to nondiscretionary wafer is industries. this well many a very touches sustainable up demand All believe of transformation and

In DRAM. peaks look addition, industry of at the equipment they below well of that's industry NAND all fab percentage investments are segments: as revenues appear equipment in revenues, intensities, wafer and semiconductor device recent foundry/logic, wafer disciplined. fab a When you three

Applied's to business Turning performance.

outstanding contributing faster our we year And outlook, to a be period current quarter than Our are were revenues a year-on-year. will to as fiscal market up compared XX% on QX Systems grow our expect the the first Semi same the this XX% Semiconductor At of whole. year. last There up the for of again performance. to around based number the guidance, for Systems midpoint factors

across very is well and balanced business customers. our devices First,

portfolio modification, performance ways third, we customers to products are new thermal incredible PVD. important road market. enabling the expanding removal our capabilities, processing, materials CMP are and customers' and foundry/logic combined innovations leadership Applied's These unique winning and to both with applications, it broadest cost creation, the power, Second, analysis. technologies, that our an we integrated to served fundamental takes connect bring reducing of solutions to spanning maps. growth, and have and in and in and ability Node-over-node them businesses, have pipeline our products epi, new favors including opportunities of our And memory, opportunity time

fact, than and grow XX% business this we can $X In our more more of year believe than generate PVD billion revenue.

and Our critical XXXX. XX% of targeted latest-generation strong and come products that have won our more from momentum we've revenues than XXXX since will applications

have of IMS. top the growth market where we've CVD, winning that where control, where of highly of products on top and strong XX% and in stages the years we new new Also, growth than in XXXX. revenues few growth in started believe where Solutions class process include: enabling this Integrated are fiscal that we're revenues and XXXX the in differentiated in pull diagnostics for wafer optical on year DRAM conductor a strong we XX% foundry/logic highlights Some last solutions customer past that revenue over year; we contributed etch, and highly Materials delivered early material e-beam grew that thanks or applications introducing up to in new we products for expect advanced our to grow we patterning; more can inspection still we packaging, XX% this XXXX, XX% year-on-year of to call adoption; new are in be XX% differentiated

sensors of can IMS multiple that onboard metrology process capable system unique single are within devices. films, and technologies with enabling structures a combine products Our and

have leading this meaningful we generate from And IMS with products. year IMS engagements We our numerous our will customers. initial revenues

quarter. Moving record to service. AGS delivered another

enable deliver advanced long-term value base products, annual a and grown customers years, Over more percentage service service services revenue the five XX%. from to with service as compound In by growth. more agreements than we've providing twice us XX% is while of which generated at our period, more with our predictable we've installed increased to growth and our as business revenue around parts this recurring of XX%, us to past rate the stickier These streams. agreements fast

XX%. renewal rates high these over agreements very are Our for at also

Finally, in display.

we in remains Our November. the shared with consistent view outlook

trough. and market of to leading do the We to and as handsets the that We will indicators OLED to market phones IT majority is believe TVs OLED expect OLED continue adoption smartphone compelling with encouraging higher see XG of opportunities growth revenues in similar XXXX applications. still the the we through current be and equipped expanded this including manage market increasing beyond vast in XXXX inflection technology is screens Applied. display OLED for consumption being create a a We with for catalyst great future

technology and to off demand to for business thank again a to XXXX success. hand employees in with a contributions their of to outlook. combination is fueled and We semiconductor our the all see call by I and record results strong I great Dan, Before Applied's macro start want sustainable our over outstanding drivers.

new momentum great believe this broad to portfolio market products. our year. we and again to have markets position we're a differentiated in great We And outperform exposure thanks our of

Finally, to April. for we're event our our investor Materials in vision at forward looking industry the and long-term sharing Applied

give perspective operational our and performance. Dan Dan? and results Now financial his more color the business on will environment provide on

finish basis QX Applied I'll calendar we logistics Today of and We and growth revenue grew XX% summarizing end high and protocols key markets Beginning then of Gary. and share. our guidance pleased revenue Applied's record relative around Thanks, costs. I'm XXX since I'll manufacturing per QX in begin increased the with non-GAAP still I'll points are by year-over-year, and margin we with performance. some the particularly experiencing that by by year-over-year in drivers gross XXXX to performance our the earnings QX. exceeded for guidance. our delivered our share of COVID-related

$X.X XX% We year-over-year operating record EPS nearly profit increased We non-GAAP to billion, also up by non-GAAP generated which of XX% was year-over-year. $X.XX.

which for our to allocation with I decision await year-over-year. of Applied the sheet to we cash was when $XXX April. nearly and together XX% record on the billion you for balance in discipline and enabled plans meeting $X.X Electric Kokusai million we billion, deliver free investments cash forward updating teams regulatory on look operated to flow by increased the the up this $X.XX investor We get capital as Our transaction.

the to Turning segments.

