Applied Materials (AMAT) 16 Feb 222022 Q1 Earnings call transcript

Welcome to the Applied Materials Earnings Conference Call.

During the presentation, all participants will be in a listen-only mode. Afterwards, you will be invited to participate in a question-and-answer session. I would now like to turn the conference over to Michael Sullivan, Corporate Vice President. Please go ahead, sir.

thank earnings joining call. and of first everyone, XXXX fiscal afternoon, you Applied's for quarter Good

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

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

of presentations on begin, will calendar gate-all-around call for chip-making technology I master you'll patterning experts technologies technology a its for and using to now, the like next scaling Time. Dickerson. join EUV cover industry, over Thursday, XD our have XX, we to We e-beam Gary We'll patterning announcement. April the hold with and I'd turn Before Applied AI(x). control including at Pacific X:XX lithography, Q&A. hope patterning And and materials-enabled XD transistors class

is demand stronger term. growing broader, this or and Thank in Applied Materials chain's period never been to for constrained This unprecedented fulfill you, in Mike. Demand the for the an has the semiconductor semiconductors industry. is ability near supply

an and a team highest orders and deliver quarterly with are way doing to Applied's first are ensure high factor, up service record and demand. long in previous who capacity possible biggest state-of-the-art of XXXX the has $X.X to for The customers. focused by the To global face to the the products. a to results supply high, the While on industry before go catches that end were go our silicon well our we made clearly Texas components This global our limiting our supply of online today make for our our everything many investments executing a quarter fiscal the availability landed all-time industry, challenging, ever range quarter Austin, includes guidance capabilities environment center we've the continue of manufacturing billion. into this own These not testament commitment our remains we our revenues. our logistics we're subsystems and in towards delivered beating infrastructure. our challenge is of Like is month. in certain bringing that within strategic

outlook. with partnership, would We that near-term our and headwinds demand our we outlook, solutions future strong better call, the the and are them working today's closely and eliminate stronger I'll is talk suppliers as for thank to which supply their ways new to I in of supports industry. to needs a collaborate very we're positioned In state find Later of coming chain overcome build reshaping like some how bottlenecks. on our about provide our I'll over call, And we're our our to secular and the you Bob industry. on in financial outperform the I'll perspective give making longer-term his strategic goals the against progress the trends the updates will years. the strengthening. semiconductor share the on perspective industry and markets

broad-based year-on-year. equipment were XXXX year, to XXXX, the XXXX made our close for percentage increase serve faster of It's the split period, for sold important also of WFE, reach prior second growth in is mid-$XX the it sensors also industry. wafer unmet most than several the in secular the of strong to will at the and years. look XXXX. We at between demand. billion industry than mix to foundry/logic of longer-term for up XXXX. being the XXXX. these If changes cloud ICAPS in faster spending next demand we and near-term growing demand start memory which demand approximation was and continues believe fab good communications, XX-month XX% a quarter IoT, range. already fab nodes some spending than last very out in in with are would into $XXX by that to systems Demand And we market Within year investments WFE Innovation total levels that as we We this and since or revenues the structural outlook WFE foundry/logic pushing grew is clear think XXXX in and a with a see means We the XXXX, me Let and in the automotive, this and have growth compare end relatively XXXX. markets. to wafer It's QX, of context edge could over billion advanced the supply the again calendar memory in put evenly in from the limited more equipment outlook semiconductor remain power and XX% driving put spending growth trends is believe who foundry/logic grow. up they and at customers the electronics positive we

chips the the their of world designing companies the a build percentage are to in-house, today, X that inflection or fully is multitrillion-dollar world, foundation by global other already X is will design in XX silicon. and economy chips. the out the now take and either of value. reshaping manufactures play this of around customized top the transformation X silicon digital decades the advanced one own While of valuable world's it most large the Today,

this transformation fundamental in framework call We is industry's level, new plays of road workload-specific semiconductor like power, will EUV and gate-all-around the great structures the from ways patterning I in and hybrid and shrink digital to playbook improvements the XD silicon had architectures driving power think of potential ASICs, the XD introduced to and PPACt transistors, system to metaverse. role for that we describing technology in new this it silicon a Back the XXXX, example X.XD performance our packaging full future cost and interposers distribution, map. the advanced new lithography materials and chiplets new backside DRAM, XD and XD said from interconnect, NAND X key chip advanced next-generation gate, bonding. like elements: new contact unlock

has the multifaceted make As for it's the road before. up shape, map than that this anything inflections and implications increasing is PPACt Applied technology major complexity future playbook takes has industry the positive This more clear done complex Materials.

