Applied Materials (AMAT) 16 Nov 232023 Q4 Earnings call transcript

Welcome to the Applied Materials Earnings Conference Call. [Operator Instructions]. I would now like to turn the conference over to Michael Sullivan, Corporate Vice President. Please go ahead, sir.

Good afternoon, everyone, and thank you for joining Applied's Fourth Quarter of Fiscal 2023 Earnings Call.

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

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

near Before XX, we lead the a calendar announcement. I Logic in a on Applied IEDM Francisco. San On the Tuesday Conference will have evening, panel December of begin, future

leading San And Joining ED and Synopsys executives call so we join us Google, turn Dickerson. to Samsung hope be webcast, over from introduction, the with along the to and a Francisco. be Gary you'll technology with in will that TSMC, I'd Qualcomm, like Group. won't There Intel, us

Thank Mike. you,

like begin, to briefly about I'd we Before Israel. speak

We and many shocked attacks Applied you its has years. had of and by significant in the X Israel loss. nearly XX of with As the presence October outbreak of terrorist suffering Materials measurable for a know, were war

more stay until is Applied Our do team safe in Israel conditions our our is at this committed to Materials families to proving time and return. their dangerous resilience part help peaceful

a outstanding like the flow and for of earnings team Now, earnings cash record our year our and turning these work to results. as fourth revenue, deliver strong finish fiscal XXXX to results. in hard whole. with to record a to our commitment We would delivered and global recognize I the quarter

our Applied talk outlook by thesis with performance XXXX. for and months. for the then reviewing As begin industry this key prepared the over XX our I'll and I'll before our our past longer-term about accomplishments year-end remarks and my concluding priorities call, is growth

to semiconductor strength major down spending our the portfolio fabrication able broad industry were the demonstrate enabling and was we as Applied inflections. wafer of both play, role well While equipment central in XXXX, as

business in track which the Our the that market. XXXX, mid-single-digit we've the will remains growth fifth for systems delivered wafer fiscal growth fab on calendar consecutive and be year semiconductor year for outperformed equipment

to can we positions believe we've outperformance We technology this at road that the the customers' the established thanks over will enable years, coming sustain inflections our major maps. leadership

of where XX of new units XX,XXX passed the shipments months, chamber. and we many business our our delivered including milestones, records In SymX etch, past major

incremental also and new advanced record memory and power products We high-bandwidth heterogeneous patterning, backside secured released and positions and integration. DRAM production tool delivery, of gate-all-around,

IoT, application same as etch, serves At well our time, in with auto, and metrology new power customers wins we the sensor ICAPS as and products communications, strengthened and implant epitaxy, inspection. that business

In in and X%. overcoming fab XXXX, services, this lower period, In total increased delivered we low utilization headwinds fiscal and -- single-digit restrictions. rates revenue base our trade installed growth including

competitor. In is process as twice nearest than big chambers our more fact, as of our base now installed

more service and generate now are agreements, XX,XXX and of including implant, grew are CMP, total inspection. XX% tools not than metrology our subscription which of there addition, number that parts In long-term under the and tools We chamber-based revenues.

We these maintained of also renewal the XX%. at subscriptions rate

we've levels. our with and quality time customers providing inventory on year, we to improvements. to while focus we last XXXX, our on-time and delivery Compared made sustainable significant continue this and normalizing operations and In supply chain, better shipment are

success to a industry era this shape. grow our next scale are company, enable More importantly, as our ready of operations customer and the the expansion grows in great come. over industry as the to Applied Across to take profitably years position Materials we're

X are growth there future, the to components Looking thesis. our key of

the of as -- and the GDP economy outgrow progresses. global will semiconductors digital that transformation believe we First,

expect This need the fast as chip industry for from X because or we next. node than faster technology more road market the wafer to the to semiconductors. Second, deploy move market and grow more for is makers complex to to equipment map fab the is becoming

wafer of we engineering Third, that equipment Applied the science fab broadest, materials enabled the and has inflections believe most connected are because technology and Applied enabling will outperform by materials key where most portfolio solutions.

solutions our we our from to technology transfer believe grow or their business fabs. than with and we fast advanced cost can yield faster providing device optimize equipment And manufacturing R&D service in high-volume service as business that customers by performance, and fourth, accelerate

strategic positioned to and industry industry portfolio exciting Materials identifying product period this from and By making early innovation capabilities, major growth. Applied and benefit multiyear our in investments best inflections is of

far, address broadest high-value by devices technology of We memory, and interconnect, problems the unit to transistor, in process customers' integration. our portfolio XD specialty have, heterogeneous

on and able co-optimized create these customers We're work combine in are to solutions, ways higher-value seeing problems. device and technologies our module integrated to integration to strong we pull from unique and

in our have time been closer customers. history At no to our we

We of a have unique collaborative innovation built commercialization technologies. and platform next-generation

and We growing offerings innovate enabling revenue advanced with technology-enabled streams platform our ramp. fab services seen by valuable, are will customers especially subscription Applied expand the our this way service also to significantly for advanced we during and These partners EPIC, transfer as Applied. collaboration technology provide increasingly innovate. And

