Applied Materials (AMAT) 19 Nov 212021 Q4 Earnings call transcript

Welcome to the Applied Materials Earnings Conference Call during the presentation, all participants will be in a listen-only mode. Afterwards, you'll 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.

Good afternoon everyone, and thank you for joining Applied 's fourth quarter of fiscal 2021 Earnings Call.

Dickerson, Financial and Officer. Gary Halliday, and are Chief our me our CEO, President Bob Joining

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

of delayed by start generated fiscal XXXX, thanking suppliers. Applied equipment challenging wafer represents these XX in to earnings like million weeks QX remains our we our supply % year for been environment. least and strong. the a the few have we the I'd at fiscal midpoint we constraints expected of Mike. our constraints. $XXX several ' higher. Demand the hit than last And you, growth. Materials we guidance, dynamic delivering revenue, In despite worsened in fab annual which $XX very while as billion best quarter, estimate history that navigating of shipments supply chain and semiconductors from employees QX, experienced larger These shortages, Without for revenues Thank in would

top chain remains fiscal priority. We XXXX headwinds expect and our into persist them supply to mitigating

both and the providing by industry's longer-term. today's For supply this I'll begin some additional reason, details about near-term dynamics, call

in how and then years. demand over search on provide Materials CFO CFO. also for the happy progress is Applied the of market very about while broad-based. and coming and will performance. is our share against I'll his a describe the outlook, perspective financial conduct on growth the we to Later positioned the which our color strategy Next, outperform the to I'll welcome our the call, Bob we're making next I'm talk state seat business back Bob the to strong

So let in the and certain in the factory primary manufacturing the make capacity infrastructure, the made strategic continues our to components. Applied face of start availability equation. has with own of industry, investments us. side limiting for a is today, is supply many Like global me challenge we so factor silicon not

issues and with I teamwork collaborating their are solutions For are and or find Applied, unprecedented circumstances narrow, directly work to the chip we around companies together. these we relatively navigate partnership proactively our our bottlenecks. as and suppliers with appreciate deeply

preferential Looking and we a a redundancy, built-in supply will the to efficiency levels place inventory, having access supply of further way there's economic of and to more opportunities we're In more ahead, approach are just-in-case the believe in savings, operated. burst ecosystem beyond, the permanent the and Just-in-time also changes designed semiconductor changes chains agreements Because see industry will a premium from shift outweighs pure which I in capturing value across higher companies seeing far as capacity. upside on capacity. require

now strategic it national visibility are recognized top customers comes collaborating longer-term closely level. our addition, with ever of than capacity importance and semiconductors the that, we're us of a more In providing at On when planning. to is

resilient, are in as capital expect become incentive years U.S., available supply chains intensity. we but trend the and that programs few more next Asia, see increase also towards regionalized the a Over to Europe,

and economy, digital driving technologies. semiconductor I has next-generation consumption, fueling transformation of for characterize healthy. Now, need the pandemic will environment, demand The the is silicon the extremely the which accelerated

continue mid the go We is especially XXXX. to range long demand before % equipment XX wafer is result, by see drivers supply, calendar words, demand as a balanced, for again we year-on-year. be fab XXXX way therefore around spending and in grow. up and There spending not demand. expect in billion a to to $XX supply In up constrained equipment still As wafer other fab

on challenges, and only recognize inflections focused the currently next it's play decade. we're resolving will that While to of beginning near-term major the important over at technology we're market out

our growth homes, our cars, everything combination and As per unit increasing unit. phones to gets from silicon of see a smarter our we content to

look increased growing at the content rate. semiconductor is per server value, at in dollar you application also For % models. and that DRAM by example, compound is a And average And last smartphones, up data year's the content XX process rates. high-end annual compared at XX to this twice or applications, NAND growth if about RF year's % center content

leadership more higher for demand approaches advanced vast for Within as I computing at next-generation supply it and foundry fab to to new volumes customers, markets. is we be logic. that up expect developed, these see not we in current data, data must next year, more the expect a in wafer automotive, consistent. most nodes, be as is and secular level accelerate. market, of these value at spending we trends investments long-term spending next fundamentals strategically are best and devices fierce our As balanced are serve and equipment demand edge, as exponential their investing AI talk much out between the the capture of relatively Foundrylogic, is communications, further ICAPS healthy and % or XXXX. remain IOT be fueling mix this the several memory, XX in And are Then, are where sensor over with core although value semiconductors. about remain processed. In ICAPS. playing electronics, and battle They to and the driving smart in the Foundrylogic clear create nodes fast-growing In power When to message years. connected generated machine position from they to growth being moved, stored,

of complexity is needed important scaling, to will intensity. now an translates the In fiscal next deceleration providing and towards we Simply semiconductor this pack to Law performance its revenues, one XX almost goals. and innovation a more T-Playbook, increasing. progress also I capital XXXX, traditional that the new Applied's the outpacing is growth is billion higher equipment during describe to get With the from rate period. and complexity put, transition node grew % higher strategic to Moore's P backdrop, year-on-year, tailwind. our capital-intensity Against $X Finally, or market