where because work are to planning. problems address are have collaborating the we for visibility, First, on to higher allow we of critical most levels the seen just-in-case automotive Applied's lost example us components. The customers. more rapidly And years. is more changing also they customers industry with they suppliers and capital us XXXX are order with valuable shift expect at are from longer quantifying second, remain recent a broad intensity most them this capabilities just-in-time of that of economics. major complete major are industry created by starts cost our of positive for capacity the differently the closely We're visible working provide to term we a They the the way the also carmakers solutions. philosophy. more and with business in playbook, their and with chain are providing with On inflections PPACt supply This top underway opportunities

economic a recognized level. and Europe and in of In addition, years, the supply. government being In will national the and importance incentives into regionalization coming strategic semiconductors US, of Japan at the support is translate

decade which more efficient, but an is As will for chains also very is tailwind less I've capital our the be highlighted next before, resilient these us. positive. Overall, regional for supply additional outlook

and exciting our significantly the three and We future, Applied we've ready aligned fab faster organization semiconductor investments expect outsized to around this equipment for wafer pillars. grow opportunities economy for be To strategic Materials. than with

cost maps First, businesses provide gate-all-around, to business and performance, XD that up key our enablement materials flows third, cash advanced XD DRAM, shift be market; incremental and to markets. gate Earlier, for technology subscriptions; power, power PPACt packaging. in to our distribution, NAND, road about from talked interconnect second, customers' PPACt adjacent more company the and and time profitability playbook, new backside generate of foundation I to the inflections to contact and free make the and for the area, and

inflections differentiated position technology developing primarily And by available as enabled result, engineering, these total materials focus core enable grow to relentless growing are strengths. they Applied's we All of on our a our to more a are great of market. in these that inflections, TAM. Thanks to also capture

by first-generation majority our And gate-all-around, transition example, grows XXX,XXX TAM per of than our transistor per positions, in capture we inflection. month. wafer For expect $X record more tool to of starts based billion FinFET on from the the to the

in out master our more to and provide how inflections will them details We expect play we these classes. about XXXX

business, that significant we up record e-beam against wins positions our there our multiple etch constraints how of recent fewer generation across past growth haven't and and leading strength applications. very all and are potential. we are our chain fully In where and In nearly few indicators our period. served well map, examples. were next have the executing leading-edge advanced tool supply our revenues a three recently XX-month customers. demonstrate in and supply our realize in the of because This solutions our etch, year-on-year, constraints, While won future current can't product inspection in doubled customers at clear of highlight these that foundry/logic address I'll nodes revenues is mean trailing metrology, are road we've challenging most we we areas in XX%

with market in e-beam combined expect further extension wafer We the XXXX leadership. to inspection, strong in outperform again growth especially of with optical our

excellence, able technology to and and Beyond ways fully portfolio co-optimized the unit solutions. Applied integrated combine process broadest industry's unique create to is

is hard we solution an an our Adoption accelerating wins secured and at solution mask, co-optimization And hardmask etch is year. carbon a manufacturer. revenue with co-optimized high-aspect deposition a example, this structures. incremental Draco For deposition first of solution $XXX ratio million etch memory new of and generate for our leading of recently enabling

tools is Another technology that and key digital and R&D, transfer optimize manufacturing. component portfolio ramp, accelerate productivity high-volume technology of our our and

quarter, customers. broad penetration this We are new R&D accelerator actionable for range engaged at In platform leading insight using a a acceleration with strategic AI(x) secured customer. we our a of

our unique our multiyear renewal and machine learning long-term algorithms making of tuning form these progress for up of from As will from average we journey than is generated and subscription rate over months in And to also is our proprietary more now ago. years, X.X The revenues. is service the technology We're tenure agreements on reduction. process use rapid Within XX of variability process service agreements. parts subscriptions increase the and XX%. AGS, of years XX% part revenue X.X sensor engagement, window this

more generate at we combined to look revenue which are software than subscription-based, in million systems, business when of semi $XXX year. expect addition, we and In our this AGS also them

can I everything near-term environment, our hand customers. grow. is Bob, call and quickly before executing the to go to Applied expedite I'll and deliveries to well long supply a in Demand summarize. remains up demand. wafer fab a we strong focus to semiconductors and on over equipment doing There's and our catches Before and with still are continues way teams to our global dynamic challenging for

trends for secular our long-term outlook beyond and Our structurally XXXX markets is higher. positive as very drive

to addition, make map our Bob, position industry's portfolio inflections markets broad market come. capture served a technology portion larger up over in road In major in that, addressable the Applied's our years With technology great expand that it's to puts of and us opportunities a to differentiated you. PPACt in the

this will Gary. they one lot I'd demand our could I do for We three of doing thanking to partners we and the in year products it to messages we here. you us. calendar we be for remain chain each our satisfy begin of end have customers' over teams for all increasingly to we that forecast Applied's improvement expect likely Thanks believe gradual our the quarter limited, environment. work the for challenging very strong and a is our is everything another still a supply Two, a today. of revenue One, year. to and to and of like through main job Three, grow needs, have is by grow. XXXX the chain growth course continues and earnings supply and

the throughout earnings provide Next, and details environment In exceeded QX, I'll year-over-year was The for of QX delivered Applied we for our and of guidance guidance. supply and I'll rate our and fiscal results, see share Materials, the to year. expect summarize I'll growth then demand the strong revenue we the our about finally, midpoint chain environment challenging. QX growth

in strength This revenue. to to perspective Our teams systems partners year-over-year. we service we of collaborate foundry/logic We control, in achieved downstream to and outgrow work continue record the sites and semiconductor fastest revenue, and edge quarterly grew DRAM locations. by we both components XX% and XXXX supply WFE with expect in we grew of foundry/logic us which leading enabled in in product broadly our deliver From upstream Applied manufacturing process maximize to and CMP. record QX, And year-over-year, revenue our ever a CVD ICAPS. with highest generated to

in we and revenue non-GAAP AGS' increased year-over-year. recurring grew quarters semi margin in We points. by XXX basis XX% basis In margin three operating points year-over-year AGS, also revenue. non-GAAP grew was of by operating by About year-over-year growth XXX

year-over-year. XX%. service AGS sequentially and grew by We increased comprehensive renewal agreement revenues our rate our year-over-year. under service was XX% Our tools And subscription

