Applied Materials (AMAT) 20 Aug 212021 Q3 Earnings call transcript

Welcome to the Applied Materials Earnings Conference Call.

During the presentation, all participants will be in a listen-only mode. Afterward, 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.

everyone. afternoon, Good for Call. you Third Fiscal Quarter And joining Earnings XXXX thank Applied's

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

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

we some I announcements. have begin, Before calendar

plan hope Time, And I'd Master platform X:XX to over optimization, like like Xth plan turn AIx we the design Master on October, On Class. at on AI. control and and Pacific to on us. we at in hold to process including our AM technologies and also the XXth series, call also host e-beam September the this We'll the A.M. our you'll Then, third on time advanced focusing packaging. Pacific event markets Class X:XX join Time, focus We of fourth of process to now ICAPS and Gary the heterogeneous Dickerson.

supply our capitalizing services, our In and environment. of Mike. semiconductor again, performance, for challenging on navigating you, Thank demand record Applied a while third broad-based quarter XXXX, Materials, strong, delivered products

I'll in adoption structural advanced the A has the transitory will time, months, At shift economy the has supply technology, accelerated challenge creating Over and the digital the permanent chains XX global transformation disrupted pandemic the outstanding COVID-XX same logistics. want doing successfully industry. support an these continue near-term Company our incredible for a of quarters. of the provide past the topics. to the on disruptions, overcome main keep R&D track. on and I over our navigating to today's X job coming roadmap thank focus call, to Across customers teams for In

the First, our and market, starting I'll thesis. then perspective our our recapping outlook longer-term provide near-term on with

trends. nodes In circular represent for the XXXX, market, wafer long-term in leading applications, of X will market. we future. or the more in Overall, begin year. advanced X the is will how in for fastest-growing the XX% it electronics, customers sustainable split communications, strategy Applied's there to summarize Applied our markets changes growth with and strong to I'll is outlook. our strategic significant and pillars explain making between total power automotive, play role equipment bigger, most more the technologies are customer what and address of is near-term than today call FoundryLogic Demand well-positioned the and we third, I broader, with spending our logic, view no is the edge, valuable IoT, believe relatively investment outperforming and evenly foundry and I'll Second, an even and fab This to sensor of investments is ICAPS. and

the and to both investments demand believe levels, normal capacity an inventories levels second-fastest-growing are year. for computing. side. On investment sustained memory-intensive remained long-term below NAND by absolute new the year, technology. spending we supply the inventories setup be positive DRAM DRAM normal similar WFE drivers AI be a We expect for this to demand We see we in strong, basis, are to side fueled expect Supply-side and NAND market on and at and

We're time will only semiconductor trends beginning underpin industry never a companies. been I for exciting further that growth. strongly secular of ahead, has Looking the believe at there more decade-long

at innovation. semiconductor on the economy built said drivers in automation. an available, X current driving for vast I've in is AI growth shift consume demand sense longer or structural the digital X and approaches value towards data. no transformation is and volumes To create from next-generation make edge, rather applications, semiconductors As expansive the silicon, more exponential of killer before, and and needed but further Demand digitization new silicon machine-generated devices they for not the about Smart are are fueling semiconductors. only data computing broadens and connected for

accelerating, of adoption technology consumption by considerably global rates silicon of is While new vary region.

China XXXX. of estimate spend digital by we governments And meeting, so silicon have China levels investor of our increasingly is strategic are transformation U.S. another the XX saw recognizing wide-reaching, in capita semiconductors. the trails showed X XXXX, to Since years. India importance in reached only will that national we of As by per same impact the the

As supply capacity. become from in Asia, incentives they support provide distributed Europe, including resilient, moves and available to in time chains can and the as just industry approaches, flexible, and multi-year government secure regionally U.S., lean the more

we've piece right is commercialization is we as the more or the and I of puzzle. in one technologies, the view industry's our lead future. and to and and technologies have putting investments the to development critical future a infrastructure the of winning access be what like infrastructure the won't. accordingly. Early those in winning the will semiconductor not place that to that next-generation And superior in manufacturing At past. only However, innovation even PPACt strategy refer countries aligned race of that strong Investment to the companies determine thrive, will Applied, point

strategy X pillars. Our has

to are and we Company to market the area, First foremost, enablement roadmaps. and provide PPACt customers' for on being foundation cost, the performance, focused time power,

most and highly broadest and ways. the can unique have enabling in we combine enabling co-optimize that and technologies process portfolio of We

significant business subscriptions, model to believe to as we this shifting of benefits we're and Second, us. provides customers for more our

yielding revenues serve services monetize converted including approaches. adjacent already shaping for we base up and is a unit starting strong and XXXX, that businesses drive profitable our a products have results, very display, We to third, recurring leadership to strategy to of subscription growth strong we a products. and our our continue flows. seeing be meaningful our Starting are Applied. for optimize of in portfolio markets, installed demand of are out-performance to This we higher business free year process new is cash using with to And tools, portion