priorities and for the outlook near-term our ahead. to Moving year

Applied's macroeconomic within build-out the from customers demand complex logic environment, mindful PC, data well spending stronger see our leading-edge remaining and cloud In initial products higher of and year-on-year, we as nodes. we some mix. the the demand gate-all-around as for expect to be While with foundry of by we AI robust underpinned XXXX, are changes center geopolitical

softness being the remaining are And equipment and will for automotive utilization pricing mainly we than be of still markets. see XX% XXXX NAND below in demand far and spending for spending year-on-year, wafer Applied's business products we automation up strong. but and believe for end and less overall. fab to demand In DRAM, ICAP's our both our due customers industrial improving lower, see We

mix lower fab We the remain moving expect a NAND to percentage forward. equipment wafer of

environment, other are rules global of and the XXXX material certain rule complex, trade on to we were and no export the we the while in The with October changes time. U.S. control this incremental the to impact countries. government -- alignment are clarify details, Applied terms working primarily focused at In see with

continue strongly that Applied look to growth, leadership and ahead, key better environmental areas with impact the our that focus company, earlier the ensuring year. our Materials Applied's programs continuing this net-zero enterprise capabilities, portfolio supply playbook I reduce fiscal major in I to believe make productivity operational right across as to future serve driving our has and as and partnerships. that R&D As the industry extend and to collaborative drive our strategy customers, line inflections economies and enable scale as XXXX, chain the In we scale further improvements of capture announced we differentiate include

though grew Before XXXX, and even I Brice, hand semiconductor service In summarize. over businesses, Applied our markets down to equipment year-on-year. fiscal let were our me

For our We customer to the positions the this advanced calendar outperform our for of a services. sustainable. believe outperformance growing fifth thanks industry equipment in XXXX, to is on we're strength the track demand collaborations for all at and row. inflections, fab strong year key the wafer market our

opportunities the service wafer business or wafer equipment growth and equipment fast And where than we GDP, our grow equipment grow our fab long-term to fast faster grow faster to fab market positive as about faster to semiconductors, than semiconductors we outperform remain as to than or expect Applied sales.

hand Now Brice. over I'll to

and record Gary. delivery year management, fiscal in improvements summarize you, for performance. inventory to Thank by and delivering our well thanking QX. guidance results like the on-time teams QX our I'd making linearity manufacturing year provide start for for today's this results I'll On as as call, our and sustainable for operational our

my going the Before one important our as our we valuable creates and to have business the their Because of how trusted R&D our long-term to portfolio and attractive returns partner -- technical a Applied customers billion value solve world, markets challenges. broadest directing of results, perspective deepest equipment unique are nearly invited and it I'll most expertise, and model annualized We into into holistically closely shareholders. creates of with on the most $X the by share for we identify work semiconductors.

customers semiconductors intelligence. to strategic modify scale artificial R&D materials atomic at industrial and better like an helps end markets growth for on Our products deliver and spending levels

into our spending focus relationships and customers strong high us and unique our with to and a probability adoption projects have provide insights market technology end that road with Our on us map financial allow commercial of returns. trends

to gate-all-around, backside As the our manufacturing growth power, R&D a XD line now key share success, and memory in sight market heterogeneous of and leadership across we integration, semiconductor including result high-bandwidth DRAM. inflections. of the have customer invested

more XXXX computing deployed leading-edge is energy. edge to help and solve than are ICAPS NAND use strategic in in fueled where markets, memory weakness we powerful a being by growth and strategies logic. leading-edge growth our like in trends The logic in the market offset ICAPS also renewable and also challenges

Applied's focused results investments and our have R&D led to effective shareholders. for fantastic

Over belief compound rate free can earlier of the announced rate nearly the dividend at and compound several quarterly share free per cash and We've cash that And support our years. at we've a period. XX% flow more increased at than at EPS this doubling per XX over flow our years, non-GAAP of a dividend our XX% over year, next XX% previous we grown revenue past over our share this XX%.

expect semiconductors to next faster Looking GDP. XX ahead the we grow to years, than

grow to fast or technical than faster complexity. market We expect due increasing as the to equipment semiconductors

We grow portfolio than our expect our customers highest products value expect largest of and fast the to installed our increasing Applied's solutions industry's And help at as value as base generate market squarely or the strong we the that inflections. from of equipment services due faster business tools. business we XX,XXX than business to more to equipment our targeted outgrow are