XXX-millimeter in revenue, the constraints legacy expectations business met expectations that prevented have could QX quarter. from our chain shipping supply below our to parts due demand us been Our higher. includes was which within our even to but equipment AGS

year, XXX a double-digits, basis. basis on upside by and in on year-over-year recovery. EPS display, supply by profit the results by basis to points, non-GAAP expect Summarizing non-GAAP margin XX%, by the Applied's XXX operating grow goal increased operating XX%. we the revenue potential to In gross QX margin increased XXX non-GAAP revenue chain with non-GAAP year-over-year. continue fiscal AGS we points by in For and QX exceeded depending points basis We our low

repurchases free million we $X and shareholders, $XXX addition, over billion $X.X with billion distributed cash to In dividends. generated flow record in in and

progress And toward our impact our supply of targets. very technology business work environment we growing. believe demand is address through chain the demonstrate in Underlying we constraints, market near-term. on the the and Applied's and the share that we're for supply we I'll the as strong gross making Next, will margin

understand some that usually today's Although than mix confidence. give are our $X to backlog on this environment, to our In products basis, report record further our backlog the absent would to gain an demonstrated unconstrained issues, share call a our going enabling supply the financial by gross quarterly targets color calendar more to semi rich have a systems revenue $X.X margin in us will chain a produced model. on substantially Moreover, billion. very to customers' billion highly we that you don't and fiscal increased includes Also, QX, I'm maps. help is a of our we What higher XXXX road healthy the in tells in close XXXX in be backlog XXXX.

support We our which of supply are laser-focused and our on strength improving the customers chain, the will enable us business. to demonstrate

market As Gary expect Even WFE billion our $XXX and more. outgrow or to market we the sizable the XX% expect the grow carry constraints, business into by over backlog to outlined, with in XXXX. semi to XXXX we in

guidance our for Now, I'll share QX.

$X.XX almost billion, expect $XXX We to revenue is increase plus up to which minus year-over-year. or million, XX%

expect QX, around year-over-year; of Non-GAAP XX% near-term $XXX OpEx semi high-margin decline mitigating $X.X and shipments billion, around in up to $X.XX, QX, we should outlook, $X.XX gross richer as year-over-year. related year-over-year; tax increase to around primarily shipping revenue be to of XX% revenue of QX, margin XX%. in pressures our and We this the products. expect up revenue customers. cost around and pressures rate by or billion non-GAAP mix Applied's non-GAAP systems we to in billion, AGS $X.XX, upXX% we be be expediting a expect $X.XXX absorb QX gross around around cost plus should gradually to XX% around After display should our around margin million. minus is non-GAAP Within which EPS of

and can year. semiconductor the about mid-single-digit on we're year that inflections, calendar based through Applied. quarter conversations increasingly technology for revenues growth the and grow we another percentages customer of each expect industry by And for end ahead, we be optimistic XXXX demand increasing Looking will especially the

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

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

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

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

Your open. line is

guess the environment. question I taking Thank on the challenging margins, a gross particularly afternoon. question. in supply Good you current Yes. for

number? You what for Can What it'll key that input year. to have might part your grow as are And, and you And of that to upstream suppliers? those to to much. model? gives you I you hit your XX.X% through of you that expectations and for that the for as to cost frame what to might down that what guided get take your build out customers? greater XX% you the on expectations impact scale guess, then ability be of your type speak pass the if part that, you when Thanks able could target to confidence so can

me questions, Well, take let those six C.J.

most bunch should gross at are from I and of margin I'd and those point. would us. logistics, burn two material factor thirdly, a -- what As in that XX.X%. impact, gross cost cost with around outlook we and better. some QX XXXX, like material are overhead absorption; hitting logistics of inefficient factory it X% is first, what's on going do? billion. other model you going guide long-term a did So billion, XX%. of So in There the The are on XX.X% margins? half quarter. XX.X% What's the is XX.X% up get the what's about things One with margins? we I operations to transitory, around XXXX, We price $XX cost increases on absorption, middle were can stuff gross say this probably $XXX X.X% year. go ops at at that is, those guess, X.X% We in point issues. know, We and to

over is that So I'd of transitory. two-thirds kind of say,

is one mix. second The

couple a mixers. of have We

semi. very, very particularly strong We in backlog, orders have and

higher our So help versus we margins. if had mix non-semi, gross semi of a we

Secondly, if backlog. -- better if our look of you we had the priced a you out -- semi mix

attractive. So in the is very our mix semi backlog

two you at backlog normalize and by past could things if ship. mix So we well, you look those levels,

pick sweet of again of the one X.X kind You spot margins. another is gross again, to And X.X. points

next you So much X.X, quarter, could if pretty point if you're model. XX, at XX one on to get you're