For example, thermal both our are Epi on of guidance, more fourth-quarter midpoint our track and the taking this grow businesses year. fiscal XX% than to

today we XX%. areas, On will our and grow in strong control, CMP grow at with While and to top diagnostics our some level. than products been we XX% about performance allows more expect and especially up calendar than co-optimized By implant momentum have our than solve have already more transition solutions. in us co-optimized the solutions integrated and XX% sell for revenue, semiconductor our also see stickier. problems XXXX. to Co-optimization and We're manufacturing, while make XX% this, speed to more growth high-volume of seeing technology customers, of process we higher-value

the Integrated with Beyond called IMS, multiple Solutions typically metrology a co-optimization, vacuum. combine in customized Material and sensors our system, processes under single

and lowers of Our and new resistance IMS opportunity we advanced X in a product complex have latest XX% can pipeline new the playbook, addresses IMS, the challenges multibillion-dollar FoundryLogic interconnect by and most exciting FoundryLogic over that M. target we valuable directly the in for next years. both PPACt solutions, With an the

specifically customers By these to year. our ICAPS strong XX-nanometer accelerate Revenue co-optimized and sensors. automotive, this in Within applications increase we're nodes on and applications serves and of power, market. demand for IoT, for a area and which business, designed team including and is spectrum is double share solutions. forming products is serving customers sustainable we've been to growth, ICAPS, markets, and our a acting We're this integrated seeing especially focus these communications, new from expected able ICAPS Another larger ICAPS early products dedicated in developing of XXXX, and broad our robust.

partnership As with our a customers. these and result, we're deepening collaborations

all-around roadmap. for to We evolving recently For leading demonstrating assured a our I'm XD in and gate is gate believe Applied. ICAPS. and example, future predictable them leadership ICAPS Rail It's that that workload-specific momentum and shrink, new The for the contact I and more elements, advances for new growth are PPACt ahead, designed DRAM, are X key Power better. as revenues ways materials more the materials including our relative customer contribution and with at industry's Today, advanced new playbook geometric of contract these Applied even PPACt foundational XD opportunities and nodes and we and new we engineering opportunities memories, more that a strong X to to are ICAPS architectures, clear IMS valuable elements in confident for in to interconnects, including provide varied transistors, signed even has create businesses, PPACt larger packaging. role. supply structures, an look play X-year And

in our investing market. Let's early example. packaging more We position take ago. equipment clear a advanced differentiated we years advanced inflection served began an enjoy Today, identified leadership XX% than and technology this share of in with as packaging

We will R&D from generate technologies. of developing a million And and combination we're $XXX organic strategic enabling of through our equipment partnerships, highly business more future this than revenue also year.

our you Master excited very Class. upcoming are more opportunities and pipeline, at about our and We share with we'll details Packaging

transfer cycle to is market. to talk solutions to we acceleration highlight developed the accelerate proprietary strategy. and enablement a consistently of market to the critical manufacturing. from of importance high-volume when stage t, time of every We've life component Finally, PPACt about our a of Time to product customers R&D technology PPACt, suite they

that platform officially launched sensors, AIx May, and Our metrology, actionable accelerator in together tools, we analytics, process learning. insight machine or brings data

adding multiple leading have and installations new are strong momentum at We customers.

tools, as accelerate windows enable Pro within For chip yields. R&D to optimizer higher is is used larger recipe process example, and well individual IX as our process qualification of Applied and chambers and

of XX. Over XX XX this double around the to number engagements we year to more expect Pro Applied than from months, customer next the

Before see positive I sustainable of strong business and range summarize. and quickly over a technology We for drivers. Dan hand underpinned to semiconductor our call (ph), demand macro by the wide I'll

Materials portfolio our adoption process above great working and accelerating While teams We to this our are tools Applied ICAPS packaging year, of for of will unit combined our challenges. with leading outperform through products. advanced differentiated disruptions our persist, IMS COVID-related these supply thanks markets, believe doing again strong a in job markets edge, chain

structurally the significantly Applied As we're equipment is the of Dan, confident that believe longer-term position we faster PPACt we wafer drive our grow roadmaps, best secular markets. our fab strength and and you. accelerate over to in look higher, ahead, will to than semiconductor markets customers, and trends,

exceeding I'll on my recurring by discuss the Today I about give details Services demand guidance. with trends Beginning you cost Gary. including portion years in revenue in performance, the of our headwinds metrics of guidance QX. the Company summarizing QX. in XX%, highest business. ongoing increased generated surrounding also Applied the related each I'll segments XX our results, gross FoundryLogic our We our large add I'll new our for provide to of revenue with begin markets. semi-systems in is perspective strongest performance Global QX the Then Applied's COVID. which segment. Then Applied's will the number the overall history, to margin And Thanks, despite a

operating also We the earnings and delivered margin, share. highest-ever profit, Company's per operating