XXX quarterly Etch, Services Applied revenue year-over-year target over reporting in the revenue basis our by and Our past Semi ongoing expectations, including operating years Systems Operating related group increased deposition grew increased The margin points records challenges by operating metal points display highest its Global COVID. margin by revenue year-over-year. year-over-year. despite two above to margin XXX group CMP. delivered exceeded XX% basis its and new while also

our of half higher for segments our post currently fiscal three We growth. expect demand to second Looking all calls year. revenue the our in ahead, outlook of

performance I'll Next calendar XXXX. our which of semiconductor equal to of equipment fiscal QX our XXXX XXXX, on QX fiscal in through revenue comment is

our spending customer growth on the than memory DRAM I growth both XX% spending rate the in over was and which in slower also still nearly markets. mix As significantly these total overall the resembled in outperformed investments balanced the our we DRAM the faster Applied at at overall grew by a NAND year NAND grew in share twice for call, foundry/logic and in but XX%. we of previewed and market We revenue XX% foundry/logic XX% XXXX equipment spending. overall accounted grew our than of and November with profile earnings believe grew market. end market, highest has of

growth customers we semi the for gain products to and our material group made where playbook, our to room where the was strongest we've Within drive to significant new in share. develop significant areas integrated new investments introduce have systems solutions

share. and was fastest-growth by portfolio where areas our in packaging, we advance of highest broadest the have far the One industry's

Gary As we into expect to XXXX. this said, momentum continue

Among unique the latest co-optimizing to NAND, Our We'll over solutions with system inspection we've with new across our CVD in our new XD in DRAM CVD products, in generating SymX along future dollar strong breakthrough growth customer reflects capabilities, unique optical XXXX, etch, cumulative system the the architectural by near grew success explain that new XX% and to its system films which create wafer are in officially AI foundry-logic. patterning was revenue. pull. etch introduce and achieving features, highest had $XXX million

calendar to XXXX. Turning

to continue. spending foundry-logic strong expect We

plays expectation We NAND. spending pace a technology than at to grow Applied's This roadmap. DRAM well product XXXX innovations to also and strong particularly mix expect faster

business our Now QX outlook. I'll share

expect $XXX approximately The million. midpoint We be company year-over-year. or to $X.XX billion would revenue be plus up minus XX% about

to forecasts of AGS billion, and Systems EPS include project $X.XX outlook, XX% government or year-over-year Within year-over-year. XX% $X.XX shipments revenue from billion, that not or around up be about about $X.XX minus still licenses. any up of non-GAAP we expect this require These We plus around year-over-year. $X.XX revenue Semiconductor about up revenue XX% do

revenue the We of with expect around Display resuming million, $XXX growth second in half.

we expect up or gross basis points year-over-year non-GAAP $XXX XX%, OpEx to approximately Applied's to to non-GAAP be expect million. around We margin and XXX increase

that count guidance In a weighted another of customers year-over-year challenging nothing performance summary, margins and Gary environment. flow. circumstances what I'd still higher growth with a share short generate and forward and like a our thanking to in in be in of strong of XXX operating Our rate free and join look We delivered record our with been April. is our growth meeting XX% challenging to discipline employees plans I'm the average our investor Execution supporting assumes giving profitability. pleased more under you QX to and revenue non-GAAP by around tax to and QX, teams million. XX% into Applied in superb quarter for COVID continues has at of to markets company's insights our cash in

Q&A. the begin let's Mike Now

Dan. Thanks,

question just many today’s call. people we reach us please ask one can, help on to Now as as

just question, in Operator, you the we will requeue If you a begin. best come have later let’s and session. do second our back please please to

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

Your open. now line is

Yes. you favorable question. Thank on well percentage obviously, Good if about into points. talked position led look coming you side. as and you assume about mix for XXXX, XXXX afternoon. it legacy like by by back foundry And looks taking WFE your eight I outperformed to the guess, you strong I as DRAM the

particular kind about of, can to relative Thank to we you. be focused of and you on? can, you outperformance XXXX if that WFE thinking should in if we point curious what to be So kind speak should drivers the

C.J. Thanks, Yes.

