Applied Materials (AMAT) 17 Aug 232023 Q3 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 third everyone, XXXX fiscal afternoon, you Applied's for quarter Good

Joining and Hill, Officer. CEO, are and me Gary Brice our Dickerson, Chief our President Financial

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

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

And turn with call to that over the I'd Dickerson. to introduction, like Gary

Thank you, Mike.

results range. well. our at the In third our high-end Across are executing business, delivered guidance our teams fiscal quarter, Materials the of Applied

We productively incremental technology and we customers. our scale driving operations introducing the solutions enabling are as our improvements we're products new our roadmap, and making in for company,

remarks today, across the with and Applied's driving innovation and my the our growth how I'll this In then era how of view I strategy us industry industry. summarize IoT-AI while prepared positioning picture is the big recent business this for start outgrow is also near-term over to I'll and longer-term. sustained outlook, year outperformance cover finally, including some this us And our enabling and the performance highlights. will

of are thesis as explaining wave expected having inflections and across of our well semiconductor new Applied later, Five growth IoT within we at AI out economy, summer sectors how impact the XXXX, profound innovation. industry. and a as the and Forum, drive semiconductor many In AI Design IoT a the of a to AI years laid

and coin. two are and sides infrastructure capable. vehicles, AI At all factories, buildings, computing same We view edge, smarter getting more consumer IoT and devices, the the of as

sales Power largest Communications, in serve of wafer that customers IoT, represent equipment the or fab these portion growing, are markets, and and Auto, XXXX. Sensors Our ICAPS,

Increasingly create be generation fueling explosion to primarily AI AI an hardware data intelligent are large is innovations. of can for very performance that training edge combined computing High by enabled then and datasets devices transmitted models.

a as roadmaps, which the new device becoming integration, of creates and well innovation As as is key designers. the leading-edge heterogeneous DRAM opportunities exciting logic AI result, for driver

In our summary, well part the significantly combination more drives of as for of is thesis and first as the technologies. that next-generation demand IoT silicon chips AI

chips The be of those and second will to part thesis technology our supplied. relates innovations how new

to down, structures, to in The and as new Area-Cost benefits elements: traditional is heterogenous industry technology, to moving new new architectures, device of key new the scaling materials, new terms XD the a drive of playbook five playbook has slow ways integration. and In Law and improvements PPACt shrink, time-to-market. Moore's XD system Performance, Power,

key the in positive of enabled new in to increasingly transition Distribution transistors Power Gate-All-Around where two The Backside examples in include to for Key materials First, playbook by advances as Applied and logic. evolves, ways: Applied the roadmap differentiated is advanced move capabilities. is has the this engineering it

complex, solutions, volume more as ramp, technology customers complexity more as and integrated providing we by which and well inherently manage Second, is cost yield comprehensive R&D, transfer, can advanced the and PPACt playbook accelerate to products in help services include this production.

countries In industry to of seek regionalization being economies. that to capacity are supply to their support build also playbook semiconductor parallel new seeing local the are we verticals resilient implemented, PPACt essential to as chains,

next globally As over incentives will of a the be billions deployed of hundreds dollars years. of five government result,

ICAPS on organization the released applications. past to new created five products than these organization, dedicated more and At early profile. Applied, we to ICAPS recognized XX we a market and made and the investment focus for important strategy, trends changes our years, In

products and for relationships to market integrated differentiated We deeper products, leading-edge This co-optimized highly our resulted and with also memory. logic strategic new formed a accelerate increasing has much customers, team solutions share. and on in focused

that We share fueling a in and, very generations developed and gains to leadership advanced market this clear packaging. integration a strong segment outperformance contributing portfolio in technology of to our enable products is and heterogenous we of multiple established position DRAM

five In integration fact, we West just announced products new at SEMICON heterogenous in July.

investment deliver increased to value on-going in outperformance during period AI-driven makers. in XXXX, enabled IoT very even by performance us and and and strategy has This also on It positions and of more strong focus inflections customers us low a for XXXX beyond. memory to

me areas. a Let few highlight key

were than the first equipment of process closest peers in two half combined. higher revenues our our DRAM, XXXX In

DRAM Our is factors. strength in underpinned by multiple

share significant EUV-based DRAM both gained multi-patterning. have patterning, and for We in

for We which enabler capacitor solutions, scaling. are have hardmask developed unique, key a co-optimized