XXXX. to described to into I meet fully shortages. And as demand quarter our to we remain expect earlier, However, fourth unable constrained going due fiscal component we were in supply

result, a the level % Company billion, same $XX.X our which at grown year. is up As backlog last to we XX period have a compared to

or our in long-term Our near-term not fully results against our the the underlying making we're progress reflect do strategy. strength business

As our has pillars. a reminder, strategy three

for First, the and performance, to be Company maps. area ' road and time-to-market the foundation costs customers pack power provide T enablement

Second, differentiated pack subscriptions, businesses to P Applied's business elements. focus built We've adjacent our these aligned shift our flows organization is more areas markets. around momentum. enablement and of profitable investments generate from and to third demonstrating our X are to T cash incremental upon strong strategy in and free and critical

unit highly Starting AIX with demand or of with data traditional tools, integrate strong. very in We enabling on these the ways unit platform. insight portfolio and can in time-to-market areas and have actionable accelerator technologies enabling and our solutions. our focused co-optimize process unique most broadest is process We our we're and acceleration leadership

and calendar process businesses XX areas, diagnostic targeted our is Our we this another Thermal be more for more year. our growth grew Packaging fiscal both Epion XXXX. XX expect CMP in to very than up than control area us. % grew % exciting And %. XX In revenues

to for We're also technologies than calendar equipment partnerships. bringing to are year-on-year, % through combination strategic and organic exceed million Our $XXX R&D highly revenues enabling XXXX. up XX market a on we're and of more track future

customer parallel the Moving capture we're commercialization example and for material's and and opportunity. see to is of removal. allows and up in nodes. problems modification, is these speed and higher-value available solutions dielectric strong, driving co-optimized new for future increasing our customers, One more to where innovations of materials, pull for innovations integrated deposition, the us Co-optimization solve products,

Our techniques co-optimized structures the released. enabled either The as up deposition CVD logic large memory. opened and XX more the These in development almost CMP steps group as manufacturing we've market etch foundry new materials and the standalone for both than new opportunity has or twice in revenue for or recently is equipment.

share Another us X ALD, etch, example is CVD, and this IMS, points more patterning we're year. one than playbook. co-optimizing t. in CMP combining advanced in and go where solutions, Integrated target or by customized co-optimization SymX processes patterning, a of vacuum. the to our with the With multiple in system, gain material under complex beyond sensors single metrology challenges and valuable with P IMS new we pack can typically most enabling step

the X that delivered copper For low example, CVD, barriers NAND. under strategy we metrology. PVD, resistance customers vacuum. metalization applications This combined Foundrylogic, for nodes, Materials, a reduction reflow, multi-billion-dollar component surface treatment, Foundrylogic our years. XX time-to-market interconnect most at PPACt opportunity enables a of over DRAM, address new in next-generation and ALD, resistance X creates that next low seed in enablement % interface and and Applied R different integrated engineering copper This in included this final our technologies acceleration. The IMS process is one X or system solutions year the to advanced

are accelerate a in tools and a chains focus digital impact R&D, They sustainable. New economically transfer, productivity major on years, area the role and key a regional manufacturing huge for technologies also commercialization and speed. coming will supply competitive customers high-volume and play these making in that will have our technology innovation

brings tools, and expect have learning. next months. R&D we leading Our currently over the acceleration number and machine triple AIX to with now customers, AIX with XX together engagements metrology, platform analytics data that We XX sensors, process

X.X is significant have to these of support of our Another already Several service making tools the our we're and technical we've is highlight revenue allowed agreements supply, XXXX about on-demand converted by renewal business, at from subscription X.X have year-on-year. XX%. to from tenure service these better up and has rate In agreements during today these The in and have pandemic. agreements. parts % nearly end long-term years a now customers spares XXXX XX,XXX highlighted of We grown XX the the to covered disruptions manage how years our service them long-term for revenues. with base progress agreements installed percentage

Before I accelerates, the will call and grow demand continues I transformation digital hand supply. outpacing semiconductors significantly quickly to over is for Bob, the summarize the As of economy to

with don't We top expect of fully components we the and these in term, meet near certain that our constraints suppliers to QX. partnership in priority. meaning expect demand Managing in chipmakers silicon our supply shortages persist to is

higher. structurally the faster feel trends disruptions, in our making the than fab roadmap, markets and I plans. towards near-term secular customers positive Applied, markets driving wafer we're over Looking the accelerate in very progress our beyond and are significantly to our position grow years. strategic the the about several And significant future. semiconductor We're equipment next PPACt Longer-term best

the Now, over I'll hand to Bob. call

Mike its supply opportunity I will shareholders. again. you of the about And strong a to Materials And want demand impacting of you and share remain guidance. all each I and it's giving in to our to I we're strong Applied are progress happy sustainability chain your topics you targets. help financial to very I Gary. constraints ability in return insight very more begin I'll good very think and Number making X, toward messages capital near-term. our our questions. have cover likely we I will Number XXXX. Thanks, great in i by by n X, our order all of demand than for and with to then is give today. s work X, products the with XXXX our beyond. meet these position to saying and demand Number detailed main begin And for into I'm growing. the typically Gary, a is X

systems semi grew XXXX. XX by Specifically, our revenue % in

% year. Our for the orders semi XX grew systems by

in every over quarter. QX up semi year grew XXX were fact, % year. orders In they our In systems

to orders XXXX of semi-systems half that way even half out is we be talked is trends environment side XXXX In the and Looking the in Gary second are bigger of years of the ago, ahead, I What's first than very short, demand demand in we playing and the strong. also higher our happening expect the imagined. than currently fiscal display. AGS, an across on about all

we're designing because sold. that First, is semiconductor everything built higher practically demand intelligence and into more gets