You actually. little above bit a might it be

what at. looking So scale of that's the we're

we're we're $XXX XX.X% on of XX.X% trajectory pretty billion at confident at So and model billion WFE. $XX the

have issues Secondly, ship With customers. the to tools, is to deliveries. do three primary on anything can along? customers. us pass one customers, that we more to we increases, Job and them commitment the to are our do cost for mitigate get better one, are; it on time door to And that's out

for and a customers Secondly, and a long good we've value we that created time, ourselves. really think shared on have tools And both I our with sides. valuable done job

on these that we that that job to unusual in product fair our have customers. volume create have and with job discussion get But But think I one also can shipping it's I type and is Now time conversation. think cost of to we for value to one customers. pressures, have

Great. Thanks C.J.

you. Thank

from Our of Research. Rasgon next comes Bernstein Stacy question

open. is line Your

guys. for and taking crystal be clear. Hi I just Bob, question. wanted clarify Thanks to my

saw through the every actually So of the year, year? itself year the sequential you the sequential read could said through goes growth is I you accelerating the So go you digits. percentage actual increasing we as grow as Do that through up growth by mid-single quarter?

And are display Yes. we numbers. type think five, And then It's of semi. -- the That's QX, AGS kind in nine. similar it's around and fiscal seven. roughly of

close. pretty the number overall So is

guess helpful. And That's any… I it. Got

I that's through work estimate. fair think We good a it's but think still estimate. I got a And to issues,

confidence something that Like you supply are you trajectory? you lines, a I make what along actually partially for the are or Got on the your Like like or themselves guess example, Is the along shipping, how will just like gives constraints supply those it. gives just constraints And supply to confidence? it tools, visibility to like work? what module final have that done ease you that easing?

of amount, they We -- total were look we in parts. up for you I kind if better up high match receipts match of in think mid if QX, didn't we'll we that that's a of a increase Well, they but to good look parts. think at type similar. have of us get to you But And at QX, exactly were single material digits. the

was, that what tracking, we're some remember a our distribution you of things semi the stuff type there's the are supplied lot said quarter You is hotspot through device channel customers. last but to

internal the a more constraints. not It's fair of I supply in it's it's think estimate It's we some we do. what could reasonable a So capacity think chain. parts And estimate.

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

for than that AGS Yes. semi those then slower little And systems. We a grow systems. to -- right are Thanks, bit tends Stacy. AGS say would year-over-year numbers semi

double-digits. So the probably but X the that low it's our it's probably bit on that'll depending the X gives up that revenue. of supply up the X the you for little And then rest have you also just year-over-year, you display, already help shape a view semi, of with and chain,

Got it. Very helpful. you. Thank

you. Thank

of from comes question John Credit next Our Suisse. Pitzer

question Your please.

Jan Yes, and good cynic questions in order results. when me extremely argue bookings Gary the afternoon, guys. can't they more get that guess, impressive, need. than they Thanks they customers and for letting and I solid your me the the the would what in the want, number were backlog on number always but Bob, congratulations quarter ask the

your do constraints safeguard of get very you right customer, ordering? you grow perspective, in better not now? and peers And all I the at I supply. against you what might kind need line kind supply that How And your get I the fact of so double having of or dreaded from I'm least how safeguard your are against to do the if

give Gary a he I'll talks customers Well, perspective, and lot you hears. to if my

you look the magnitude at one, and So growing, of it's I much orders number. how the pretty think, they're a big if

or inventory overbuilding going anything. So we're not to be

you think where if it's I is the doing. look at that's thing mix, second The

memory I'll some data, give John. So you look -- so at

XX we're over three industry you the all XX% last the in years So memory. of the memory indicators years, some a year. and XX history XX strong at of when of if years, you go XX, the memory is strong is X, leading overbuild look particularly

at WFE XXXX. XXXX look in was in several of points right you it and down memory going now, XX% if So

at So we look as double growth, there. bookings don't moderate and memory we see

a the indicator at term, whether we of look utilization. they're look we short thing leading Second starts wafer and at fab is overbooking in

I QX. fiscal was last a at quarter, said So our fab record utilization at

in is very so utilization In fab higher, high. fact, QX, slightly

several Thirdly, XXXX XXXX wafer rate memory, XX%. growth. look wafer were starts to total from from if That's starts XXXX you to years, and in That's last the compound a DRAM at of a over NAND growth both not XXXX.

look it's you If XXX-millimeter, XX%. at

the If growth it XXX-millimeter was kind logic foundry. was, you in logic/ look XXXX of at stuff, and XXX% from to XXXX -- right foundry,

So well look go, gee logic/foundry. so at you now – let's

look spending to So year. committed $XXX this put has CapEx forecast spend. closely them. billion, billion long-term if you at TSMC $XX -- of in talked mean next And kind $XX I pretty CapEx, to out they're billion we've of

look up XXX XXX. you number XXX of XXX fabs. We're If with to tracking -- $XXX XX, new -- started pretty of announcing committed quarter, to Intel, billion That we at fabs. billion billion. is XX spending to Last to a number XXX shells