Via We high-bandwidth memory. supplier of advanced generations have packaging significantly multiple for circuitry I/O they that in developed to are peripheral where in positions Through key largest of we logic and DRAM, the increase enable And, successfully technologies used ported with are Silicon speed. to the micro-bump leadership solutions

investments very DRAM grow X% DRAM less growth annual rate compound years. our especially feel As but about is of it memory increase, the in for XX% positive today, at DRAM coming is High-bandwidth high-performance we opportunities, capacity than a datacenter. over to the expected

needed larger increase area and at extra die-stacking steps of top die it you a the because compared for If the processing X%. On of by approximately our further look to routing is HBMX available additional for XX% needed the TSVs. DDRX, this, total about I/O market

include and We beneficiary which these for significant demand of a government electric systems, driver key technology as investments we advanced ICAPS energy, expect of to to wind customers ICAPS the drive to requires be and smart automation, business. assistance underpinned that are billion annual each could ICAPS chips, delivering expected regional end around are power $X,XXX by Another of with vehicles, the generated grid, driver markets also sustainable $X,XXX the industrial These silicon world, the and is will decade. enabling solar support play $XX where the incentives. demand over vehicles of these out megawatt global by be growth inflections decade. as large, see our next and

geographic absorbing of XX%. rate subscriptions renewal utilization the base are needed revenue agreements. are drivers after a trade track agreements is of on The our impact and is increasing quarter both footprint, in of PPACt key and our long-term from XX% the than U.S. this to and record have the rates of This service generated a industry's form at These to more this than rate installed a year, growing playbook with faster than more of business. new high rules. low revenue year's combined XXXX complexity enable fab delivered growth service grow with the AGS the even for broadening in

years. services customer capabilities, of achieve strong low our a growth pipeline the and to we're for With on-track robust in AGS new pull we coming believe double-digit

about cost velocity through carbon relating I significant next-generation Applied, While believe closer and efficient is important deliver combined to ahead, and of the to commercialization we industry that computing. excited it way collaboration our to challenges recognize this complexity, innovation this future, am footprint. opportunities also and energy overcome must higher the technology the At is do to for

productivity. better government Engineering and suppliers the quarter, investments EPIC accelerate support increasing States These we time-to-innovation platform announced to partners in United the our In universities, major faster initiatives: and in will relationships while Center India. and and Collaborative even two a combined our customers, R&D time-to-commercialization with past

optimize we as emissions and to the as we new out by and as to reduce much by Net our Vistara industry EcoTwin, by driving approach carbon with increases July, our carbon and chemical a Zero help and by throughput consumption recipe. announced reductions: two products density customers model up In are also consumption platform, and which rolled tool XX% In energy major that addition, energy enables lowers monitor, that platform XX%, we and to grows. collaborative collaborative playbook customers

inflections. takes hand a investments over to high-value summarize. quickly of and wave shape, of Applied, focused as at strategy to me the for global we and deliver At and, semiconductor I key are IoT-AI and call Before the AI-driven it major driving is our the IoT technologies growth industry. chips inflections have Advanced enable new the innovation let foundation that Brice, era

ICAPS, foundry-logic, equipment positions XXXX, deliver sustainable coming the results years. for over strong DRAM, heterogenous strategy positions advanced to and lower have in strong overall us packaging. fab using leadership We consistently and outperformance This despite leading-edge is us spending, enabling wafer integration in

Brice, it's over you. to Now,

Gary. you, Thank

On frame the business and for I'll environment, we're the investments discuss our provide today's summarize in R&D QX, call, guidance our infrastructure. our QX making results,

Before thesis. covering the our near term, I'll remind you of longer-term

semiconductor in sales the industry reach overall on believe XXXX. we than by First, economy trillion faster to time grow over the $X is and track

in leadership customers' roadmaps. Applied's is to our materials Second, critical increasingly engineering

generates than invest strong balanced which in our business broad growth make returns. fourth, and the growing enables cash today likely products, free shareholder to efficient model our profitable to attractive Applied's exposure, and markets. less both grow and more past in portfolio And market differentiated us services faster than volatile business Third, us and flow, profitability of deliver

the continued record to in largely business revenue QX Europe. now record we which systems ICAPS strength in broad-based, revenue offset and in in XXXmm demand NAND. foundry-logic leading-edge Moving was and weakness ICAPS to environment, generating see

a are key In ensure to a growing supply ICAPS medical fastest equipment fact, investments name governments renewable support wide growing automotive, Japan United the such this needed Around demand year. to States, long-term of and the to in and of world, Europe the future making and are as regions industries range semiconductors customers energy, few.

guidance teams Cash our across results. services, history. reducing We Systems, operational made and Services We our our progress and further our performance the to both were in delivered and improved Semiconductor in cash from second Turning operations delivery our free exceeded revenue flow highest QX, Display. strong systems and performance in inventory.

guidance, of slightly summarize upper expenses margin $X.XX year-over-year the EPS our down in I'll below. QX was billion, our $X.XX, Company X% guidance. was revenue down year-over-year, range. Non-GAAP the slightly of operating was gross guidance above Non-GAAP X% and the and end high Now financial near were results. end and nearly

non-GAAP of segments. was down Semi year-over-year. operating was the to margin Turning XX.X%. X% Systems Segment $X.XX revenue billion

consecutive $X.XX growth. generated XX.X%. year-over-year and XXth Global over billion This Services of Applied revenue operating was AGS's revenue of of non-GAAP record quarter margin

sales of leading our the also the While driving XXX contributed subscription millimeter progress growth, to strong team system the business. made indicators