Used industry equipment Second, equipment consolidation, efficiencies, a the model. is and And higher. wafer automation, increases the capital don't foundry is intensity have has industry run anymore. size fab number including We now of out scarce.

And to So new adding strong. more the spending capacity buying is in industry Foundrylogic. keep markets, ICAPS demand, believe even spending customers up particularly wafer with and The are in remain equipment more. will we

XX alone. past the Specifically, level fiscal around overall grew around to our by industry's At of fab grow of represented Foundrylogic continuing over year the as see the the the end We the industry mix. a for XX ago, decade. highest spending. the % FoundryLogic to past wafer utilization % starts of years of WFE X industry proportion X years FoundryLogic increased

equipment As X.X of potential XXXX, higher wide million global are we spending projects and around that's tracking starts. range of higher XX % available it's wafer years. with semiconductor fab to $XXX into announced projects WFE, of affecting it in shortage Even capacity expansion see even billion and high we the of XX These of grown future. have own. industries, Industry-wide, represent capacity and utilization, being future wafer a with including a our we

All likely me demand remain of this to believe data to that leads is strong.

guidance you QX, give was semi revenue situation. levels In growing at I'll insights record systems our we quickly. for and into Now modest semi our targeted QX, more growth. backlog our systems own In supply

issues the range of overall the also owards we supply the our build deliveries to to we end guidance about concerns by reason end later need our due for components plan ship expected The enough our quarter. the We semi analog of of experienced widened and the related complete than directly QX, and own chain. affected QX. our which delays all suppliers supply to the shortage, The parts distributors. that Not their in of is and were couldn't the ICs. chipmakers power are our include particularly semiconductor from get logic, suppliers, in businesses

etch semiconductor quarter shortages our Our In the %. full process Yet of midpoint of growth during below systems revenue well packaging to the businesses for $XXX guiding targets. million QX, beat revenue and X semi our around of above we're our CMP, was control, revenue the expectation. million. sequential was impact $XXX overall

We have for But we're million several semi $XXX a the ship equipment. internal capacity increases. easily to of more modest supply planning

ahead, and Looking in the believe, second in XXXX in both half for remain particularly also and of in believe again of up higher calendar nodes. and be edge spending semi WFE will business Foundrylogic, Applied's in will leading strong, I at calendar the both XXXX calendar ICAPs the be first-half will than I XXXX systems AGS.

targets points, by on revenue progress, XXX We scenario margin including of well operating basis a of assess XX end track believe we've fiscal $XXX non-GAAP the earnings towards implied customer With described. AGS our strong exceed is $XXX and case non-GAAP it's this increasingly likely. $XX our year to and XX gross We Next, roadmaps profitability, points, WFE growth good by good its by progress our since deep the year, %, scenarios, the April, our basis margin growing made model can the believe high the model. it's to seeing we're variety high XXXX grow engagements making a by product industry in base we're in is on XXX in everything group year our % of targets time In after our financial our billion. %. XX semi-systems X Gary by revenue, the increasing a we case of of growth into to today, billion alone. plan, and a non-GAAP long-term billion and based outlined EPS

of % business backlog to In X subscription multiyear. of of had were of $X.XX X terms the new with years billion year. and end XX fact, at % the bookings XX was backlog QX subscription the AGS over record of

also business. recurring XXX AGS revenue, includes equipment our on millimeter While our focus is

has the million the XXX-millimeter along been growing, business Our XXXX. rest ICAPS calendar WFE market, of approaching $XXX in with in revenue

non-GAAP our XX.X%, gross profitability metrics target near-term once and We cost to Turning expect headwinds logistics material a achieve to of margin the subside.

and margin group its increased % for to QX. we confident We half display and margin operating the %, between feel AGS by us targets. record by operating the margin points XX second of of The delivered is basis in semi-systems this group's major in margin to % XXXX. that XX XXX A year, operating XX focus also our in range be while non-GAAP plan increasing

demand return program. we given % of billion continue to And flow outlook in to strong to our % our we XXXX, and buybacks. free we remaining is In We generated free year be a $X to targets expect with XXX of the and the through XX $X.XX cash view Another flow, the % the value authorization. the aggressive fiscal ended in to with billion XX returned of shareholders. record over stock of mainly cash intrinsic Company, buyback

share Now our QX business I'll outlook.