the more XXXX say little $XX if markets backdrop. in we it's XX% I say against billion up than would XXXX, around a that in So

at called out. as segment look you outperformance grew so If segment Systems our significant Semi we Semi Systems by our you've revenue XX.X%

about As the average. memory-driven drivers little industry really average. at NAND we DRAM a was more X the growth below foundry-logic year; It times; XXXX industry a look in than grew the

in performed So that the company really environment. well

to As NAND. for more we company. be we We to Foundry/logic go be environment XXXX, a continue to spend outgrowing a will view mix as XXXX. in DRAM favorable the strong us see

that against mix, more significantly year. so outperform expect again spend market And this the to favorable we would

an strong and markets really XXXX. market performance and then So robust beyond we feel we're end look market XXXX, about We've markets against we product how we got see good. end see opportunity. overall company-specific we within as feel momentum positioned the so And momentum into standpoint a good strong those from we standpoint, continued

positioned. again, we is XXXX I we're So, how us mix to more like and a expect favorable well would significantly outperform again.

more Thanks Gary. bit the a question. is this C.J., for our Yes. I'll give specific relative to color opportunities. little

the If industry time, XD about sustainably lives. an of you look And driving the That's at end. technology at overall every our transforming business coming aspect is overall, same talked scaling higher. the to we've certainly,

to going materials. they're and chips new connect recent and -- our you road even meetings around ways the structures see new So about of with new in technology co-optimization, new map certain customers really largest again where can some design structures, forward materials, architectures, talking publicly chip around together,

chips together. that's think have. you And connect the driver materials, new a talked about what's new really about focused. materials. you about packaging we're big spot a PVD ways just structures, for to we're sweet relative up technologies and We enable is in creating really structures going new it And us. think is we those to to the When XX% where about And future, when new so new

to Etch those The all when you business our processing Selectra And remarks growing strong. and epi think industry, those those the we're then Our creating are about us. talked of And be shaping very CVD to modification structures, the product I as in and CMP is this strong going is structures, areas the year. win. continuing in very PDC business implant. and in with about that leader a prepared then shaping is for thermal

what's you we've the certainly that. the can infrastructure in enable forward, inflections more better for again, power and position. the a on really never going I call been to and on performance think just position. So When later give in about color the But great we're a future going

saying. aggregate to out the of size point in XXXX. market data more Gary add went the one one maybe to I as of point C.J. I profile what And left spend through the is And was

in meeting overall today. billion, I call way XXXX say point-specific have investor a to view bit size at coming if think $XX higher high up and I'd today is around our more six the in say XXs, sit in consensus a as that overall industry we'll than the about here WFE it beyond here is we weeks. But

Thanks C.J.

you. Thank

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

open. now is line Your

me little going second what businesses stronger a on growth letting with bit guide. business? all Semi the last growth view just it's And first And WFE. half up kind the you doesn't of year tone to think congratulations a kind by the little Yes, a different specifically gives having on half? is Dan might fiscal bottoms-up surprising good have some year probably confidence given weighting your a calendar overall results curious display. commentary, in to that bit solid than comment of that Systems peers with guys. year, that about Thanks calendar question that's that Semi But have on for first the higher be WFE. than do your relative that services and the you and in basis fiscal to But in match we're your half-on-half the C.J.'s year of I'm System both expected kind ask afternoon and half questions about your the explained of not it of of a half-on-half talked

Thanks Yes. Sure for John. the question.

others talk what we're in seeing it in a theirs. so business try what bit, Let we about to of can versus maybe our little see me sort unpack

point in end-market markets. is, businesses. got the I'd those got those to very foundry/logic, end of types; breadth within a really across of balanced momentum DRAM first I product our But thing around very we've exposure. So, positions and guess, NAND, three We're all number each broad strong we've markets device

more who balanced got we've than some more are narrowly So say end-market exposure focused.

Second thing, setup a continuing ties I'd into favorable we've in outgrowing to I question, be with XXXX point NAND. to gave and just to DRAM got strong, answer foundry/logic more mix this C.J.'s the

standpoint a So both I outperformance. and significant carrying think the then and market serves product for well we from talked XXXX. continued that about us And momentum into

So that out, as fiscal pointed each within the And looks. I rightfully transition good we respective year feel then, our with back-half segments. lastly of you how about see momentum reporting

So today, again, year. sit set we're up we think where well strong really performance throughout we for the

you, John. Thank

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

Your now open. line is

taking for Thanks my question.