free flow of operating record cash included and results Our billion. record cash flow $X.X

stock we've made quarter return a shareholders, the long-term billion free flow flow fact, $X.X full XXX% quarter. X buyback our the We available buyback the And generated of share billion $X.X the authorization. the quarters. to to flow X with billion returned in XXX% in We QX, of window in quarter for At including cumulative commitment the in cash ended to to cash In we remaining and Applied investor dividends. nearly meeting us free XX% free was around repurchased over cash shareholders. of past to during April,

intrinsic trends shares. value markets our Company, growth end to active secular of we the continue of in be the and for our our the in expect Given the market to view

also Finally, upgraded Poor that rating Standard to earlier A. A last our credit pleased quarter, - AX. month, rating Applied's I'm upgraded from this that I mentioned Moody to and

business I'll provide semi Now of which in insights QX. its performance strong some generated revenue the our into systems highest-ever

that's and our a first Memory, business, of focuses wide across across our revenue nodes. X About XX% leadership the nodes. leading reflected many operating half We're most is technology foundry-logic and ICAPS variety increasing Our but demand within FoundryLogic for and on foundry-logic all which being is in crossed our margin, the of being generated which our time. in areas, broad-based by

product global North serves applications and customers cycles, throughout business has the presence a long large both a equipment opportunities large number us, Asia. very generates and of lasting in Our America, for Europe, ICAPS Many of and services. which have ICAPS

strategies insights share, into We are next at have to accretive and the the month. We the a you high the more markets and look Master giving our ICAPS forward Company. to margins Class

across Global predictable free We're flow recurring business market Turning to delivers Services. that cash Applied a solutions-based cycles. building revenue

that I'll help good qualities you our segment Applied indicators insights of the From and gives performance with continue And into the business. progress unique key of demonstrate Our business, a reporting record the you the equipment. strategies. year-over-year. that to XX% services segment was up revenue QX, The delivered XXX-millimeter and AGS was reporting, you of revenue in recurring amount services, AGS know parts, legacy, XX% billion $X.XX software. primarily of remaining

and in goal At investor semi-install XXX,XXX base to industry's over is generated So lifetime is by XX,XXX we billion progress in by between highest revenue systems, recurring system XXXX just this our peers the base. among field. chambers installed increase value in $X.X revenue largest Today, our per and quarter. This from and over our we our far shared have process XXXX. Applied the the the meeting, XX% generating demonstrates

As our already we're achieving halfway QX, of to goal.

the world. remote also analytics, in from which best The remote X,XXX, and remotely our to for We're the XX% us anywhere our of to allows installed connect over XX% perform to from baseline. grow adding which just to revenue. exceeds enables strategies up perform optimization our number Connecting further which X,XXX servers for we value to from XXXX tools, connections, baseline. to over of put number customer have base XXXX our up connected base Now over the connected metrics secure I'll customers. diagnostics, now to is is us recurring our some data-enabled tools AIx our experts growing installed our Today, services the

the is around generating XX% Another key goal Today, in our of we're recurring XXXX. long-term recurring form service to is our by transitioning to subscriptions revenue from revenue of agreements. and focus XX% reach our subscriptions,

We subscription also rate have around XX%. a renewal of

X.X base customer We've Another at entire of the the the value of years is increased across today. of subscription the XXXX, tenure to agreements. the sign from of years end agreements tenure X.X

sense XX% of We our the cost very on were pool revenue, KPIs booked In good of they [Indiscernible]. closely. focusing QX, the and you track size to of in subscriptions give we're customer market, recurring as of our customer these output generating fact, strong by multi-year I as growth time hope all and a agreements. well

Finally, metric first our years. time in another key which for of services bring is provides to operating customers the value the across AGS a margin, QX disclosed XX segment we XX% the good indicator in

Next, on the my I'll demand perspective add environment.

record we quarter, further see ahead. QX a While was growth

in of our systems still record fact, billion to is close WFE overall expect be the and In and FoundryLogic backlog $XX our in XXXX for be spending XXXX I of to across expect AGS and to with reporting levels geographies. I and half I segments of DRAM. in all semi equipment strength our both be to both second higher. higher up expect calendar all

outlook. Now I'll share business QX our

because of XXX within We or or our expect to this supply chain. the minus We've range increase widened quarter revenue million plus $X.XXX around Company revenue near-term of billion, up XX% year-on-year. to risks approximately

$X.XX XX% AGS or up Within $X.XX $X.XX around of year-on-year. We semiconductor XX% non-GAAP to year-over-year. revenue plus $X.XX about An nearly around EPS billion, revenue or project year-over-year. we up minus this be XX% outlook, of up billion, systems around about expect

increase is non up We should revenue open be or - We around be to million, Applied of $XXX our flat GAAP target XX%, expect plan points to XX%. at - revenue and of display basis sequentially year-over-year. $XXX XXX around to margin around gross non longer-term GAAP below which million. XX.X%