Given to increase up $XXX billion expect we the minus % revenue around supply to chain or or modestly challenges, million plus year-on-year. XX $X.XX

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

We model around to XX.X% higher which to primarily and is we $XXX of margin We XX.X% OpEx and progress target through QX around non-GAAP be %. plan near-term to Applied's revenue, year. million, expect to of non-GAAP increase around higher decline the cost should $XXX headwinds. display in below XX due to million our revenue long-term as gross

non-GAAP Our % also rate. guidance XX tax assumes a

work like along of challenging Finally, partners to thank a hard our Gary, teams in and I'd all with their environment. for

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

Bob. Thanks,

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

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

need [Operator Instructions, [Operator you will Instructions you. ]. press to Thank

question. you with from C.J. comes Evercore, your with may proceed question first Our Muse

question. be golf to And happy Bob. taking back, I'm from you're Yes. Good sure back the and afternoon, course. welcome thanks for the

So a constraints. of I supply part couple question guess on

resolved You considering your on that reacting looks can April? you are now Can all longest talked of do resolved sold to expect whatever it are extends customers backlog in be full waiting also about the And essentially is to the get? tools they taking January, not then, of out you you to for fully into speak [Indiscernible] And XXXX. like lastly, highlighted, a how tools certainly being they XXXX, Are or and time that it that? visibility in they shortages? suite lead

Visibility, back. guess. for?wovering? environment, Thanks X. Sure. and X. demand Few chain, I Overall Supply X. things.

we about supply our and issue. first of quarter. managing On it months well a actually did the And was at that chain, got one, pretty the worse a then this of year little the the end through week XX and

we're thing. short-term, quarters management over now In execution. and project So the the prioritization, next all this managing about

is set up every going have we by-week going supplier of I'm individual through receipts, it we week that doing shortages, performance all So escalating And through every thing. we're Gary detail how names. the are a So this on shipments, cadence day, okay? almost

we So of on % some % If when allocation companies somewhat you QX? to know, look that. at say, some do in to why X our be than the will up average, you X we're think our going believe better better We suppliers. they're you public that do of

are free allocated more suppliers, working that and We have up with effectively to we also who believe we're that internally demand. our customers our

previous up Secondly, of receipts the early about from if the % at data first look quarter. you were the quarter, X in the XX weeks

to we're going okay. be So I think

We're of We using over about miscellaneous of look particularly and components the XX that are What to bad. suppliers the all were top quarter XXX our hard place at PLCs. XXX XX of There us last These make our most we're monitoring electronic we want goes of the and this that but us monitoring gave that monitoring was sure are end caused problems plus around problems components. products to quarter. at our are that those closely the manageable. other nothing problems, theoretically you those there's us. If XXX thousands products suppliers us hit the stuff

really year, the looks I strong good, So quarter. up X, pretty are is like orders number next it demand It feel doesn't there, strong the good is that backlogs year. next every the

going to is chain incrementally every quarter through year. the better supply get think I

In terms of great. -- visibility is

happy, too full make of terms the not tools the throughout progress we In largely are customers we want backlog suite of think and to taking keeping big, we're tools, all can but we but the them are to I ship, going get year.

add would there and again the said the a really top I'll Bob bit our Gary. is with the that the broad-based situation in -- technologies, ICAP supply certainly is I it's last of little some say for CEOs and the Bob of all challenging, is in tools products customers, I've This C.J. And more. quarter. as no customer met of Hi, terms the s leading here demand change not a issue. but what

tools enabling that Applied nothing from relative Some that has demand. are to those again, these and most of -- the changed ones are

thanks C.J. Hey,

you. Thank

Thank you.

comes with Our Pitzer next question Credit Suisse. from John

You may proceed with question. your

ask me numbers be can't online. then you ship to as they when typically, that just welcome safeguard they they it can't your Bob, gets you're environment? Bob, against is plus the will of chain January letting And do think little of impressive But sort going for the earlier you the is back what step quarter, and up April tend Thanks the or XXX minus of than working to with order I'm the just as point to do to in that are than more question. side. million there how by on kind you 's supply pick Yes. big a as supply guess follow-up, or function, the better, of a a to curious My backlog, great but kind questions again. need. C.J. in supply Bob, you It's get get October well. They frothy this multiples about customers backlog linear comes want, bit more

you against are how safeguarding So that?

and recovery double in the question question. a confidence the think I of is rate of booking backlog, terms In

little can best our we're suppliers rate suppliers of of the is and the model accurate. at a to X ' terms you look is quarter-on-quarter. In believe analysis internal recovery, what the equipment. with suppliers we are what think about we're rate and if business doing recovery, our semi this % which discussions modeling up QX, We And we industry that's over there from it's

Our QX business Chinese rate at QX this But as the last falls bit a think every % X points up the we couple the because more year. weeks over later recovery. little of up of in a build it lower business in holiday QX, if AGS look We little goes picks is think quarter XX and more year it's in equipment momentum a into you year.

Now as we We I'll a more but acceleration get do of think to of that's right kind picking quarter, in booking, now Doubling, might do that's more modeling. visibility, what confident I we're the John. double We we're problem don't next up But hope be better, numbers. that's those shipments. better.