Gary of is either there's days. to WFE of $XX talk or these actually address number the push WFE Dan, higher? sufficient you. shortages met? be the think shortages? could chip demand for do shortages some think this the year For billion into can that you a industry this you well lot before as Thank Do Or out next Or the fully of these are

Yes.

couple Vivek. So, of a on that, things

XXXX, there's for the in momentum. our higher aggregate weren't think point higher all, number is. of we're than good -- we bit strong I the positive where do a industry First little consensus size specific, a the where but than

statement there put is over around be a investments a investments, on that behind I in those our our those customers the investments run, long demand not think return the a has drive to sense transitorial statements. multiyear sits demand capacity substantive make To make. these place make customers

that's market of we market. don't demand types to of we sufficiently about a the going is that and When do we're end shortages talking about a itself the be But drive think good of that so in spend. environment. large to the there's bit you in think auto And current think in industry, I think catch-up

that respective than foundry/logic statement So then in DRAM, greater at NAND, we the $XX XXXX. are sits that, diverse. markets look behind billion it's The broad. demand strong. All It's end

decade-plus And be of out we're talking think major been it's are on trends the early to We back on grow a the Semiconductors going over these play the that we've innings. path This time. Some be cycle. than the very of investment enabling about others. in out world. key pretty to is going some trends playing faster around

of to nature. dynamic where long-term be it disciplined. our so, are to to it market any what temporary be be more opposed customers capacity substantive the going as demand will continue makes will support in They'll near-term add sense, is in statement that but And a in

you. Thank

Thank you.

Thank you.

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

line is Your now open.

taking margins. for and to And you're ask year-over-year. I the what are both drove quarter. Hi. nice that. gross guiding for January wanted Good afternoon, upside was and then you curious up I Where in about nicely Dan thanks sequentially margins the showed April, question. to the puts faster and I sort be going you. takes the and potentially your fiscal of in a higher products given going gradual guess Thank would And of growth into hopefully assume there? progression year, leadership away? COVID second the half fair inefficiencies it

Thanks, well. think Yes. We're I margins, is recent points most quarter's year-over-year about results. basis XXX company up performing in When Toshiya. the gross

basis points we're backdrop the it costs still sizable of material against the in headwinds the XXX logistics world. some as to about relates pandemic factories On move around our protocols safety to up year-over-year, the and pretty guide, that's

environment. of of to current never hold the beginning efficiency, I company really take gross core what's into the drive actions in drive see driving discipline in the are, when our I a performing set about matter well efficiency margins business. where so, there's I operations And of some discipline of and is those think of operations, think company-specific a the we're the be that, No company that environment. core will inside to that the drive And satisfied. that the We've extremely current of had to into actions number the and

good that So fundamental work hard inside really things hard about efficiency. company the work doing streams, lot the of a drive to work and feel of some we

that in whole really to influence but element mix the host we happen serving and think current environment. we company actions have things always that an You'll substantive from will what in one well selling a of quarter the there's are customer of be quarter-to-quarter, any

was of fiscal would As into continue the long-term the end be work beyond to -- margins be a gross COVID forward phenomenon. of our top And we that up back environment operating the XX.X% At half expect margin level. back long-term in X-quarter about over The to look this of to next X-quarter is what levels in several not the see a we're XX%. and horizon we'll of end Analyst the half but for even our opportunities model us I in year, the years Company at of XX% to gross Day, I top the year these is not model. well. the phenomenon. current see we our the target talk even higher performing off definitely

congrats. you, Thank

you. Thank

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

is line now open. Your

Hi, kind Gary on you thank with strategic. is have into building or Europe. Are European among we've become Question semiconductors Gary. in that deal my any this Union for D.C. There investors redeveloping engaged buzz you is Washington question. for topic? discussions of taking heard fabs great looking a with of

Yes.

Let so it's see to accelerated can different. that digital me growth environment industry transformation employment the to that of economic forward, going everyone every in going in. look is -- being growth current that and we're relative And I the do think

into would about. locations, as of been is from of say what's you initiatives there moving building have perspective, couple to are is and From again the less at scale is, smaller from perspective. announced new investments look from what around an things factories I customers these employment somewhat companies think been scale the have government this and a we Applied's least efficient. also One that -- So -- they're at and to in strategic are different locations. perspective with Applied's very growth And engaged economic

eventually where service positive for company opportunity thing an experience Now that every geographic out of size itself that, have the moving we've concentration from talent what in business and amount works where move creates a but is is a one a our they they less factory tremendous that as seen efficient location Applied. case supply-demand new location. into And somewhat for other

service efficiency we This I all higher things business, us. both So see That cases. think those much is the But for can think an creates can out the a also agreements strategic service play factory very are strong. of that those the certainly from in I perspective and opportunity pull over there time. our

Great. Thanks.