In like that strong, quarter (ph) Our with and Gary record in of financial slightly non tax all delivered I'd Applied thanking demand environment join to partners summary, a margins QX teams around in guidance rate pleased continues performance The flow. and our of of GAAP in I'm free strong higher hard XX.X%. work assumes - to environment. their challenging and for a and be cash robust another

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

today's one call. Thanks, Dan people many question (ph). as us on To ask help just please can, reach we as

just to back the best later If you come please re-queue have our question, to we'll in you session. a let's Operator, second please and do begin.

while stand Q&A Please the Instructions] [Operator compile roster. we by

of comes from Muse from line C.J. question the Evercore. Our first

is line Your open. now

Good Thank little ICAP your dig the Yeah. you for into hoping question. Was afternoon. bit deeper a taking to business.

the as about and being I that. plus part of you bit spending that's as sustainability there, You should that, this percent lagging into is versus you there, can And around XX then year that as as talked spending there perhaps greater we Did XXXX, hear of the much. a about Thanks the correctly? the mix little a angle of or can -- edge, no? story positive penetration how And you in of of half mix finally, think shift FoundryLogic for about gross a ICAP, think more detail you growth subscription part given there so to well walk the leadership margins.

(ph.) I'll some perspectives after C.J., this (ph.). Dan Hi is can with Gary I'm start and done. jump in

FoundryLogic look edge XXXX, XXXX. the market markets X than right around you we're WFE We FoundryLogic. got ICAPS we the as think seeing is those So, create setup in we of about balance those and versus drew FoundryLogic, leading look greater I contours X balance we've XX% the again had think the perspective into in the When and this balance in in year at the nodes, markets. ICAPS

entire [Indiscernible] new key well-positioned drive playbook edge forward. going in across incredibly roadmaps Innovation So, the we're We're profile. entire the profile well-suited on within the FoundryLogic. is we're those out. ICAPS equally think node across strength rolls really technologies drive to the encouraged nodes, leading by the and seeing back enabling the We we're as to geometries

are very way be to there Those capabilities vibrant. As need for at technologies as got intelligence margins. unique key enabling edge. our to auto customers that are really IoT maps the driven positions are We've pursue communications, driving its in road market good technologies unique attractive us that sensors, finds power and opportunities

of extremely of well think we're FoundryLogic positioned. very balanced So, set well, both perform we're to sides profile really well these way, going we as we a so in how like up forward

This Thanks the Gary (ph.). for C.J. is Yeah. question.

would the as trailing talking think the X.X trillion certainly, and this really think People that having a technology all of is about both packages. if applications I and at maybe of big sensors, some we connected talk and and trillion there devices ICAPS, people or about But are digitization are edge, inflection, chips everything you nodes. cost the future innovation eyes, amount of tremendous needs ears, to be industry, power system that performance the to those companies different transforming deploying those every in and and think the are in

is go I connected So, some unit strong. very data, more parts going need I a But Master and cost, things Company, change you those see of innovation. all power, the organization of Class. machine-generated extract very edge, to we this high-performance innovation. in to the relative would pulling as very, Xth as will especially trillion the data. insights. in we it's talked edge is our XXXX, important. devices in future, And X/X stay that you This strategic to think But key market about process And together to made in strong we XXX-millimeter Certainly, about, in the XXX-millimeter, our edge at can a think you certainly, explosion Dan cloud, on think really of innovation that latency, sustainability, cover September the the actionable

of technologists at that some September focused dynamite Class. we'll share our these We Xth markets. again, on Master more have And

Thank have please. the C.J... next Okay. Operator, you, can question, we

you. Thank

comes Bernstein of Research. from Rasgon Our line next Stacy from question the

open. now is line Your

a DRAM. First question question. guys, Hi on I on had taking for my memory, on -- thanks

into prior any shouldn't is significantly whenever than grew on X it NAND that there believe positioning than its sounds be piece was strength at your peak, ago. of may on Have in your you about views several about, prior the I a NAND, like ticked your And didn't competitors we So any the it potentially reason I versus NAND years though rest really and talked a there because that muted below wherever market everything DRAM that pretty think ago And the the of FoundryLogic higher all. quarter And whenever be other and at levels. little still on is, higher, more Memory, sequentially talked saw hit months ticked to quarter. peak, like all, half is, of peak down your you of level which were pretty you're believe mention on to trajectory is the know it. DRAM, where bit. we down little that of the were you've still and given the one trajectory obviously it views where back that nicely the you positive reason last

Thanks, Yes. Stacy.