Because So memory versus at mix, if counts, starts, foundry/logic look you edge, are shell at look pretty more are utilization, ICAPS wasn't right? you look a big. at at who you you look little look and guys predictable and it's at growth you trailing good. what to the too mix fab historically Then committing ICAPS and at you look

to was to trailing used because through edge business tools roll pretty the to do leading the over customers to trailing look we at be edge if above, edge. tools enough model ICAPS moderate, roof. XX-nanometer that, define look from the right? if as you Now, edge, was it But for and you trailing it's at that demand, So

the XX look to and base areas some if but WFE particularly application in the center, stuff automobile, comms at, phones, forward also look growth you the accelerators, some you of by If data are, sensors. from at XX, IoT, its it's biggest

big ICAPS So sensor stuff. this there's on demand

drill look look because it, tools up And of have is demand trailing well, actual older edge, XX-nanometer the a and leading the XXXX the particularly some said of from is XXXX XX, there, if you edge, in at and it's WFE XX% and is XXXX demand? Well, -- in stuff, through in that above, it and percentage XX, XX, So there. from right? gone the rolling and XXXX. over or then of enough not to XX% we XXXX you So what into look XX% because if So funding XX you the at going for ICAPS. say, up you is don't on so in demand at XX% the as

because demand going over up two those. of So tools to less to roll factors, and

So gee it declining, rate of if whiz, the overheated. look you Well, at somebody XX, well, might is say, that's right, increase XX. went XX,

So it's strong, but declining. the rate of increase is

the long I is very you don't data, right overheated answer, I gave So now. but we're think

type mix. have is orders. the of not of mix, mix lots We it's The crazy

this probably next year. Now, you year bit. can drill pretty good into ICAPS in China a little But I we're think and

Helpful. Thanks, guys.

Thanks, John.

you. Thank

Vivek from Arya of comes next Bank America. of Our question

please. question, Your

taking my go question. to I Thanks for wanted back. just

$XXX QX, think, QX, think than very growth I X% sequential so were captures, what QX, were shortfalls you million constrained Shouldn't you fulfill. be about you I going growth. QX, that short supply because kind QX, in so $XXX So that only that I'm mentioned wondering not impact or number? this growing I in through in able of more you Bob, by had the of applied still given you it when, sequential is to or million or QX into this was or

constrained. supply completely It's

have orders We than more can ship. we

the couple our of growth quarters. look build in you substantial in pretty at next billion was backlog X.X and the quarter, is our If backlog

are totally is everyone constrained So in we industry. supply the as

is think Its us million could products been and the like And really QX weren't MDP, $XXX and more think DDP was And backlog. products I the that. we starting like have mix number in QX. for was it in if supply constrained. good what for APTD I

Thank you.

welcome. You’re

Vivek. Thanks,

you. Thank

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

open. is line Your

touch a question. again it taking industry constrained experiencing have for for base the but peers your and The semi on Thanks you the to just Bob, Hi. wanted constraint. been supply been while, a but suppliers, equipment I well. you're has suppliers seems to quarters a whom their few of end direct some also being now And your that, it customers might few as now. below talking up levels like your not just and and for

giving curious, next So insight that of supply I'm chain And your few for that these the depth your digit better mid issues kind what you informing in level is is has quarters in single sequential semis? of could into abate? when

you give than more I'll color yes. some Yes.

has So X,XXX subcomponents And parts us. -- we to discrete for our parts suppliers. of those have got then buy down tool level average an many about

some that. stuff MRP, And so suppliers of some stock, of run like on our them build to

and today visibility material suppliers, they which kind their lot not our It's customers. We've gotten builds directly to parts through depth our of And in to chain suppliers, and was understand get circuit suppliers, from at times, goes back our their many So limited. historical customers customers. a a from distributors, more our our into supply route.

visibility of long-term understanding frankly, So as into we've points and a and, this, the gotten in-depth we have more strategically. this tactically ways choke to gotten manage much

So I lot think better. our visibility is a

benefit Our long-term, company. is we management big a is about every the think, strategically it think very getting to And quarter. incrementally better I how

we yeah, got, again, So better visibility.

depth to but managing I going We're I out long-term think better. be of benefits the terms there's think of not company in tactically of the our we're woods to understanding. yet,

Bob. Thanks

Krish. Thanks

Thank you.

from Hari Toshiya comes question Goldman of Sachs. next Our

line Your open. is

in afternoon. compete that in your areas so for wins Gary, you question. market much. Thanks in much remarks, you talked some all the etch taking didn't Good where historically the about prepared

FoundryLogic. advanced about the talked You nodes across

outperform the guys and about still overall you've should how in we into expect into momentum your there the outlook think you supply perhaps those constrained. WFE talked in this market to a you're XXXX? the basis should done we and well you and supply year trailing and you have, how market realize inspection the about and also think I metrology When XXXX. share once on about XX-month You But near-term, XXXX? eases, wins

combined for about the question, Thanks now is significant the for the platform thing few is that And mentioned for Yeah. opportunities inflections. etch, Toshiya. lower biggest and I'd tool gate-all-around, platform question different capturing billions going one areas integrated you that the No technologies talked wiring. to PDC, say us resistance both mentioned, by to XX%. forward. seven us are and We We new a worth -- dollars. a ago of that an bringing wiring market, platform months