you. Thank

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

now is line open. Your

question and it op congrats over my spoke especially was about taking I given year XX-week was, for think on Gary growing this XX% The given strong results outgrowing very in which year had control I the margins and XX% the you quarter, Jan for over possibly thanks last a quarter. process peers. you're Hi, impressive, question is

can Just kind of is from Or give to curious coming some is this it new and you some Or year? around tool? inspection the optical fuel growth it? adding extra all primarily puts patterning e-beam takes the PDC

you, Krish. Thank Yes.

much new the And tremendous inspection -- wafer say system. So tremendous in where major optical leading the we've foundry inspection the of the line optical places gives ramp. wafer customers drivers. insert big can that they a new really so it in we've three in has of system inspection is impact speed yield on of seen a And better at ramp tremendous really ownership points more that performance and especially there's the pull. I a One cost foundry would seen

really of phase So wafer the new system. adoption, the that's inspection optical in early

are strong. products e-beam tremendously Our

our e-beam every a would XXXX, total prior you systems XXXX. than for business look growth other PDC at exceed If year

is business that very strong. So

gives optics. imaging much We us the one faster that resolution, of introduced technology a much leadership higher market. electron in EB in segment have new source We've

the just and that opportunity electron will the to in in We take different optics technology market. tremendous extend our for leadership a it us core across part platforms, of to creates all our of continue e-beam

our the to important, So area third drive key I when thing that's is those would that's important all and what's they about can cost, And really you say different think customers growing fast power performance of how very fast. really metrics.

magnitude for more can where time. So especially -- PPACt e-beam there data faster the talk are enormously certainly period a in about accelerating us and much with important. them, of you of generate our cases for products is orders And we

So and customers our also thinking map the materials, new for synergy algorithms about unique the with that an is structures PPACt imaging road at Applied the our company both when perspective. to new optimizing and accelerate R&D you're increasing from overall internal

phase I our again, the capabilities. E-beam that overall important we're us been never in the and the think extend customers. been has imaging. in leadership for our more new leadership We'll the synergies inspection for never early And and business adoption. with So of better with optical

Thanks, Gary.

you. Thank

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

is Your open. line now

add XX% capacity. And year. the for quarterly analog, are on IoT The Do looks these job lagging segment? And are that auto edge activity margins lagging-edge contributed it how tools? mix shortages overall on across this feed lagging-edge scrambling about probably to the these microcontroller systems and mixed signal, industrial great year? been to last and of expect systems lagging-edge that customers you grow the in like And just to think order leading-edge operating compare and tools guys the like chip markets. technologies products so What's your execution. into to I support business and afternoon, Good for more do industry

Thanks, Harlan. Yes.

the split. Let statistics pull some on me just up

leading-edge, it kind So see XX% XX-XX follow-through versus leading-edge geometries. probably again of if on -- it's yes, trailing-node year trailing-node year: a this -- this was we maybe XX%

years. talking As been we here amount go back in over we've the last time, fair this couple a of about

trailing-node been geometries not So has the strength -- is on new.

trailing-node take in segment XX%. XX-year aggregate that the geometries back over Leading-edge has go business growth. window, bit if a over to grown the foundry over XX% at we just about just just have above been if grew at XXXX less, the average little time foundry that about fact, XXXX XXX% about In

for out been key is has trend and market and segment. positioned We're the value-accretive outgrow company as performing quite this will well. grow this in very this some well playing We're technologies the to time. delivering to So segment This us continues WFE. of be

Yes. little to just Harlan, add can I this. a bit maybe

one this an company. two call it's devices, our those Applied And products: together as our opportunity fastest-growing within power and CVD, is power IoT any implant, of PDC. About drives pulling sensors, to CMP, we sensor ago, of in technologies leadership refer auto of I all about opportunities formed markets, really we to you communication when thermal, PVD, what it as think capabilities across specialty Materials. focused RF types years those And what see this on whether significant. businesses, epi, or semiconductor the people organization of ICAPs now we the etch plays think

So good have we a focused pulled team Applied devices. device those really particular just incredibly have a we within there. and strong integration position together group an We on also

our role as our Integrated unit really strategic So role enabling and Material been dynamite we've has so we integration the have organization. engineers refocused about talk market -- that Solutions we increasing that in beyond processes some the

some So, the as said, we Dan we're markets fastest-growing think years. over these and some be optimistic, markets of next could of really the several

Thank you. insights. Great

Harlan. Thanks,

you. Thank

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

line is Your now open.