X% For agreement year-over-year service X% under service under are systems. comprehensive tools have XX,XXX XX,XXX up up which systems, agreement, to reaching over year-over-year, highest example, are per tools the tool, revenue and

sequentially grew non-GAAP million, revenue operating margin and Display, In XX.X%. was $XXX segment to

buybacks. at the million increase an and during in per the average We share reflecting $XXX flows, of to distributed in announced revenue. flow shareholders quarterly and XX% dividends operating in quarter, which million was $X.XX, We we repurchase paid $X.XX nearly over through X.X dividends which March. share $XXX. in $XXX shares Turning to to cash below cash million $X.X produced was of flow, $XXX We million free revenue. cash XX% billion the used was price We dividend billion XX% generated

QX. for guidance our share I'll Now,

revenue or company QX to be expect plus $X.XX $XXX We billion, million. minus

expect EPS $X.XX, minus non-GAAP or of $X.XX. plus We

the Semi Within we to billion. revenue guidance, expect Systems around $X.XX be

trailing-edge quarter-over-quarter, DRAM to We around by $XXX up expect be primarily million shipments. revenue by driven

We and revenue around to $X.XX revenue about billion Display should $XXX expect be million. AGS be

Applied's about be operating expect XX% be around margin expenses expect to non-GAAP billion. We non-GAAP gross and $X.XX to we

rate a model tax to of continue We XX.X%.

last secure depend said The closely to infrastructure and new customers the on we a scale support. with productively as expand our multibillion-dollar we and to in years the to several significantly investment plan Finally, over next-generation to technologies ability equipment. as more quarter, our materials, R&D our process capacity will next investment develop of government we make collaborate

years, higher is over And while our our change expect fiscal to is strong to XXXX. The the EPIC there returns. to come commitment be shareholder several expenditures expected capital online we next Center to in no

Materials Applied well. summary, continues execute In to

are good We progress internal goals our and our markets. against making outperforming

are decisions Semi up fab slightly our quarters growth. 'XX, is with While in revenue fastest-growing DRAM, Services across foundry-logic, for year-over-year our leading-edge equipment business lower aligned calendar on the key is year-over-year markets Systems the calendar advanced and end business wafer three remains track trending and first packaging. and We've ICAPS in our spending winning

invest shareholder We leadership great are returns. to flow, generate increase growth, technology a cash and position and in for free strong

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

Brice. Thanks,

question one to mind, of our analysts as today's in help call. possible. is that please goal ask Our as on just many With

please to later this you re-queue to do question, back session. another best come have and you If our we'll in

let's begin. Operator, please

[Operator Instructions] line from the Stacy Our Rasgon comes of of first question Bernstein.

to wanted and guys. DRAM I the in the about guide. quarter Hi, Thanks my the for taking question. in ask

got in of strong, the DRAM next and the So, lot quarter you've a was quarter. growth in

is in you about from Am from bit driving that reading a It said mostly the And your right in was maybe is foundry. is Chinese almost trailing-edge. piece You piece of primarily China strength in ICAPS the talk DRAM customer like it DRAM versus stronger than sort I right sounds China that? could the that little now.

is Thanks, for your Yeah. Thanks Brice. question. Stacy. This

in to quarter. can about questions that DRAM. It gotten during confirming ship related about So, technologies we we lots highlighted in We've in that to growth that or of customers is that customers sequential QX see -- we'll China. the

we that answer. that So, sure make wanted got people to

that So we in won't wanted you'll clear quarter-over-quarter. where growth on only probably along the have shipments QX. quarter we'll -- lines, be the that see but trend to It make we'll those

one think memory investors by market a continuation not equipment market the that's that add, been weak of we And perspective, while thing an actually from profile well is I'd for this something understood year this the more has that has the for our just customers, and DRAM that's that fairly us. strong been probably

DRAM, manifesting in So, and we've that good a QX. in is got position

Stacy, it's add... Gary. I'd

Is -- that sorry. ahead. go I'm

you ask then and color follow-on some add me let just, question. can the maybe Yes,

points the XX wafer years. of DRAM XX added about share DRAM, So last equipment overall in fab we've

the moving high-bandwidth taking where That's especially to the speed for in you our we're if logic DRAM. for gains, is look So, patterning strength, I/O advanced periphery driver packaging, big at scaling have memory, technologies share a DRAM, into really big share an we area gains. high Capacitor high-bandwidth memory. inflections

in really of years. contributed have for gain and big all Applied DRAM areas this overall WFE to XX those So, last XX% over are the drivers share

question, And have another Stacy? then, you

I think it. yeah. got -- Stacy Yes, I

wanted the DRAM follow-up drivers? quarter, to Was Yeah. -- I just QX. strong for in was on the pretty same it

be small. In a to of shipments small QX was QX, there would customers, Chinese so amount relatively larger.