We to got DRAM, of with the scaling examples CMOS in some data, technologies memory. inflection around the logic, you've process the connect also So the wiring data, in inflections. to transistor associated the those gave capacitor, all

inflections we XXXX. double-digit share All tremendous significant the really A Really, another served really, with XX% in packaging Memory, wall conductance of that we share higher materials all at where gaining the can of we better great customers. all look has well growth. there, another I or of etcher Applied. chamber ICAPS, -- us foundry/logic you really, And leading review, defects logic, share in for for as unique it's platform technical XX% The is we those -- terms into advantages, mentioned, growth our remarks, better the in In really we're really significant in to PDC, unique in any inspection, again, of modifying And leading a performance, the great products revenue creating you analyzing the those mentioned us. where only was materials, a shaping the in not really have and visibility for the opportunities in yield. position thing position provide overall, are the never over we've have significant one in been enable those the measurement whether very deep we inflections. customers. it's overall about markets, for that when the prepared to those areas. one really T chamber E-beam and in are a certainly, memory E-beam really in different structures, specific better growth that's -- at volume, larger materials been so drive our our really We're mentioned but the doubled you doing on electrical really of SymX PPACt etch PDC,

but In XXXX, We only have have significant E-beam, we'll leadership faster growth inspection. not wafer in significant optical there. even in growth

leadership inflections you growth, in backlog earlier, that's Applied we're talked what for And our see ship we're it. -- XXXX, And leadership. Bob really that can't where a about So that in just that position. what see implant, the will grow wiring earlier wiring. tremendous remarks. our of was our mentioned in big And about I'm XXXX. we especially unit say booking metals Bob I talked what areas. big our the inflections great is also epi, about into again, that some in really, and in excited I has for one these mentioned another can't most significantly us would it ability Bob processes, to prepared in revenue because you Relative capture the on to

we yes, really, in challenge than better Toshiya, now. us position, never been right for I to gap. close demand The -- So a are is supply right where biggest now that we've

you Thank so much.

Thanks, Toshiya.

you. Thank

next Harlan question of JPMorgan. Our from Sur comes

Your open. line is

question. my parts for for against can the this have And suppliers. entirety your year what assume just to subsystems, orders chips, visibility lead your as through given and of team both Good is you with the assume afternoon. extended those the guys that Thanks suppliers ship good that basically I I placing taking times orders.

what below customers' In for you WFE billion of is need put can team your forecasted words, backlog do there's that that exit or so, likelihood your XXX that if year, requirements? a if XXXX you your customer require? and forward for and you this shipment demand all the other demand equipment year So together, what this you its of And shipments XXXX peers the think like you requirements with calendar customers true the do think is below profile?

are what meet their Well, supply signals do? gray. Sure. than struggling they three, or we a suppliers, we chain or Harlan. can it's of think they the they So questions meet. visibility. more can two couple send is if what in you to through how to of a visibility kind we MRP. we it, you've So Frankly, Mechanically, because understand And meet do XXXX? out think Two, demand think there, do not they quarter about I the unconstrained say right? And what in is got

with thing We're do mechanically right? see I -- XXXX. into question what we go we we The second we is? is could. it, thing of is is the out year think of still demand we sure, demand could unconstrained but asked, Yes, nobody supply? do tactical north So you but the too, improvement, second think right? The

I our probably fiscal So think our backlog throughout year. grows

XXX look for billion is go the booking defined into are you at and you If we our demand, think, as industry. what also competitors ship unconstrained see And they're WFE XXXX. I constrained year, this

demand billion than I think more XXX. unconstrained is several

I think XXX less more billion. it's but XXX it's than than billion,

Thank the Appreciate insights. Yeah. you.

You’re welcome.

Harlan. Thanks,

you. Thank

comes ahead. go from Please Fargo. Our Quatrochi of Wells question Joe next

taking Yes. the Thanks for question.

that embedded side? should logistics are a if understand, margin this also you give you about wondering efficiency or I us be new center. you're that guidance? costs mentioned had does the capacity, You then, are And that gross start-up some opening was cost does that that we help quarter's could added on thinking there in help

mostly things into do It our so much That helps our costs, the up, absorb we volumes to around. that cost of burden. the efficiency doesn't shipping, because moving receiving, are

cost, it us But our And of have don't think the a in I expansions percentage will in further or do probably, so doesn't two. helps -- much as hurts next cost, We it impact. affect frankly, efficiency. our year

Yes. Bob, a follow-up. And just

by year? margin at And the you do think impacted that does the and between what it is build-out? all So end of QX gross

probably the doesn't And really QX. gross have about I think margin I Yes, think any to we mentioned X.X guide point from QX impact. just is what

Thank That’s you. it. Got helpful.