Great. Thank on you. question's the services business. My

are us You better? a upside guidance the the should the to by we driving that how and trends you Is Or sustainable there about that the utilizations had those on Can quarter. could lot customer of infer commentary, telling upside what that? be? just talk what's there relative

Yes.

So thanks, Joe.

prepared comments rate this the at twice installed in growing about the talked base. business of our we So overall

used is installed We're specs out it new this outgrowing requires integration job has to what good tighter say growth So equipment a technologies are complex. than time. and process the more. playing done our windows a customers' continually tighter, years. so decade been a windows. period more things. base. ago in performance entitlement on windows, greater over, and of Company or we an X:X Service tighter of The Embedded The of couple are technology extended the ship, is has outgrowing the that it over multiple

when service adder now agreements we're penetrated customers. one about about the of think creates XX% so value it's good then agreements. around tenor years really year five Fast-forward those their adding have stretched that tenor out A that over the And feel of of today, underpinning had well. we've vast in long-term for we business. duration. third those growth strategy, a XX% long-term And to ago we of the service covered one nice so beyond a revenue of long-term you nice covered year The had the service as agreements agreements. majority to revenue service And our about by by

cash of opportunity our we creation So the the a and feel good shareholders. feel of profitability, value the nice and for execution strategy. good flow about about We it's source stable

is So business performing well.

that relative ago. seems XX really surprised just like upside much mean I business. it weeks to I'm a good there's so

Specifically, what being was that -- I in came at and guess you by? upside guided to $X.XX billion billion. is $X.XXX driven What

into in making into where typically puts in those execution an standpoint with a from pandemic things, it's recovered conservative around some a assumptions populations that we would, how the went respect than comment So different as just unknowable extrapolate we the quarter, result models we spikes to their pandemic we statistics globe. the current sure We a to you bit as those specific everybody environment, seeing in respond you're around points of quarter about that geographies recent different a on if and seeing the more most are fall. data

you Thank Great.

Joe. Thanks

you. Thank

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

open. line now Your is

either question. you just about provide Hey, see of any a to advanced then a is for local place deep Europe? Or to my follow-on taken US a guys. for would chains being the you extent Austin that have due clarification and you. Asia Atif's And WFE to reallocation at Texas? local WFE would manufacturing, follow-on that incorporate European the support the spending otherwise they that US just from sort what in of The ask additive? does semiconductor I and is to supply spending freeze clarification a Thank the that and question site in is wanted guidance going Union your on question shutdown manufacturing the to

Quinn. Thanks, Yes.

business was I So our fluctuations -- saw a manufacturing I in say Austin. power would that from commercial the subjected What manufacturing an most to Austin is enterprises see impact material enterprises standpoint, don't would we say We can our We've place. been got weather here labor day, the there. in better got as another gets We've risk-mitigation power contact stabilizes. in plans business. think with imagine team the you We've close to prepositioned.

as respond I we've we contemplates we and And guide going there. power once we quickly the the going get we that's that possible, of in back think so on quickly today feel about put out where that we're sit way the the region to respond power once good stabilizes. are forward as ready and we the output in guidance stable put to everything drive and support

I start As going here's it mentioned from XX,XXX relates of to localization is that's standpoint a a impact got of factories to what disaggregation supply footprint, supply facility. would would start a say business market you've that, if Gary a global capital-efficient wafer say manufacturing footprint month a demand. two meet global perspective. large I and less wafer chains one And than manufacturing XXX,XXX month

fab fab So while that a I those is change probably smaller-scale wafer overall of wafer think say a would upside to multiple step-function the equipment biased positively I result from an don't facilities. it's standpoint, equipment as

that service expect service that's home The historically business from other localize say outside as areas our nice adder. great a continue. their of our impact They that increased globe. to We've these been our is, on I a supply we've capacity of in got would a the customers adder customers would geography I for a seen organization. things great perspective around footprint and locate global nice capacity chains service When entitlement do and

that think as going materializes that be that's to nice going our service business we forward. trend So for tailwind a

Quinn. Thanks

Thank you.

with question next the Our Barclays. line from comes of Blayne Curtis

now line Your open. is

ask I But is considering I taking up op margin a for the OpEx quarter guilty to amount. little Dan, thanks on my a just you OpEx given decent feel in performance. guys, and asking Hey question. the want

And just on of So guess I higher driving other what's thoughts fiscal commissions? year? maybe rest any just the that than the then

Yes.

of Blayne. So thanks a things for couple and question the

observe we holiday a about is to at period the calendar that end Just on a as transition QX a couple QX. get from in the QX shutdown of of year. things What I would

also one-month partial impact. You of impact annual increases have merit

As into have increases. full you of you we no QX, a impact shutdown move merit get a longer and quarter