Thank you much. it. so Got

Stacy. Thanks,

Thank you.

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

afternoon. Yeah, for question. I taking sustainability. Thanks I to focus, guess, wanted the on good

outperformance significant calendar WFE You're about here talking versus in 'XX.

two-part question. a so, And

'XX, see this look terms in that kind year? you as right to then, you deferred if is be so Thanks the calendar representing look and/or I where guys in new you guess, So, January are out versus should markets end to, can revenues what speak to demand kind leverage X% quarter, that year, the year of drive you gains kind that of outperformance? flat to calendar of be you much. next suggesting And pent-up won't down helping you year can replicated that technologies to relative of

that's question because with XXXX, I Maybe Okay. unserved $X were on, there $X.X about 'XX, we start in C.J. to think billion. how Thanks, in you We I'll the billion did benefit a from think much orders embedding 'XX?

the in of that of All served half was the first year.

'XX So, $X.X the that tracking besides what $X with see, year. is you're billion largely seeing the from to us we in WFE that that business billion the business during we see

a booked there There now shouldn't be from we forward. any that So, be going overhang. previously business shouldn't an see benefit or

And, question get we as as that's regularly. sustainability, one far

think in get bit It's that's most from We just sort will function. will and demand 'XX. the ICAPS global And second and that earnest country 'XX. a sustainability The is Gate-All-Around business largest growing. a the fastest we the the better China. We will in grow China. global the question in shipping be that for trend ICAPS We sustainable. that very about 'XX. well, not Services that's -- a see in Display regularly of That's our little in think We start as think business a

the So the that specific yet 'XX for to are kind Otherwise, those or we've we're for not 'XX. quarter. for give of bits a given January going forecast

bit Gary. is little this add Maybe color. a more C.J., I'll

the is see foundry more spot logic, moving which Applied. of On to what we the sweet spending materials-enabled technologies, leading-edge is that for

shifting you materials if So, the nodal engineering. again, more spending at, look is to

same in, for in when all Applied. interconnect. size about, in leverages Backside zip probably talked And the of terms our $X of that's Power, of opportunity code billion really a that's opportunity for that comes we've that Gate-All-Around, us. strength

talked ago. about, we've products four a in formed We've to XX grow organization organization. the we since introduced formed years share. the new room ICAPS, have And major still lot ICAPS we

about. talked I DRAM,

think last I share DRAM the strength over XX those talked we have big in I the WFE don't maybe inflections people overall really gaining years. there. about of points XX understand

a opportunity see the $X that we next billion an years. and us to double over Packaging, for now, that's few business

in weak Services, low-double memory a we're of in said, track we're be still on in utilization, digit Services market up Brice as relatively growth. terms And for to going and

outperform again, those some term. really longer the the things us that over of are So, will help

C.J. Thanks, Yeah.

Thank you.

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

measure Thanks place Do wanted question. in a for because have same geopolitical the a your line, below in XXXX? you or what will different whatever understand of you do to in think of mature Applied does above I measures are you take taking arrangements? that to my technology I that way, kind ask to shipping? there have because in isn't grow forward shipments of WFE just what ways or ensure do of And thing pull utilization or reasons you pay if of

part Hi, the second the question. Vivek. for answer I'll Thanks first.

grow we WFE market. a do good and of we grow because faster the we think think -- long-term we'll So, and growth, think than way Applied for plan of secular the whatever we think faster. will is for to And it, think that's

of On got that many the equation. in ways China, to test forward, to pull we've question specific

rationalize think that One direction that do we are local we and country put that equal consumption. we capacity that what at tracking of will they've the from things strategic incentives at to is relative consumption. the make country We And those and in the the local of place to the least in look investments perspective. amount things strategic can in there's think together local

semiconductor capacity market triangulate itself. also relative to the We being overall purchased

makes that with to intensity us. you know, and we test As sure that sense make we equation

micro installation equipment. also perspective, at our of And the a from look then, we

at then we and know we that the installed we it macro operated. sure when We all that the make installed, being is that track understand and China. in And also equipment utilization level it's So, a in market. lands

unneeded up unwanted unused don't of or perspective. rational are point. we And this see so, signs equipment or from And we at the that think pulling buys

Okay. Thank you.