If and We Foundrylogic, actually next XX this year. Foundrylogic think was you memory breakout the % business. the between it's look up a year

We DRAM, double and a their FoundryLogic And look booking bit don't down you on NAND, that's bit If WFE a little We we see muted we a being spending They're mix up, that on strong look little manufacturers. its little TSMC We [Indiscernible] at and the talking more year. very commitments then. Intel, mix at next reasonable. slightly multiyear down so from think to bit see within as China businesses about on year big. side. increases FoundryLogic public next the of statements another look percentage

So I don't booking thing see the now. double right

at see the We'll conference.

you. Thank

may you Research, Bernstein question. with with your Rasgon Stacy from comes proceed question next Our

you And forward services the little Thanks into actually wondering because constraints evolution services see them? going impact it's to -- question. about year you talk -- constraint Hi, the next I you business for the service services, --how think do and bit was without being of if work do a guys. is everything services on just impacted strong be not would could else. by there you constraints, hardware the my how the issue? If taking of as is the resolve services

doing business %. is were of This hit model. great. up ahead the Services plan to XXXX XX We're year

we that call need rate of compound double on probably a we growth have service. said that a we'll that think the in year, % this of model. do think hit might year I exceed digits growth to X We even

millimeter our at there business, you and different If you XXX contract services and then where material there look for stuff. to service is years, services arrangements, up including service there multiple tool X components: is is types sign it's a X business, of time

it's double or customers we you this in customers getting in in going in parts. strong onto our service year double-digits. – past shape the because are them grow support If terms are at look to parts, in our strongly fact, good year thanking service service our think And X, contracts for business, guys and the of

So I parts think business. the impact service chain that issue, our supply not ing issues really are

in that at might high are supply service which thing replacement parts in other detail, we'll look not parts you are are service the the more Gary constrained the PLCs The those of point out components you and components, parts give if the things like chain. and which stuff

on business we're think pretty service shape good it's I a and for us. great the So business

fiscal And services 'XX a guide double-digit? Bob as you in would how percent? Low

growth. double-digits all it's think I Yeah,

much Got it. That's Thank helpful. you so

Thank you.

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

may question. your with You proceed

question. my taking for Thanks

do supply recover, see prices, chain supply what to gross my or hit the because the combination we some you power guys prices. pricing in as overall clarification, How to seen mitigate issues this margin some your you of these about have side this fiscal do equipment recover 'XX? is, you a did quickly pricing margin? question of and What recovery on that margins situation help raising year the display of fabulous start the And customers their mention will time? then gross foundry should have much expect do gross there your side? we Just So you take supply customers, expect you a raise this IDM as their can

with I'll the to technologies market is our can larger Bob many this. Thanks question. in this take where can substrates. times, part. market Relative take first Gary. into we semi the to two Vivek talked good part the second then deposition that adjacent and a take parts E-Beam really for we've There's display, about

Bob exiting XX have For 'XX, for as versus prepared in strong do more a also over And higher is as flow remarks, share billion XXXX. and and first $X.X track higher for our profit achieve the a discussed free market. half on % % in maintaining half, We in you XX second our range we're the revenue. of part. think expected, we're second And 'XX, than 'XX track served then to little on Bob, the cash to target little

gross your margin of second broader question. it's a question, -- In terms

up So great if hit the out track and now stuff. I supply year, right you XXX the think chain performance. -- in X.X a about to is look points, which at years. We're QX which this in We're gross all soft we're past on little model margins that's is

you us. the gross to we year, through expect As we out again up as supply to rise issues get behind chain the margins go

reduction, the back lot a we and the In too. did things that we for into very terms of helped of pretty recognize high-value customers, customers, things mix impact that XXXX: the value gross to good which and had cost we good we then good margin, had we sold products volume services

is If you look at a slower. prospectively, the cost little reduction

share at help We And the discussion continue volume if high-value to the and that's have going that think continue, may to customers. that point. our even we will we We cost realize margins. some with

Yes.

chain? the margins then flattish and the in half first So second in half of little supply better a tweak the through maybe

or bit the I done. overall, think the by think an a issue time years I so. of little we're And

kind comments Okay. thing. of That was Any pricing? on

I share that's look with both for us. think worked and to customers value We of

that. for thanks Great

you. Thank

you. Thank

question with next Toshiya Sachs. comes from Our Goldman Hari

may with your You proceed question.

significant there How and forward. welcome prepared you impact much back. these semiconductor States, the the capacity until Japan. from But we gap Chinese as so this is the think X your are all later. XXXX semi-cap in and a you. recently a about most know, what And there for us all Thanks business talked companies? are from point, Thank well, lot how time a Obviously, taking Europe, threat localization how you're Asia the years? you that? in you but thinking or I about your as about over sort timing like yourselves we of I next going talks around guys. even we based projects? remains of of you of should more my for and question. that, remarks, local long they've Bob, How perspective, to know about concerned incumbents related them, Hi, having. X the thinking been think between discussions very And on a potential up in about from United thinking should the be, very competitive to are Gary, think

opportunity act, I've all services the of that our questions, for business. us good that's Thanks to in localization for as an locations, new the of top chains met chips things and Toshiya. our to move with with to Relative discussions, other obviously mentioned the creates like I these earlier, CEOs here We're supply business. for quarter, as them, they last in and support especially the