So there's that an embedded time cost frame. escalator in

-- of and this, mean happening industry. time there is The thing Traditional we key say a I Law hit very a wall. shrinking each a playbook. have fundamental to The in Moore's Gary a is Law new enablement other our spent XD transition playbook new of I that beginning to traditional is role and play lot are pivoting shrinks to Moore's meaningful would about a industry talking in element

containment standpoint, good we of XX% company fuel going a spend key disciplined, grow. going I to to a close are innovation. track From discretionary We spend be R&D OpEx We're of our road From we be from invest but record. We're with for tight customers' is standpoint. what drive enabler to got pretty maps. growth to discipline has an think the perspective a to going are a to going

company is all leverage from So, delivering we're of a to R&D. manner. goes OpEx And OpEx very -- to in efficient perspective, close and to this would doing in an manner an growing disciplined it goes XX% observation but then an I the make innovation,

to basis to delivered we've OpEx we've we've months, it P&L. the OpEx if XXX to And that the points we've delivered. XX got eight quarters, that of leverage I leverage got Over last out XXX basis take points of

of an great in shareholders. value that for So a these track it demonstrated drives delivering think doing has way I efficient innovations, record company but the significant

Blayne. So feel good we about it

Blayne. Thanks

Thank you.

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

open. is now Your line

Gary, I lot. had question longer-term for a a Thanks you. guess I

go NAND, to in the a seems say going it's we're three really be that like that that a happened you but gate-all-around to five it see 'XX kind could away, late XXXX. maybe logic And incremental in far films a to out look next could there like out start year, big So, headwind way so versus the where But actually be definitely you maybe seems in And stack for like but transistors, seems 'XX in companies FinFETs to the long you. you we to view is definitely that or litho, there. then broad to litho not which dollars same of happen capture if thing years. going

can talk just in logic? So Thanks. what's you about happening of kind

Tim. question Thanks for the

wiring, And talked these and you there, about of about; the think about structures going this to those now new forward. actually the no there we're all chips; at pandemic, elements the and forward, new new that transistor the when going and going own what can structures what resistance meet -- I deeply there's leaders markets, before And tremendous is or doing focus people that because I shrink. look I tremendous week forward. new on how virtual. you really but specific technology and cost CEOs say you architectures; growth believe about I our roadmaps drive very really or So, would I've the leading everybody a structures; whether performance of about position. talking you often and different talking also of these gate-all-around in even more -- designing for about and five logic we're the new application think regular R&D they're the than it's this one new performance talked driving all materials; ways And was going new a materials. did question packaging in it's going there's been when around we've see the is the areas, these chip forward in really power foundry enables to nano just call I because sheets, leading customers power wiring their and what's basis, their

those nano by future, we're going shaping that materials materials those create or sheets to about you creates the those Then in in structures. have we forward the DRAM, think or any So that XD of position. tremendous a When big portfolio wiring best that just just are or far really needed you about think the the inflections are the structures. of

certainly had conductor foundry/logic. in position have we've growing strong We memory. -- etch. strength in in We're We're a

this and also structures I'm rates learning continue inside can time-to-market. structures, important different that share I and residual to of go new that especially those if nano for the cross-section with orders other transistor the our transistor, new by When having particular e-beam our I'm Shaping structure and about our see the magnitude. the one as really I sheets product and of is Selectra up PDC the synergies look the also their for building there. You'll materials, versus materials to inside accelerating driving see modification grow with talked business. R&D

in capabilities you'll again, modifying those new with aligns structures, enabling at being exactly imaging So Applied. to if customers this playbook by see and presented I shaping those just unique and our week, this leading capabilities and the combined creating you for look what's -- even capabilities unique

again never excited about So enable more our been the to opportunities I've roadmap.

Totally, Gary. Thank you.

Thank you.

you. Thank

Joe comes Quatrochi line Our Wells with Fargo. of from next the question

Your line now open. is

Yes. And any curious now? outlook by does the year right license assumption assumption year, what's Thanks government taking the that for for from for that customers include China? we don't required your question. this around the see I WFE was domestic your in WFE your this outlook are

Yes. Hi, your Joe, thanks for question.