of points anything crack a Let if sure me out, the up leave the table. you put at those and hit I to follow questions on take that make please I all

billion, our said view WFE within see we a minus, and strength it's change. there's First, now I embedded across this year, think little it's very think We we XX that, plus, all around device over grower, types. mid-XX%

and pull second-half-weighted, fastest-growing; down Your more still strong put about Still we next on second-half-weighted. fastest-growing; think a profile of there, tell, time that Is flat? so we we're category. bit the feel We it question I Last good Is a needed a demand to quarter, customers it mark in NAND. bit? FoundryLogic, see from that. DRAM,

in at a changed DRAM terms this the strength little in down the of bit? the increasing place a map, source question strong us. traditional our And shape the now to we've structures a about at there's has back be the a are progress, in Is Is and think had taking for mark. playing profile logic-like DRAM I it is the our a you So market Right talk we node, years. market. business and now, adopting flattish? road seems as over of Taking that a look year. for it opportunity throughout step node in within several very momentum take we of to a a out that look this

for the our through customers, out and see continue results. that we would strength key playing role to enabling recent of that And the so, most half playing year. in expect the back And we're a you

we As overall strength We the see we types; NAND. look do device continued up see into all year-over-year. in FoundryLogic, X DRAM, XXXX, WFE market

so, going we segments way transformation, right positioned semiconductors, we at years than like that it be really the planning this from to of year-over-year. secular to shaping concept in interesting I'd against was up how look back going today, now, context; see digital of The if going now we And and trends increasingly know all than reporting be it the the through a take industries peak X well ago. industry, for say are we're for opportunity. to this years is of X X semiconductors a drive greater adoption it we we're demand greater and is our And a step and the one certainly is

than that playing they say historically. is bit market, shrinks would have growth producing nicely. is So, less node that What all out node over of also I in DRAM your the

intensity seeing that rise market. So, capital you're in

it frankly. Capital seeing as in types at what But our this in the a seen historically. and I of when look are historical all compare we've You're profitability I making intensity customers percent basis environment, a device on to rise investments

last decade. customers about the the You decade a over is and more down are a WFE, XX% back spending as from a of percent WFE the EBITDA, go standpoint,

we And the and So, is up the line than not this while think play really to drive road every investments year long-term it definitely really up to be We those map, been. of perform industry highs lows our as the we're today deliver well greater and monetization industry. leads do out. trend its We a secular it's higher peak, around higher ever may set like continues is map. road these performance as drivers well think power trends to and incredibly the

you. That's Thank helpful.

Stacy(ph.). Thanks,

Thank you.

Our next question John of comes from risk. from Pitzer Credit the line (ph.)

Your now open. line is

going good of afternoon, notwithstanding And have is. semi-production the figured about how important comments period for the letting made strategically out a you governments we're world regionalization in me Gary of ask question. finally semi-production. comments your prepared guys. Thanks how through Yeah, (ph.),

If quarters, biggest that X has you of dollars far over been grown look over last a you've revenue the the China. and billion chunk by

help China how I'm you supply. better When the the think expecting all we're takes today in and wondering us do you understand so, And of this to of that just if spend can and extent makeup place? regionalization that

Yeah, take crack it. a thanks, John, at let me

China. numbers to And would a so, The that what the are got we at three market in we look both there. international we We've domestic take report systems as facilities participants, well are segments. market participants we do China the reporting business semi say building is, as

the market. we ship of the that as facilities, that into equipment those All go into as supporting well display the services

lot And so, there's a that of in pieces any given moving quarter. produce revenue China in

all a would overall growth market this year the towards little ICAPS DRAM, say I NAND. spending As the that I $XX China. what's growing at in I And and it is the going compare probably you're look would and seeing domestic year, say back step types, meaningful a it's we perspective, bit is take maybe China would say billion the a FoundryLogic, I WFE is, of X device this to across waiting on spend above industry in last average. What from year.

really and technology, So, enabling reporting up but we're longstanding got about serves we we've set this against how across diverse good feel relationships, while this X opportunity market segments. key business a with broad that

performance the we as continue feel we're how so, strong to about market And evolves. drive positioned good and

I tremendous other across the supply from I'm different part capacity, it's There's And about think perspective, different investments on there's from a continuity that a happen question, what number of discussions. regions: regional those chain pull that's more infrastructure focus. everything but others. And is having to, inflection. no to area personally, I infrastructure question. involved John, U.S., or certainly, many in ahead more to power, a important Cloud of gets for doing Edge Asia. would when big that's costs, a have of the It if Europe, regional your think say multi-trillion-dollar think digital you I not about in innovation important manufacturing back going just physical innovation, this performance, even earlier, between, really infrastructure. of enable But infrastructure, I innovation, about as is talked

the as relative is foundational regionalizing the an governments, opportunity, invest certainly done I to infrastructure incredibly of important, think but and having puzzle future York, key see race win continue Applied we're -- I to of moving is top and technology pieces this New to Center U.S aspect the innovation we race and forward needs that the the is to in position what already a is many META for certainly going the the those where future. this U.S, to Center and PPACt in Maydan happen physical of on we've and to So, with Applied, lifetimes Silicon is Technology infrastructure this Valley, Also, what certainly for innovation win capacity. of in in another our

then quickly a counting in John, in -- from an of we're markets, government quickly anything XXXX. very impact perspective, just timing John the And very not from spending

than that you is to the standpoint. we're it is right the 'XX, view what to it spends it's seeing then start as But in and market 'XX see a 'XX we faster from timing regionalize 'XX. currently that, Our to around happens have If upside perspective capacity.

guys. you, Thank Perfect.