Thanks, Vivek.

you. Thank

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

Thanks question my question. Yeah. for two-part kind for taking I Hi. have of Gary. technology a

You to it XXX,XXX sense $X slowing X thermal TSV, et customers of benefiting which like give And hybrid of spoke about ton Applied. cetera, looking is same at your are on it's the you and makes for like Gate-All-Around opportunity high-bandwidth you've per point and advanced some down, bonding the things packaging, exposure a memory given for bonding hybrid on seems starts billion the side, bonders. every but gains how along that? month Can about incremental a and compression share any path, Gary, like spoken color being wafer other

there Gate-All-Around You're in (ph), core best-of-breed solution? those of cetera. technologies in most epi, epi] going making or you. epi, are et like ALD, bundling decisions, vertical Thank still customers they Are with [Selective

Those you. Thank big are questions. two

me high-bandwidth off with packaging. Let memory start

So have and Silicon Via CMP, packaging. of that critical for portfolio micro-bumping enable to DRAM. technologies, stack packaging we thing the is The Through CVD, types uses PVD, plating. and different all enable to Applied that broadest two great the etch

So overall packaging. the leader about X%. for The increases this -- overall the HBM in us We're for packaging opportunity about is TAM meaningful. by

it's $X to As billion the talked and we over a business, have double years. about, five track three we're that next on to

a good definitely that's So opportunity.

time. we're that of as On that's going opportunity we've that, I short would that believe bonding, on relative a growth is generate we absolutely focused still single something are the track. the rates believe on. that say what over all see in do is hybrid is And hybrid chiplets bonding the revenue I to every discussed something It's but things significant not company there, term, great to

that X%. with had about that of we wafer we for question month. opportunity. the of lot increase indicated to you so a technologies. we have other the our opportunity of FinFET, share Gate-All-Around, because as Gate-All-Around, that per we're Gate-All-Around, engaged XX% critical of I the then is close helps things in billion XXX,XXX asked, adoption that we $X starts overall full And their FinFET enabling We've see still many with opportunity to that have In deeply And every think those integration company an one share teams, even us with

$X to our track. billion things ramping So the about And size is Gate-All-Around, still when XXXX. is that talked we toward relative Master we we the basically back Class that all end on believe around of to

much different processes There performance. a message is deep on main that very on talked well, electrical then, other But that thing are for what to technologies where is vacuum, have Materials is had about And IMS. previously. which integration unique impact Yeah. Gate-All-Around Applied something big on unit and some market the of combining we're the in engagements teams areas pretty together those we very, with that's has we of the under all track completely is

Thanks, Krish.

Thank Gary. you, Thank Great. you.

you. Thank

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

follow-up much afternoon, for for ICAPS and taking business, had a Brice. I the Good thank question. Hi. so you your on maybe

Where that your more percentage yourself in a sustainability importantly, So, the was second in see the year? in business. you how big of half July maybe the ICAPS as do and going calendar about business quarter? of the talked And Gary

where you. the of forward? the I Europe ICAPS your but With non-China care and Thank strategic, they're slow profitability about returns. is could Japan, near-term they that makes fear China a the some the there rationale yes, also for ton about business slowing, within of thinking sense. customers, end are think and going How markets U.S., you

Toshiya. Okay. afternoon. Good Thanks,

exactly big said leading a you It this last again term, logic, how a is, feel longer year, grew much. about memory. and the we as we've for On it's It's think that's the growing But about can you a year. articulated it. strongly over said, very market. third we've year. it ICAPS, And And What is. our the third haven't this ICAPS, strongly a probably third largest it's business, as get

to offset enough and in the logic. we been growth As weakness all said leading business has year, ICAPS NAND strong

probably So a you ballpark. let will that those get --

it's spending, little globally the trend and regionalization see look of businesses market. that's sustainable a across being a regionalization, do whether we think growth underlying for we whether it's of And rates with of the we at bit different the that that also rates growth and think rationalize and the But consistent ICAPS. that's the markets underlying all We the our invested, world. devices On whether China we are leads the all device made or from and look to investment being the is perspective. that more types those

X%, chips, of vision, different analog, device So CAGRs markets. sorts power into X%, X% those X%, types computer that the for like, fall that,

the And last then, piece. on

So...

Different profitability. geos and

Yes. One thing of in is I the -- some Relative this say segments important are those would Toshiya, very the of one regionalization supply, the that on ICAPS tied to to Gary. extremely of those things is different is markets large vertical regions.

So, There chain billions is those hundreds country. a something incentives having for focus that a supply is ICAPS markets. secure of big supporting of of are there every different dollars for

another thing that So we're certainly that's seeing.

say thing for moving to the is that's not is only there locations, And our as business, Service is I'd into it are really because new a companies relative is track -- no low-double-digit systems, opportunities, for opportunity but those great this the help our by service in regions. We're regionalization. the infrastructure growth set new companies that up Service on will the us. business, opportunity certainly for And supported into moving last but

horizon. you, And, the I starts environment. the remind just investments, plans. Toshiya, And doing three-, the changing the the it's question whether planning of certainly We've or would customers happens a today business forgot I on are piece your two-, -- Good. four-year last way are people but lowering that equipment it, was the health and their seen business yeah, in of

current for purchasing more that see time, bit their demand is. they demand investments out what that little a making makes function really and stable far than function in the whatever they're So the

color. Thank all you for the

Yeah.