XXXX So think from domestic we standpoint, level. around billion a we year ended of China We $XX off the billion. we're that think few a up

seeing what see is for now, we'll we've which ecosystem year been So development. slow-steady several years this

when not some market receive revenue pretty of see still given roadmaps. we numbers up, we've in that to licensing current prudent calendar come for to think assuming $XX standpoint talked And expectations we'll year size where we up. overall through. expectations. go sizing will it's the licenses in just I licenses and and forecast expect the That then revenue sit to the roadmaps then would market sizing, adjust and be to greater behind about. go from than going do assume this I technology would But And the and licenses upside a capacity technology come to not those the the expect does additions through. some billion those that modest You're the we the process, market investment guide sit forecast

And please. for questions time operator we two Joe. more have Thanks

Our Mitch RBC with Capital question the next comes Steves Markets. of from line

now line open. Your is

segments into the for all display quarter to and My the we a Obviously quarter nitpick here. us the the you've only feel every of comments Hi, made that bottom Thank kind half up guide. guys, business, second try half. sort here, a year. in you. call just But question. business? got, display thanks maybe like display around very then, the second of of for at and you any the taking secondly, about my the being being great visibility little of you like Can kind actual confidence magnitude great what up, of is on in just understand, I if help And then

Mitch. Thanks, Yes.

see spend, on I many So been that well that as quarters, this display, We very spend think we've know overall overtime. the XXXX the revenue exactly look market TV, an fiscal many is little lot is like business a that saying couple to from a out. saying display we sizing XXXX. bit. see business things we've quarter-to-quarter, similar, what the in as now for feel business perspective, playing proportion mobile, been in But from around we fiscal revenue quarters been our in in will consistent what And a in XXXX. to of going a in business to now, going this for our that's The be we've and we of for bounce XXXX is very produced and that this implication in

the that And math. so you gives I think

we've know fiscal QX. in what You done

half cycle robust the continue continues confidence to are monitoring we XXXX year. the XXXX, the a what sense back that of a to around guided know number talked You then, see around point in shoots. we just fiscal you in interval the a about we green as look on interval last call them That increase. we of earnings to into We the of our confidence And the And gives forward step-up QX. in being increase. investment

from about So gave of can -- standpoint, growth we we in can stand, the from From into deposit order good QX. the customer see a year. see order it fiscal standpoint, also guide half we an we we an growing the off feel perspective. of where back just And it

And And stronger we're being the see second given about, we in this that I've how the around so shaping where we expectations first what got, good no half anxiety, feel around half and than we market. sit, business.

Hey, thanks Mitch.

Thank you.

of the Patrick with from comes Ho line question last Our Stifel.

line Your is now open.

front-end you a very advance of it's and to from for leverage the Are packaging looks existing strength business you on given another maybe that the Or developing the on are Thank products going able to are you much follow you. that like and and particularly you in more advance as that opportunity your, become portfolio?" had growth to the some changes congrats calendar questions the finish, manufacturing-like? "leadership packaging, given in products, just Gary, the up also they new nice on year.

Thanks for Patrick. the question, Yes.

talked you start the is we've being the are key at, this I'd what if power by for of packaging for about So And off forward. saying, look cost. leading roadmap going five and drivers as performance and incredibly one about PPAC customers talking important

much I've was. this products, engaged than products in Relative say versus personally, both. new I I so So more for your ever to industry would about, the particular it's R&D question with leaders existing me

advanced you with If plating. in number CVD, look wafer-level one, CMP packaging packaging, packaging we're at, wafer-level wafer-level PVD,

via SymX -- new largest a also have where We in business. one that customers etcher, of our won the one we of largest

system, integrated new recently bonding leading all company And So of the products new another technology. our of in strong very pull we we we those every hybrid from a combinations important. of that packaging. really have And with that with announced -- one also working have customers is

big is also innovating So where again, of inflections with looking our in it's the example combination hybrid we're accelerating packaging. existing of at both, a that. bonding products, And one

I think tremendous the a opportunity it's for just So company.

and we this is unique the combinations position we have. going in a we're become to I forward with capabilities of that as more go think important

Thank you.

us Thank you help Dan, to like you, wrap Patrick call? And for your would the question.

Thanks. Mike. Sure Yes.

for a as things So this me. look at I few quarter, out stand

team improvement. XXXX with goes that end strength favor. really I during reporting all I you I and forward in third, work, setup during segments: really growing Systems, growing we six about rest of the includes the I teams in markets, let's of better investor to XXXX. for of an time, on for into forward and especially second the outperformance hope this look been display. call progress. gross the like I Gary as in our see And AGS guess our of Applied, COVID-XX that great regulatory Mike, and want across throughout hard We decision close along thank Kokusai seeing strength year. calendar Semi all look First, meeting. second, the the really to margin now. the one all even our fiscal and strong the lot management three It's half weeks, And more a

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

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

You may now disconnect.