So we're those with in very close cooperation

forward plans. customers there's with And move as opportunities. they those

of things. those for them, also think I and and all differences cultural they are cost about concerned

not ramp manufacturing like just AIx think R&D acceleration opportunity, and actionable tremendous opportunities that I accelerate how Applied creates for high-volume in on where they're extremely a also locations. but our insight optimize focused new traditional to So services,

I tremendous us. think for a really that opportunity creates

others. PPACt and providing Relative is The it's one in of the about where the biggest industry, tremendous companies talk believe in all gate power and also incredibly that scaling or are capture and probably is wiring, And government other or resistance part look the innovation we equipment suppliers, China transistors really talk around strength faster number what whether which deep is of at that the I that companies also costs really if we And an runs with incredibly majority Applied. of is and or about of opportunity, how important. on have and really the the performance, issues for -- to you power, in low the market. customer memory is every focused cost, ahead packaging. -- discussions the performance of We T That a on, leading commercialization. difficult. are single every the and the we're and ahead create And chips will technology it's complex

really in relative Applied in local position forward I to we've a competition. stronger So believe the been than that even is past going

Great, thank you.

Toshiya. Thanks

you. Thank

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

question. with proceed may You your

obviously out check could next the it that billion you. you're impacted my year, mentioned the for taking on some how discount your WFE constraints into that Thank environment? How out target thanks of target to should wanted rate that, billion, think in so half XXX this you I about towards looks the we much are and just pushing constrained model next trending in like XX give in figure margins Hi, of to WFE. fact vantage and Bob from welcome and model, revenues to you do the are bucks question, run back. that bucks maybe but XXX because the EPS point, constraints the first also these year, just with a of hit I XX had and wanted

up Well, next think year. WFE we is

we're confident could the I be too next time I be in Would pretty up think, % up think we -- year, frankly. I -- this at talking said probably there think we specific, script. it and won't to XX

If stronger bookings even the think day get you half, the first potential customers little the a the and the half booking talk today very on and have particularly in look at first in is to in what FoundryLogic we're actually we a better in orders we strong visibility is half. We we going first Every the rate run half, and second have bullish frankly. to little area.

at the go look billion. you $XXX it's If model,

I at if nowadays. that's point. I year this real a know next don't that's a real number think number

model I think $XXX was we the that and XX that billion, the hit bucks. achieved model we'll

it. do I think we'll

Bob. Thanks,

Thank Krish. you,

to more you obviously, met terms XXXX Krish Backlog customers, multiple us if this, strong look some then in ICAPS. It's I've And of Again, thing, going And you have public to right us. now, be going planning ready for can't the business very the to they're again, confidence look on earlier, customers not to mentioned is can at with strong. those of and with is opportunities. if talking And again, capture their certainly, and they're Maybe I cycle, but that for planning the investments very high all a what very, years. I over all also add FoundryLogic, Bob share relative publicly just from statements I very publicly, remain of looks these strong good leading Memory, short one they're forward. at about through 'XX capacity 'XX.

Thanks, Gary.

you. Thank

UBS. Our with next question Arcuri Timothy from comes

You may proceed question. your with

Hi, share WFE the million that this lot guess But would've that's range. flat in year and you representative thanks. obviously optically XX.X done back. And, I to about more XX.X I Bob, have in a talk October. Gary, share. your is a question welcome not you $XXX because on

us. So January I'm wondering if you can adjust for

been have a SSG January in So obviously guidance have -- an billion gained supply? would the if that had higher would would of just share to $XXX trying basis. I'm because million higher? you on what terms Would share Thanks. have $X.XX of you year been adjusted adjust this you've lot say your

Yeah. been Tim, Certainly, QX for the significantly question. thanks have would higher.

we outperformed us gave I outperformed We've we're and very on we is that, -- higher in certainly think to in feel supply. definitely some 'XX. 'XX, also Bob than but take track in outperform We're far demand on But 'XX. color and you When be the I significantly other forward. going QX don't have going if color specific I then we've the to but and higher know it XXXX. been more call, would given want 'XX into about that in than already good definitely on

or Applied of again, areas where XX resistance the very but very is one parts features, gave And talked have is in resistance resistance. with is X that to position, of and we've they X it's some shrink haven't at feel F innovations you Certainly resistance. our increasing, enabling in talked biggest billions worth FoundryLogic unique gain good transistor and these them, positioned remarks in billion to And we're the goes really share different to for share we believe we've we the to copper challenge sizable customers solutions is technologies tool of dollars. EUV barrier/seed I we a in about as we relative the dollar wiring to is different forward. Foundrylogic. In FinFET that look of color position is of business, in in share. that in the wiring said customers prepared goes what And in on that That's the It up F these opportunity. terms our gate-all-around, increasing. our then our delivering gain really all quantified our about share % case, In as improvement we're about we