Thank you.

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

in of systems afternoon. for my Good It's been control. very about has taking XX% business. to Team Thanks question. your process well XX% doing

faster systems benefits XX% requirements think year. I'm last you process inflections assuming above strong more talked I equipment and it business and pulling XX%, is for better technology strong Gary, wafer this but controls. about portfolio, overall the your also grew than across

systems this I update just your that, So control to business can how mean, give process you is year? portfolio? us relative that overall segment performing And with on an

the Hi, Harlan. thanks Yeah, for question.

talked the growth So, that PDC some of is thing material within our of as PDC but with major for major unit solutions, focus. One accelerating other for and increasingly R&D equipment, are really there equipment you've and important process these is is the us, two is, PDC, integrated areas about, inflections. both for synergy

So, eBeam growing there. the with in the XXXX. grew eBeam. two our business is leadership we've on share of segments around the about maintained XX% times And between PDC growth, one overall XXXX and fastest

new have market. the cold fastest Class, Master emission field to with imaging. about We highest products talked coming and We've our the in resolution

business that helping that's So growth.

can't else. then the And of new materials, together again, you can't And synergy, new we're fix These capacitor anyone eBeam of technologies and where discussed bringing eBeam, had accelerate are DRAM is the solutions nanosheets with formation on Gate-All-Around. inflections we technology, complex. what In etching to see. those our you incredibly imaging world-class, ahead

growth market increasing. in in value in group, share our so is PDC. That will our semiconductor And overall help our also that but product synergy

position, and we're overall in again, pipeline Applied. great a coming really in products great synergies PDC strong with So of

you. Great insights. Thank

comes next Securities. for question. Standby our you. Arcuri UBS of line of question Thank Timothy from next And our the

had question. Thanks a a lot. two-part I

give China banned is, chip two (ph)? question potential China. they're mean, in we but can do of for might you Micron of I sense that's not in Brice, how handicap makers? much us $X.X this fabs been in] pull all, the China you that's billion revenue, China part China, have that the multis [DRAMs And you of chip then in that that of have the how July us other tell of, First domestic makers the a is can versus domestic Chinese

WFE billion million your tools $X.X in worth have billion to quarter. October more worth taking now a that of that's one memory maker versus in $X just We that's $XXX China of July; extra

possible how So, it's how that being count pull in? you Do it production think you factory? you on a run on comment If Thanks. Do handicap just do sustained? that that be can you sort that? could you of

Sure. Thanks for the questions, Tim.

multinational, So, customers; domestic business billion at of this -- our all. include, a on XXX%, It but does China, of not it reminder, almost then that Services also. our revenue, Display about number portion the it's it's almost for our a Chinese in very on XX% just the a And of and all It's include point. business. portion a $X.X little does

And the in I on that a as viewed technologies was in. think of or not part is China. restricted then technology handicapping, certainly a being a whether don't DRAM, it's traditional for This where for were the pull legacy pull it's rules the

So, it's existing technology. an

put they'll quickly as think possible. as equipment I that operation into

for XXX,XXX shipped incremental China, equipment it general, that world go would to view to that in weren't in just shipped somewhere else is it's our up And on question, production. for installed this in if that being the feet if it there, allowed we like be be that's not

view we against the the function. amount location mainly as So, selling just of overall it demand we we're equipment triangulate and

So, we incremental. as location, it not view

Brice. you much. Okay, so Thank

you. Thank

Thank you.

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

competitive markets that thanks the I Yeah, your we what other localize around their taking think guess do just about ICAPS emerging competitors, technology you of I certain their given the competition? how your in portfolio, of chain? we have for broader comments leadership specifically efforts advantage? we leadership where question. think When how at some over some look more guess and China, about the supply to or do

the Joe. for question, thanks Yeah,

all the So I and with deeper in always steps. focused in device even relationships segments. on of leaders And we're strategic innovating areas non-critical is focus all for Applied create us in process keep the portfolio competition, say would our at main to

is a and edge that our because customers. always we talked moving years whether gains, begin strategic we paid and those those very in has important, In that relationships with we helped formed innovations quickly pipeline about, you in really this integration technologies And others faster than is leading share We've learning will us teams, And also ICAPS, since the with positions. say deep as strong I new or off formed four super major it's ICAPS relationships are build the launched continue this strengthen leading have new that with about in we all group, of XX I'd tell the ICAPS, products. talked ICAPS would we've important. that group, to strategic ago,

their still we segments those -- portfolio. working are have there is PDC. integration certain teams again, etch have next-generation ICAPS with the We're in grow we technologies. strategic to on and say I'd thing strongest last room like also position, The But in broadest

have share the continue gain We to segments, coming in us and those certainly years. that help to going in momentum is

you. Thank

question, please next Our standby.