Joe. Thanks,

Thank you.

ahead. Our Arcuri from comes of next question Timothy UBS. Please go

terms of of about question think really -- a revenue this intensity. talked how WFE the semiconductor the about is, WFE WFE And Gary, the of backstop. on to just I much a Thanks can how in shape have you and lot. question sort year

on So the maybe to you and XXX something talked take past, half, WFE and XX% it think you well, I in if number. sort half in like about QX first XX like in get billion reporting, a as we’re that And the back intensity. doing XX everyone's about of to you commented here the seems they've Gary, billion

have semiconductor $XXX we're year, revenue. be support lucky, And So of that billion. $XXX this like if kind would to at to going billion in we're

of with how So agree you out I'm math of semi is. sort you front far WFE about just think maybe Thanks. how if all in and wondering, that

question, Well, yes, thanks Tim. the for

higher In terms definitely capital the of than XX%. WFE the or number intensity, is

around resistance biggest foundry-logic a of in let in come of of the all at one that focus than customers in, higher that in one wiring areas ramping, is I Bob the second. where capital big inflections definitely But is here XX%, the would now, example right you for XX% just number. look the If is, just are I'll intensity these guess, probably but of all the customers.

interconnect from at increasing X-nanometer, look by about Xx. X-nanometer you steps If to back-end they're

only also and -- memory. Now foundry-logic, the by also in it's happening other not way, in that's the thing increasing but

-- the to That resistance, reduction pretty it's that that -- complex. impacts of example So XX% output an again, the that's complexity get wiring just in also system.

I really color. more any example on products. of the step want output. high Applied, seeing those but for And us add why we XXXX that's only for also Bob, we're in metal where very very, into not don't our driver So certainly then steps are significant you're increase, booking share, a to you -- an factors one know seeing And and for reduction have products a a deposition of if you

question, a Sure. good It's Tim.

is think I a XX%, XX% running the higher. little

you're XX%. good a sustainably, think I at

WFE trend for tools trending you customers' out, by just just If it and if WFE leading and a there's is and FoundryLogic, trailing at NAND, the divided edge. you split up reasons, not couple because look the look the DRAM FoundryLogic at it's intensity, enough lines most, for of revenues, edge of and

revenues percentage So WFE the who trailing years add customers WFE to having so in can you haven't the of of up. trending see more spent and that as revenue TI And take see sort dollars, capacity you about too. CapEx customers of a talking like

XX% rough little new will more a a frankly. and with mix is with of more If kind greenfields think gate-all-around, and which with more you this drive ICAPS, FoundryLogic inflections do I you and cut think XD spending, normal, around technological

If you about billion. $XXX look at it's electronics XXXX, spending in

WFE of take XX% So you're if you billion $XXX about in that, XXXX.

I think growth for XX%, the WFE, think high capital starts. I all wafer for capital driven at rate it's numbers high growth that to the a sustainable and of kind got is So drive rate you And half if single kind intensity, sustainable of of in worked partly WFE. intensity growth has -- cross-cycle and single-digit half digits is

Bob. you Thank it. Got

Tim. Thanks

Thank you.

question go Moore Please Our Stanley. ahead. Morgan comes next of from Joe

year? a I quarter, from bit. about programmable Have out nature challenges there's it little it the products you about of And shouldn't get you -- how to utility move that Last think be get the -- of visibility highest a mostly year? chips. get in queue you. broadened the the guess you user constraints so this the Like the these lot constrained before the end you're could end the continue that Is to these supply is going that Thank and could I I of there? of could Great. to wonder possible talk the would is if up it talked of being logic. much you

We ZIP definitely the where deeper much, to of code -- on in we're living this visibility all every day really our single is we've improvement, I'm we given, the supply a are of quarter-to-quarter-to-quarter Thanks, the Yeah. relative going in components guidance were ago. land. even much that to constraining with quarter really than Joe. about call relative chain the to Bob this we talked output. deep think going have I had

destination chip about, for from lot a from are chips cases, in our don't come through distributors, those these buried really in end and components. down talked customers chips. They the a of Bob As perspective, know they

wouldn't so think much to products that do of much that what where As where a other there constraints metal up it's resolve those And us. They're deeper certainly industry. responded areas earlier, have other than constraints. issues. the say visibility. has our again learn is those also just deposition mentioned true. But think, I we really went where Bob components that were. just also the are constraining There demand they number of said I I different -- the higher are in helping are chips. in the I But they've are, only they also

of come stronger. out this will We

there's think visibility. question I better we'll no have

suppliers. We deeper our have very with -- have relationships we'll

that's So the again be -- growth quarter-on-quarter ballpark think terms about may numbers, of but I right. really but in ZIP the talked what it about Again, not Bob relative exactly standpoint, code those incremental of from the a is trajectory.

Great. Thank you.

Thanks, Joe.

you. Thank

Bank. comes Sidney of Our Ho from Deutsche next question

Your line is open.

the memory side Thanks for question is on my of taking question. the My WFE.

memory looking growth grow kind logic. guys the low of than the teens some you comments that at and you your on foundry less earlier, you're rate of think based reiterated But WFE I memory. had for view but will

curious, Just much more. can seems And so they market months has have one you memory the given are constraint improved in the view that just supplied your upside? service changed three or to maybe past really the

demand Thanks. think it's side about there up I quarter, the last DRAM down, that well? as you to talked any but is is update

question, Sure. Good Sidney.