John. thanks, Hey,

Thank you.

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

is line now Your open.

question. Thanks for taking my

online I'm even expect year. of EBITDA targets. bring some next that, how Because I when curious exceeded at you close, does additional gross And fiscal have you are your to mentioned they or cases to WFE structure? your your margins, it much You look and are that pretty margin in impact or XX part year? planning capacity you how expected grow next as

how margins into Thank If are give you you. here? online, planning could some go where bring additional and do us then to capacity from much insight you

Yeah. Thanks for that.

multiple Company we've a now for been a nice you quarters. as If rate at noticed, investing

place had way. saw serve saw this we place view a You made for to sure several infrastructure. for do we're years competitive we'll would that we really been to ahead we've this But margin to specific as point statement capacity materializing about our the capacity you imagine structurally to performing what we of going, along Company's support continue it. of in go point industry a begin larger, them now the capacity this in going put invest online, up, bringing From our We'll continues was on standpoint, to customers is and We that can do reasons. what as us in and in take We much doing where and invest be environment. took that how and industry say -- well I continue successful. that won't that a to make the we

results. You see this the a follow-through We one-quarter is And you it told levels. a environment. we in phenomenon and at despite near-term from current see see the we these headwinds it COVID wasn't

a about think you also talked those off as these put so, begin basis And standpoint. upward XX.X%. out an I see on a of dissipate, says, model [Indiscernible] margin to we bias like-for-like levels long-term from that headwinds Then the it

the level better Company making good think the I say even is, think with but of to be matter for to We'll no Company than would it. baseline do I doing at what increase about that. constantly we're we're progress be productivity satisfied the our way today. against a margin good and It's we'll gross ways never looking

So, results. we drive continue continue business, to how set we'll up. about support and make feel to to investments the We'll we're good

Thank Dan. you,

Vivek. Thanks,

Thank you.

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

Your line is now open.

about to so the leadership Good Thanks ask your taking Gary, question. much product. wanted I afternoon. for

gave some your in growth rates prepared You remarks.

year, and I All what and of guide above growth key implant. X said XX% is, my Epi for an for guess the thermal I outperforming, drivers some first for XX% think question above your you implied believe for are is, I XX% this And 'XX full-year semi above systems. what what's obviously for it Thank based question gross the important because should sustainability think mix conversations ask I on today my based backlog is, fiscal and with has and there? And second you. you're the implications having in on margins. about your customers? we how part your CMP, into

Yeah. the thanks Toshiya (ph.), for question.

industry. new ways of shrink, that, chip structures, the when map, And each X hours Performance, drivers, X So, the and in would architectures, to Power, PPACt ways Cost, and key last think for think many you leaders and materials, chips ahead relative CEOs in -- customers. new others, new the losses who new that's also what road determines when I constant what and to new talked about you weeks, getting drivers the our conversations of leading with R&D connect And about having actually, time, when there we've wins say the together. I -- about and for

a are talking surface our levels. different some rails, all in I drive no at enormous billions road combining innovation gates under is cases of also look significant today system are you material that materials our communicated. talked technology one in we've we new gate. area in wiring ALD, and enable in leading of And When structures customers what meeting, performance. And you think is in or solution, could prep design I see and smaller to what I earlier integrated many we but over savings. about reduction the around, many in worth new reduction If elements, people wiring this pitch, That with we're active new and buried businesses. even XX% drive XX% where a our with when a saying, can today, reflow, table forms, investor periodic contact at integrated the different PVD, packaging co-optimization like copper That's where CVD, or map, and those with look about then power an vacuum; across technologies, like of technologies technologies, power many think dollars. you about, And technologies

innovation innovation, for structure that new with Integrated more position relative advanced with about edge also Solutions. partners whether a really September driving really today, leading I think forward, all better. the cloud. power, that The about think where that costs for the of opportunity processing going I talked has you're that edge where performance, been Memory Applied in in it's and earlier technologies, When So, data Toshiya, it's never you the the contribution of combinations in breadth only unit materials new the in not We're our going our innovation, very with Class spot but rate. Material to we We're packaging. sweet Master innovations in strong of share have Applied processes in for in our in

the you're and investments a are years just bigger off in the better the off look that strength I going PPACt, leadership I and our we've the So, at next a pay I paying that lookout position, I seeing contribution strategies even we've never now, been way if think in few relative been forward. they'll to for driving, think areas, and

Very you. helpful. Thank

you. Thank

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

Your line is now open.

question OLED side? Hi, have this will go how come display? the on phase, long LCD When an display industry. thank you on should for on taking inflection through my a when new should I for the and for we display And conversion to the we Gary expect question. capacity

Yes, thanks Atif (ph.).