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

tell surprised still Thank you talk record Can I headwinds at I you a are Great. us was where side strength you of that that? you. memory to business seeing go given elsewhere? incremental -- back that come does just about the are with offsetting you're mean, issues the that And utilizations about that from are up? And see when can memory. kind what utilization and Services in level

Joe. is Okay. Brice. Thanks, This

It quarters the business, And there takes XXX-millimeter record Services transactional XX the that the that So was growth equipment. sort quarter growth. of lower and consecutive what and year-over-year puts are yes, then the of are And are in drove yes, that the quarter. we was associated spares quarter. the in that this really a activities that's significantly with see higher the utilization transactional

we the and XXX-millimeter is talk of about markets. Services So, upside equipment really driving significant the And strength business what's the growth in the those for ICAPS the quarter.

then, around and upside. follow, that trending think indicators we or When headwinds inventory part we question, memory. will been see The when utilization, price, market, the negative And for of flat. we the of there's incremental about when still it direction in be discussion see second the and we memory the on will turning

careful to we a market wanted the has haven't memory itself even But have an out the turn seen normal DRAM though DRAM this on year sort that weak. And it's we point side, from year. a of been strength we perspective equipment market, So, the this to point. seen in at be

is Joe, this Yeah, Gary.

though that the the again, think higher is much of We're business to even thing other is helps utilization that also memory down. and based on the that of I a service over XX% part add agreements. is part And stability. have our service level business keeping agreements, us that's more stable, of the on

say And is amount complexity. that the there other thing of a would I is significant

the the and integrated all memory a are platform in for you increasing, those in revenue are whether with with these or single or are third us logic, If technologies leading-edge about multiple material of inflections, DRAM increasing, a under combined solutions increasing. service about it's steps those also vacuum, our think foundry is opportunity ICAPS

growth to we've we you to and levels be talked Service. in low Once that. have able about we're come confidence of back double-digit normal achieve the more going high So, utilization, a to

Thank very much. you Okay.

Thank you. Please standby for our next question.

Our next of of Chin line question Brian comes from the Stifel.

seems incremental firstly, the capital AI Good us it ask for in spending not questions. letting driving afternoon. to next imagine difficult foundry a upcycle. there. Thanks Hi, Maybe few

in incremental start about AI-driven So, much could thought have how result expansion? spend you future wafer years from WFE

the of markets, we of our XX% for different high different think thanks and When workload market. amount have. AI-related think about capacity. share WFE And We heard certainly overall rate the that X% -- is we AI you've data approximately about center Brian, WFE XX%, and growth for bearing peers X% about has Hi, question. is the a talking between the of about XX% end

as and do X% that workload it's important a be relatively going growing forward. view we rapidly an you if think So, small amount,

So that's we things grow elevated of wafer think to and for a WFE will that XX% we associated and rate. to our sizing comparison, as that those would next XX% IoT, with also hold at IoT -- would an starts And now. wafers be

integration Yeah. is Got as that of right? well, supplemental That's heterogeneous it. helpful. sort to And

That's right.

significance think the until, being for from And I now or to constructed domestic the of when either you customers? advanced although expansions? current shells your logic into be and guess, timing pushouts see wouldn't next ready and foundry that any expectations foundry year. it about And constructed did some those of What's detectable filled be your for kind you from several are also, results, and

suggesting underneath In still There's movement still lot the you're underneath as our results, a with macro lot of Yeah. number. of movement a there's that question.

we have leading have some outs the So, and seen we the of some a in push foundry seen installation tools, with customers. of delay of

the and we're strength what ICAPS I DRAM, both in and with the seeing. And offsetting QX really then what's in highlight strengths consistent would again that's just that. So QX, our is outlook

you. Great. Okay. Thank

Thank, Brian.

next Thank you. our for standby question. Please

comes question of from next Timm Schulze-Melander of Redburn. Our line the

Hi, Thank question. taking you intensity. ask my I to very longer-term there. for R&D much about wanted

higher the intuitively and a EPIC the a CapEx ICAPS just about the of mix the intensity. business, third R&D for of about lower probably mentioned revenues center R&D You thinking from

leading-edge logic intensive more two-thirds say, R&D as materials and sales memory, other maybe intensity. and higher to you The

a what be wondering multiyear should Just we factors expect the please? on net two those kind you. view, Thank of to of