two China, for there's our think think probably on and view reference since a the particular. low outlook little I that last low DRAM I a and little last probably our in for foundry/logic mix. little And of on our I we're think points we’re quarter, DRAM changed bit NAND, views growth a XXXX, for quarter outlook

look is several XX% point, the a and we of believe to reference are of in look at from number, points kind think and DRAM a a foundry/logic, think and biggest kind if $XXX of that you in kind tiny which billion bit, than growth that from in but So XXXX. you billion the environment, Maybe NAND flattish higher mix we of if constrained down our flattish now $XXX we that's that increases at environment. that terms

were particularly last were DRAM, And last WFE XXXX NAND, positive we're on we So think and on overall quarter. number one, I than more DRAM positive than quarter. in more are we we

from we and they're unconstrained remain in frankly. positive on the I fast, last too foundry, think -- an don't then growing think view but I our And quarter. biggest on DRAM delta had still probably

at pretty good. utilization you look by fab If darn and it's memory DRAM,

think a second they're I think more weighted. I okay. So And it's little half

Sidney. Okay. Thanks,

Thanks, Sid.

you. Thank

next Hosseini SIG. question Mehdi from of Our comes

Your open. line is

ICAPS. follow-ups. Bob, it my taking question. or references, think you for Thanks of I Yes. Actually, trading was couple the making niche were

ICAPS that the mix mean Was trading percentage imply -- You XX% or XXXX in were of and of highlighting XXXX. that niche in as entire a XX% WFE? to did you WFE

two the again, Mehdi? were What choices,

just mixes? and what to understand for were mix What XXXX XX% XX% to. those XXXX, XX% are highlighted for You for you trying referring XXXX. I'm

right. All

We we ICAPS except a what we node. the define So as ICAPS broke bit. little did down everything, is leading

okay? I XX at I into the then grown. you sales have it stuff, But and more, said, some in XXX-millimeter years, above, that's because and I So including drove look and last above, three to those at look the XX-nanometer if want

Now, you particularly had where growth stuff. is XX-nanometer

for XX-nanometers revenue logic foundry-logic, percentage had and XX%. So XXXX was mix similar then We above us, too. for that pretty was numbers And the XX% of the foundry and in see WFE XX-nanometer in our for depth year. growth the we But XX-nanometer, much. node XX% and up, XXXX went too where biggest for you by into strongest; XX-nanometers up; by year-on-year not And the is XXXX.

And and -- so So interesting in thing acceleration it's our then, of if that's gone edge, rate curve volume. was, and WFE, up, a you conclusion look in share out is growing the leading DRAM has for other somewhat. the ICAPS at absolute ICAPS, of years Mehdi their diminished that growing NAND the and see you

So for you coming, about equipment do that. what devices the think number come also Not are the only the where of ICAPS to tools but from? get did is have we

from edge. they equipment take the So used over roll and it leading that to

example. So an make let's up

for XX% the they use ICAPS the two your incremental some might you growing edge and So behind. roll believe equipment reuse in for most you gets leading grows to run much, then might for equipment But the couple if of have left trailing and edge, growth isn't nodes, edge in node the of depreciated XX% to trailing of But the years, forward ICAPS, ICAPS of your a on it next trailing Xx. edge. an fully you

requirements for over edge. much relatively it that XXx, leading the like Your because speaking, goes capital rolling equipment have up equipment you don't from

ICAPS driven WFE roll by generally to is it of ICAPS, not availability the buy spend the growth into new. tools have that on to in So just but

Yes. That's all for XXX-millimeter. tools used to that's the has is dynamic used just last XXX-millimeter would gone. years, from Mehdi, thing. more say, one that that over of have few ICAPS, more I -- moved you available a were to And

ICAPS. of transitions have capital So for those all intensity increased

China the become the being majority for and dealing OEMs, these of actually a-third. domestic helpful. think very than China. the for referenced, of all the I Great. installed in has And this If become is China mixes, -- Bob, If so follow-up, most about have insights, I we're it's quick with that has to situation more much just you were a I think thanks may

So happens I'm sustain, and for and that China of of assuming logic outside the regardless foundry XX-nanometer will investment China? that in fair? continue, Would will be for what above

Yes.

growth you that's The thing Mehdi, only think automobiles, of at, phones. in sensors stuff fair. pretty IoTs, growth is, might And for years in you've look where which I spend in the the the is got interesting a WFE by big some out application. is

look I to the sustain started I is the they forever. good. agree I think edge demand leading growth to when the China But at growing So it's that to of keep relative you you I can't agree stuff. WFE, that will bit a XXXX roll already from rates long-term tools And it's a pretty decelerate stuff the availability in because at factor. little to to XXXX from have that XXXX, look over agree compounding XXXX.

Thank so Yes. Got you it. much.

You're welcome.

help would call? Yeah. that's off the time questions. all that for And Thank we you close you, Bob, operator, the have like us Mehdi. to

give I'll Mike. three-legged Sure, summary. my you stool

very and those. be that we confident which progress really on constrained number we margin to up our We to And position our that gross with returns. be much three, very chain; we to all revenue operating we'll You XXXX business is Number our our we're and track will supply demonstrate as this I'm demand shareholder look able record in the and Applied's continues forward see cash stronger. be believe are strong. two, flow, Number one, even strong. year, strong targets. we environment, proceed generating fueling through very is even make market trending share to

go ahead Now Mike, call. and let's the close

continued thank interest And We'd by your X for Materials. to today. A you Applied Bob. o’clock to be like on for is the Thanks, to joining everybody in of thank replay right. Time. available Pacific our All we'd call going like website us

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

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