Let me one. jump that in on

capacity display So, panel for quarters strengthening we continued screen now coming about talked the market, several sizes increase. out, in strengthening to fundamentals overall prices,

in future penetration You displays the in the roadmap OLED see foldable XG then handset. And handset.

about of more attractive OLED off fundamentals, cycle. start dramatic you'll step us to format IT going point certainly investment. a but going better of it's think levels in investment displays, I enter penetration I think, a these sense levels, good to probably XXXX of strengthening of the a don't be up larger see give TV, talked all of that You market those you're to

I of market solutions there are replace format and the in we're solved entering now, I cusp at XX into be more think of point OLED drive displays back-half -- attractive beginning technical we're to of on of think large But need it to LCD. the the the XX. on tell exactly the that that to that when too to it hits in start early right cusp

think map displays. those But with attractive a got larger out. inflection capacity success I and market think inflection. way display the behind an from away roadmap, than and a this will think Applied it Once today, those business that technical technologies we're hitting it. you've then that little take But to be in putting LCD little the when customer's capital that's that more piece putting behind a and the customers technology, on still from shift will happens, it the I be and happens. the will certainly and Material of capital it structurally we're large solutions intensive opportunity actually an So, way an us road for standpoint, inflection, long-term watching business be industry's format I market

Thanks, Dan.

Atif. Thanks,

you. Thank

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

Your line open. is now

had Yeah. Hi, inventory. thanks Dan, question. a for question about taking I my

Your own the sales last yet $X at could some with some And And component on inventory give and militia subsystem have your roughly and your factors, suppliers' from a your constrained basis, have hub due a into stayed around you. revenue Thank down challenge point worried take. of or being dollars billion few road? grown sequential other you your quarters are suppliers the to potential pulling Inventory? curtailing manifest are you

Yeah. Thanks, Krish.

is front. pockets, So, back I chain begins and our to say that know no is fire are and different on the certainly, all supply industry is nonlinearity, economy I the some online. would that what think global we disruption There

see we I the operating. think what in we're X Company about needs to to that a our begin successfully and make with operation in decisions expectation satisfy supply quarter, anticipation environment. going set time, chain it We them current challenging how see about how as see take quarter the good disciplined, of what we horizon, forward smart at would of see we'll successful. the you make make engage but we a to My we're sure efficient what is you is on given in inventory feel our customers' a rise up

quarters, pleased the So, as in and the I several on look the Company way. a comfortable way environment and really operating last very Company disciplined in with the growing is back the

Thanks Dan (ph.).

Thank (ph.). Krish you,

you. Thank

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

now is line open. Your

last and Hi. segment and Good did control the well results billion-plus $X on solid very in year. afternoon, The congratulations team the execution.

segment there's was now to calendar focus strong this saying Clearly, view XX% the prior strong as we up last And see this the potential time-to-market going critical. new momentum by next to look your And and processes is this Obviously, yield new is team a think share how the is you control these or for sustaining gains improvements that do process growth were know still into XX% production plus strongest this debug and control? for What year year. the prospects process growth year? the year. process I year. team going grow from on areas

certainly When question. think I'll X e-beam leadership, tremendous e-beam within PDC. there about leadership, the X really we're is growth PDC that. I our are aspects, for certainly Thanks about Harlan. business, extending our we're talk Hi, and seeing

IMS to more of the and product. talked our that's optical that the new expanding other prepared in But the synergy next I Enlite, really different than remarks, have the we're the those recipe We from is that process optimization, engagements extending in product, unit with traction innovations. technologies XX aspect about, year. XX the Pro Applied important,

innovations, for billions any every leadership, those structures the it's for data or unit have one across e-beam with basically pattern DRAM, of loading we so we're recipes in us things, customers. that's it's to our amount and And a And around, across process and whether highest can or worth gate those of at things like IMS of and our so dialing or capacitors and our chip worth the look of wiring, unique wafer. can algorithms, imaging or dollars really all fingerprinting is we massive a taking for and kinds we tremendous doing generate what resolution,

all new of the EUV across Certainly, will really combination to in more our portfolio application. our we within relative that that products, growth extremely Class strong. Again, a see e-beam to our at about is talk products from the that's powerful. very upcoming types of Master technology revenue and We're perspective. also of great across PDC. the So been also to is And deploying synergy extend leadership resolution

growing So we customers customers. broader FoundryLogic strong. some is with optical set a strength The also that's of very part across where have real leading

I'm So, very optimistic.

even optimistic, for in big of the acceleration synergy within Your PDC, about Applied question R&D higher I'm rest excited sustainability And of portfolio. the the very, and sustainability, for about about revenue process yield windows the very growth more

Thanks, Gary.