Thanks, Well, we're our but bit little spending, on XX% two-thirds of with are R&D. our Yes. model, this fully XX.X% comfortable level. It's spending at about And of put revenue. very We towards a higher spending is point focused Timm. roadmap. than our our we the

trend. the trajectory think we longer-term when business, we're of positive So the in we our business, investing a perspective is about about the think secular

digits, that's We high think it's think which so be X%, to growing We mid-single there'll about build semiconductors, X%, those X%. drives more semiconductors X%, function. complex additive -- becoming so an equipment, more

that the We gain looking inflections will customers also on our Applied, forward, designing think top that. for with share of

So the and increased we complexity and semis, of equipment, function the materials -- growth market the higher think Applied's of an between intensity then engineering additive the participation. there's the from more

to those rate. growth all add up a So significant things

to see level what so, that will would go I spending the on the forward. approximately best work we as you expect focus And on projects identify as level spending maintaining today R&D is we

I we've And and and working also their flat much very been pretty highlight for strategic we've for we held just that three who focused on said quarters investors are would spending on hires models, conscientious very then only. our

cycle. to of QX, our normal normal so spending pay rate fiscal we'll see quarter that next cycle, As and first of year, raise in move we'll see our the we our

to what if they'll So modeling I that's highlight function. people to see just wanted they're that that

Super helpful. Thank you.

Thank you.

Company. line Charles Shi from question Our of next the comes of Needham &

your I talked any ICAPS, my on and Wonder customer that WFE the 'XX a of DRAM largest preliminary terms thoughts might off of leveling CapEx want revenue particular dollar impact about customer meaning in basis. foundry taking for be leading-edge, on maybe Thank coming from in in segment, relative seeing you. by NAND? your in ask, the XXXX that to and thanks question. Hey, what's Taiwan beyond. And logic, outperformance you

current customer on All Charles. can Thanks, particular we're forecast. about especially is that I leading-edge their any Okay. customer, say but

all understand bottom. at better an supply roadmaps started the what as So, we visibility into went to they're forecasting level we through the top the account future. in crisis, getting we're chain They've

we on that good have that. a we So, perspective have --

next view of business investments, our what guides prior in long-term said to haven't the growth is cetera. ICAPS be we expect for our that a just for of we the market, year number In called in 'XX. WFE of sort I we general, or in our What for highlighted business that the 'XX the et have question stable.

be at if that for So years, that a the last will. durable, and It's stable. business grown level you off, not growth is two to we expect high fall but

our business grow modestly. Display expect to We

closer leaves for at We market. described. double have the until we'll logic, we That I and color leading get expect the so grow just our Services business memory to as wait to out And that and far we've digits to give we've the given forecast. low think that's a

I longer in position. as Yes, we're Relative a term, Charles, great to mentioned earlier, this is Gary.

higher technologies. where Power, for Backside is as that for savings Gate-All-Around, you're that's of spot at look future going technology spending also the a incremental performance this And benefits, percentage spending incremental a area inflection. you going sweet materials-enabled that I with and If power said, get Applied. but to nodes, you to get

So, node. our we from have been for position technology each growing --

I think going forward. even better that gets

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

sir. standby. Yes, Please

Our final line Bank. Ho of the from Sidney Deutsche question comes of

both clear terms how big could in is Thanks market and Gate-All-Around. Great. This to share. on of for Sidney. ask for revenue Gary, very been you've squeezing me about opportunity [indiscernible] about in be, want this guys. I And

can in contribution this Thanks. from maybe so, you speak to inflection the And revenue 'XX?

for Thanks the question. Yes.

to that, in I is ramp would amount. latter of think not that what is 'XX. But a that I say we're give starting part going specific the to dollar just inflection

So, certainly driver but there in opportunity 'XX, our is it's not to significant. a significant going be forward, going

great. That's Thanks.

Great.

see I'd if Thanks close for And us Brice, we closing to give before question. you would like any the Okay. just like comments your call? to

Sure. Thanks, Mike.

add. note to that I Just one content wanted

the highlight we people lot want models. I just are and modeling margin, for to doing So, of gross about that a their get questions

guide little that. QX. XX.X%, normal higher that bit somewhere rich at for what a would we probably that's in We're XX.X%, running a expected underneath a around around Our QX, have XX% with mix mix than

XX% their we about next XX.X% think on we'll to XX.X% think make continue 'XX. XX.X% way modeling in our to -- So, to as year, progress to from people or

So, a wanted just perspective, if that. from I that modeling helps to highlight

trending From executing a Semi The outperforming markets. revenue comments up perspective, closing year-over-year. well. year-to-date We're is our Systems we're

with Our growth. foundry fastest for We're leadership DRAM, we're heterogeneous aligned and is ICAPS free and flow our technology increasing year-over-year returns. logic, cash track end winning investing businesses Services We're growing We're leading-edge shareholder strong aligned generating integration. business we've and and the on for in -- growth. markets,

many I you at Sachs and the of Gary in Chicago, Francisco. at in Conference hope see San the be to will Jefferies Goldman Conference keynoting

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

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

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

may now disconnect. You