position XX on have being opportunity. memory than share, solutions. with our color where business the PDC again some and more up co-optimization And about I % market Our just an really very, overall. gave big again, strong a integrated very in we've talked we gave example

our I going So good position Tim, feel forward. really about

And Tim, for I'll you. add one more thing

market everybody is what did wrote we and ourselves. a back in that our the revenue. of Group did QX we what disclosed our what's February in I an you waiting as fiscal similar in QX conference And Gartner to for is April, interesting in adjustment we've come call for made always a So I with proxy know you past, instead to out share, through our fiscal took

for other you forecast AGS calendar at million WFE the year. And call doing attention revenue can apples-to-apples an share reporting benefit today. and for for fiscal X our based we fiscal XXX that QX. purposes, sized purposes can now VLSI And we group. share as just make now is which change that is revenue in calendar to the the I in financial just one number then we're peer our revenue on $XXX Bob what to guide today, now your is QX QX So script millimeter through wanted year soon our did as around you of with our

forward of conference. all your make just to share have to wanted to numbers look Bob the assumption. a and I that you I now that you we the at and give investors need So background you seeing

I you. everyone. you, Thank appreciate it. Thank

Thanks.

your Our comes with proceed may question next question. from you with JPMorgan, Harlan Sur

Bob Good and to afternoon. the taking question, Thanks my back welcome for team. come

even leaves within deposition of sure chip shortages is other many packaging different ICAP has the this which talked it's impact edge you Architecture that and some the for On plus I'm about areas. versus And like etch systems. CMP, leading things different not systems. implant, processes, s. thermal much, areas control the like But seeing that

out is ICAPS markets pattern Is is deposition, that in given impacted, impacted system segments figure different of getting the also pattern which is it memory and getting well? more to impacted customers impacted, Foundrylogic getting or that's across intensities trying what's etch your of business of I'm being end your more -- as intensities, So implication are are all it configurations. displayed there is it more your

is this Gary. Harlan,

impact. impacted. that not just our to I is business, FoundryLogic First share that Relative one as and being the display impact. the significantly in in the Varian types, an to off, versus another relative there market when separate Again, that implant X ICAP our business products, specific think was the not ICAP And say the would broad-based, that other I'd our revenue in I example, say device market and I up know the don't different XX across is but you last it's components. It's you again, are look different our years. at up when I or the necessarily look one wouldn't over

you. Thank Okay.

Harlan. Thanks,

Thanks.

Your next with Wells comes question Joe Quatrochi Fargo. from

your proceed with may question. You

expectations is being as maybe first above your weighted? calendar FoundryLogic XXXX more Does memory being or the second apply well memory that about question. half driven growth to for second double-click taking should for to that we I half want Yeah. think and 'XX. half Thanks mostly on

little so a memory the you in you first in a stronger data memory half data, versus and nano little our the than strong in the if first actual half stronger And half of logic, a we foundry on and half look in DRAM look terms actually. little memory. little second the second our was a at our XXXX then If stronger were at

we than probably look weighted next flattish. year half is second next year. a little the think it's you memory think more We at If year,

throughout year, pretty big strong but don't there's think think I the delta. a foundry's I

Yeah.

So overall WFE --

is WFE up. think the I overall

a is Foundry bigger think percentage. I

down of a is up and memory kind flattish think little bit. little bit I drams a

think not My sure. half, little but memory the a I'm I second within next better year. split in is memory was the it is,

Thank Got you. it. helpful. That's

Joe. Thanks,

you. Thank

comes question with Ho next Our from Stifel. Patrick

with may question. proceed your You

you, of so back. I much. enough on Thank likewise, side wasn't you AGS Bob. very welcome the for Maybe things. guess And rodeo one up following just

seen today, pickup core current you to of customers Are their keep any have Given your incremental incremental tools the are as pickups the trying high demand for of utilization just you high services?business? in seeing because your businesses possible? because as rate, chips the type best subscription in environment. any just running

on I -- the think answer I it is give cover the like I'm yes. you completely some if I'll call not guys sure data. you

If of all to sustainability at look I -- you look this. want

rates, orders, So we bookings, stuff backlog, like looked at that.

The other wafer thing utilization. was I looked starts in tool at growth and

in call, in utilization all the at was all-time So sure an years high last at the the device said looked across I end tool I'm but year we of fiscal not the calendar types. back at XX

think % in also I about So memory that growth starts Then gave starts in for good said % millimeter XX XXX starts, me is Foundrylogic XX for and growth and wafer I've about confidence good this at our the since particularly wafer thing is service business. strong in in and looked pretty XXXX, looks call is I Foundrylogic. sustainable and WFE

the and contracts etchs increased We us. life and we looking we The of -- and XX % looks if 're Patrick, X year, revenue you growing XX the grew the in FoundryLogic contract at sustainability at you for good. % XX I service service if our particularly you about business with And question subscription did -- that utilization, So really is well this years pretty business, our also. asked to % previous year. tool well last go look business a service see years. we X from our high of

other this others, profiling Patrick, that, yeah, I've out pointed all comment. forecasted parts we're those one discussions that have In one parts said because of than having with subscription was these management, thing had was Gary, the is there. Hey they just and agreements these they CEOs, better

was So a and more gives conviction to that differentiator them from approach. supply and a that continue expand of said standpoint, type big they

you. Thank Great.