Thank you.

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

open. now is line Your

XXX-XXX business. I it just into half we the some look If commentary at seems like lot. semiconductor the takes views if a you half $XX around on take consensus both in XX the wanted doing the here your systems get range. of for this of the WFE back to run puts longer-term the and on the street year, rating of cumulative for the year, revenue, about we're it's And of billion billion. calendar in just Thanks back of

of a bit here And the that think the seems of number. XX% So XX% back above I WFE the longer-term in think half you've said you year. intensity

puts on So, systems and the go the Because do say, subsidy-driven think is, on downside? we beginning I about for where business you guess WFE that takes XXXX. coming you my in question as Dan, how could have the do

I think and just Thanks. all of guess I'm takes So, that. wondering around how you the about puts

rates, and you Thanks, Tim. think about rates. about When quarterly run market think think you about and run share, you

quarter things with to what First all, given see going quarter. to broad a quarter, you're happens move hard in any so from of it's to extrapolate trend.

from second depending say on mid got this is, thing perspective, we year, think analysis. From a you is pretty get The that in what XX% billion over assume I'd market my a big swings market you XX the grower. standpoint, share can we some

our X Our in see that all semi systems increasing. systems over those seeing strength over quarters is market to across and our quarter momentum, segment, opportunity opportunity. three X guide, of of XX% going node against We're quarters, results, business be node actual types up device first we X the

into we As we WFE see XXXX, up. look

confidence has the that Our up months. in X gone interval on last

And so, we then you feel good of about see perspective, regionalization that capacity.

importance the digital in call back step of so, with any segment verse intensity. profile the year, about And a to of raising and as think always the economy, given -- about precision hard to capital I take you Agri virtually transformation think semiconductors

Moore's out at playbook. see create an don't element secure regionalization multiple capital about I wall, on think of going playbook certainly hitting an capital upward Law, of think the a then each a upward shrinks supply is XX%, it result XD new there's traditional traditional key to enabling that XD role I We're it. a in semis. to has that elements bias time, and time over intensity new to of as of intensity think you of bias I play a capacity over there tops and

even that think bias. upward further I provides an

a and -- while. observation so for this we've on been And

successive up next And we back WFE, decade, see over X-year averages over as prior. to those our the look showing of secular of shaping won't we go trends be X-year but window each you If a been at year decade rolling signs the strength. every has up, forward nice and look industry,

low of highs, the hit. to It's line. hard will a on cyclical call the higher it's going peaks overlay lead to of but and when You lows, that trend those valleys higher precision top get with timing

you, Dan. it. Thank Appreciate

more have please. question, And time for Thanks, operator, we Tim. one

you. Thank

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

line Your open. is now

I'm on for the well. question. about the taking Congrats Yeah. curious as results just WFE outlook. Thanks the

any increasing now plus the is update XXXX? about of give it, XXX how a I you in for XXXX? about about Can think you higher on think confidence for I over You talked XXXX. last sort XXXX, we little bit us part we're think talked

Yes, thanks, (ph.). Joe

what see. Here's we

said over XXX see we and and see XXXX up year-over-year. XXXX, we we So, billion, XX XXXX being for over

over higher billion we've 'XX XX level, already, and So, we that won't that to but of to update than higher you're up be over point those you're got XXX, clearly, if that specific a into lot pushing is levels, confidence XXXX.

our be certainly, that as we opportunity segments into to in momentum we we reporting planning We each our going look 'XX, 'XX And outperform look So, again the to we we're think we're to and continue into good up in we're XXXX, about as XXXX, feel 'XX. given outperformed of set and up. setup. for the

think probably X I of just is executing what for in way that you we won't see. the what you shaped a But years. good feel we Company against update But how about a So, sense gives it opportunity. point-specific the I

Fair enough. you. Thank

question. for up to and thanks your Joe, like Thanks, close call? today's Dan, Okay. help us would you

Yeah. Thanks, Mike, sure.

takeaway As most the I market from to ICAPS now in just one be a quarter only used is the and away is spend quarter, balanced today. node past, leading-edge much look leading how What recent big evenly markets at the take the broadened. FoundryLogic has I between

in put more it's to edge, edge think memory is generated it advanced where a nice logic data of computing intelligence going virtuous I the IoT. the at cycle. the a cycle for virtuous the momentum create we edge to sets see cloud, speaks and demand that When you the up at

more incredibly the has the deliver over coming shareholders up Another well are had. many gross the Company conferences cash seeing, chain the our really observation, margin in city I you and flow some also hard despite teams the industry working initiatives, in results and supply time. best of strong they're free see Needham, is to the at ever us cash Hopefully, being driving headwinds to like the sets delivering I'll generated, weeks. even Deutsche, of

Mike, that, call. let's ahead, with so, And go close the

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

concludes Thank you. today's for Thanks call. participating. conference This

disconnect. may You now