please. have we Thanks, time Operator, for questions, more X And, Patrick.

you. Thank

Needham comes Bolton Quinn Your next question from & Company. with

proceed with You your question. may

driving year? slightly color, in Is wanted a In ask more put next Do little taking localization you a place question. said I decline? Thanks give it impact any supplier export be China you perhaps to next this for wondering bit in year. that or digestion us just you towards of for political my down what's just could XXXX, trend about capacity would your outlook see it year? China control or if

data guys Let data. me some give you and give some I'll are -- you you guys good

things X pretty but in next China, year, some So down it's strong.

year, at look versus was high international year. XX versus it's % It about is you spending % by companies thing if The up. in XX trend seventies, companies, -- local this next trending second local

The is business. and mix third

of have little bit the trended like they a to So more go rest world the Foundry.

XX to % XX like they're this were like % going they XX So -- memory percent next year. year, %

trending they're So way. that

DRAM think a and next trending little In Foundry, terms is in of now where up. the China but bit to mix I is it's down, Foundry year

you. Thank

Thank you.

you. And last Bank. Thank Ho the Deutsche with comes question from Sidney

proceed may You question. your with

-- for side. Thanks thanks a have the on control squeezing me in. I question process

You talked growing % now process XX was an % not impacted about about supply guys XX that -- for year. by and was area control constraints this

AIX about You year instead engagements potentially also number doubling. of tripling talked a of next

how the year an us just those engagements the number or how revenue or measure they gain can into opportunity same Applied And you growth Do over in market shares? the translate just engagements. Thanks. understand for size with these they impact potential. you of do help to generally, revenue success years, your increase overall generate of Just

PDC fastest our strength The imaging, This We're E-Beam significant product a gap is emission speed family. are coalfield the question. resolution we're growing Gary. largest our we advantage resolution amount. have expanding is versus and where Thanks about others. of leadership businesses that have tremendous really share % growing we part there. for And The on of and XX with

optimizing sight important. scaling, there, in We And that think of we're is really certainly we optimization technology and E-Beam about the you very combining for we these and with XXXX, incredibly where is material complex. very, about to call with growth new etch talked capacitor have innovative also process Draco so good call when a growth basically line this example

many goal same big the optimize because those at with as fast possible time is parameters as optimize to many, recipes process trying You and are that different to impacts directly window, the yield.

this those multidimension our look fingerprints wafer, scaling, focus the gate-all-around have being that of system. with out different you recipe map important. think an structures, And to and with for with or again, unique inflections, ability this big space at at fingerprints So imaging you our and about pattern of across we able loading enormous map AIX, combination E-Beam E-Beam the any those is optimization, to dense isolated customers. When really capacitor or then features, chip, Applied within is of these which about incredibly talked across out look a we the process Applied all Pro for the

with impactful, So it IMS for business, value PDC our to even is co-optimized certainly capture is but opportunity worth more growing or platforms our -- of the us our platforms billions dollars.

to of engagements of and all different next big does is an accelerating those worth a XX into XX customers. for were, scaling, great but capabilities tailwind, a whether accelerator gives of translate in low T an is the that that enormous terms from inflections, PPACt us going or So memory wins these year. our us for It inflections that's amount gate-all-around, the leading that it's indicator

it's -- So and it's overall really with tremendously opportunity. our synergistic strategy

Thank you.

and Sydney. you, like And us thoughts -- would close summary help some Bob, you call Thank with to the

Gary. I'm including off team say have thought but I be back as hear Schwarzenegger, coming summary great Gabe it's the back welcome more be visualize thoughts, back. to script but won't myself a the And some to going Arnold anyway. and go back, I am unfortunately we just with little I'll bit when back Carter, Terminator, first I like something And then, to Kaplan

the stool. three-legged do Let's

positively up markets and is think WFE are and strong We next great ed Our frankly I'm year bias shape. to 'XX.

Applied's strong. is Second, position

great. spending Our demand our is --

orders great. Our are

operating is favorable to up we're flow performance accountable the Our and including I last or of impressed and FoundryLogic, year, returns. really back is of admit Number that It's this XX devices, The flow X.X% year. at great. investors for load mix % was returned points advanced these XXX free is have I we our X strong demand XXX great. look up a cash points ICAPS. margins. really this the to financial really went cash we margins And year gross us,

Company in great So I shape. fundamentally think the is just

to customers. and take supply work have We accountability headwinds. for We full delivered chain making it

I'm make next is to We But are or the shape a issue all quarter forward work you progress. going so, to and all of this again. lot over this fundamentally, of with Company great we're looking in

website thank thanks, everybody by call little right, Gary for in joining is Bob. today. the Time be many And at All while. of Credit to you like going PM our look in We'd just available today. to Pacific replay the forward A of us X:XX Suisse and a to Conference on I Scottsdale seeing

continued And so Happy for Thanksgiving thank your interest and Materials. Applied in you

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

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