Next, improvement to operating Non-GAAP basis $X.XX I'll OpEx to basis, billion, and X% XX non-GAAP XX.X% to billion, -- increased R&D. the to year-over-year of and offset than record more increased majority inflation. summarize per margin X.X% the X% $XX.X declined of a a to XXX value-based pricing year results. XX.X%. points increased actions We EPS revenue $X.XX non-GAAP nearly share. as increased in XX% increase Non-GAAP gross profit On basis impact points billion, cost with the Non-GAAP our margin decreased operating to our fiscal $X.XX

per committed We paid flow operating to to million time billion X XX% Shareholder free We billion approximately XXX% of and $XXX over average over flow cash price XX used million $X.XX remain an dividends were flow cash and shareholders cash to shares billion. record cash $X.X $X.X $X.X past We to free approximately XX% years. below repurchase of at in the billion. generated $XXX and distributions returning record share. of returned

basis XXX of summarize a and the sales increased basis. Non-GAAP increase record billion, billion QX non-GAAP were to points of X% Now grew Non-GAAP in -- XX.X%, rose with X.X% Net $X.XX slightly to R&D. to I'll OpEx X/X our and a lower. gross results. $X.XX $X.XX. year-over-year on EPS margin around

Semi year-over-year market, delivering full as net Turning margin to -- at grew deposition operating X% well X% and overall and segments. outperformed For in billion, in Systems Semi non-GAAP Systems packaging, metal the $X.XX implant to segment XX.X%. declined foundry the logic and by the was and revenue And revenue flat record sales as year, CBD.

in $X.XX grew operating points to Applied year-over-year segment XX.X%. basis billion, to non-GAAP and Global grew X% revenue margin record Services XXX a QX

which AGS XX,XXX. adding is that For ramp than kinds for October of to including the underlying are year. past installed I in increased agreement In growth -- X%. tool X acceleration. subscription of matching increased areas -- and agreements, AGS of percentage entirely tool. of like business process in new utilization demonstrating revenue agreements, the growth along points increase and is intensity AGS the An rates X things: increased per the in as XXXX, the percentage function service of tools base we in -- important the the AI-based And the tools a XXXX, by under subscription more solutions the revenue trade sensor enacted number the restrictions the and how number full fab X%, increases complexity year, we that installed of and increased base, catalyst over by of we The for with compensated service drivers fab declined for

number reduce large connected In QX, all and and carbon as software a which process resources that applied subfab a are we delivered unique customers hardware services tools our consumption helps products and service a signed environmental electricity emissions. agreement under to eco-efficiency of

ever. agreement we addition, In comprehensive largest our signed recently service global

dividend. Finally, AGS continues to produce operating company's more to profit enough the than pay

improve cycle modestly operating to and laptop to Moving now OLED display to to Applied's technology into And segment look the revenue tablet and opportunity display Display. forward $XXX increased million, business in drive in to XXXX. QX to and -- margin markets non-GAAP the increased we expect we XXXX. XX.X%. continue And to our

cash operating free to shares shareholders, -- We $X.XX We nearly nearly billion buybacks. million generated nearly We to of dividends average We flow QX. in million in million million Turning billion in and flows cash $XXX $X.X $XXX in including an flow. $XXX price at in distributed cash $XXX.XX. repurchased X and

I'll Next, our in -- China. The discuss business

do expect indicated, from not the we recently trade Gary updated incremental impact As material an rules.

expected in business Our largely overall in China of In company close in in our revenue. an trailing-edge due grew revenue China shipments in sales. XX% to that and increase QX, as QX, DRAM to -- $XXX million contributed was

China, System sales the composing was year, in full and China and in revenue X%. remaining Display AGS the For in China sales of XX% with sales, XX% Semi

domestic remain demand. its of healthy capacity an worldwide extended China's demand equipment because to for in significantly remains believe likely below period semiconductor China manufacturing is We share

addition, while in nameplate is until and some likely capacity time is yields remain growing fab process product improve. averages capacity effective industry below China, In for to gradually

Now I'll guidance our for QX. share

We EPS semi $X.XX, of systems expect billion, plus ongoing or revenue or $XXX outlook, be edge plus revenue minus trailing $X.XX we Within $X.XX. $X.X expect to million, our this with be we in expect and strength billion non-GAAP minus DRAM. to

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

now, to We tax expenses let's around margin you. expect billion. a approximately to non-GAAP modeling and the gross of begin are non-GAAP we XX%. Q&A. operating Thank $X.XX And rate be be XX%, Mike,

to of our mind, that question many X on help ask in today's as is as call. analysts Brice. just With [indiscernible] possible. Thanks, please

session. begin. and . let's back another If requeue please the you Operator, to to question, best our have we'll do later please come you in

[Operator Instructions].

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

at potential your can report Reuters out What that was into with you shipments October already is 'XX the your wondering, going sure I'm on earnings investigation coincident I October potential actually that or time the pretty us mentioned, had controls shipments came release. though, what might talked you around comments to it the . I in would you saw SMIC. you here? subpoena. disclosed what from in have to in -- export on issues this . your China mean, that I have tell that much don't a comment to you also this And know not, report have legal on be you result around don't on much any the like potential China point? script. news about disclosed just put related you can I but helpful. It think

Office. Thanks Stacy, they related an And government information from K to to point, disclosure out committed in is remain this this at to it's Brice. U.S. we we are can is matter. can't that Attorney's there China? we We been we're any for What disclose a a to fully our legal last say but of that subpoena certain you year ongoing did -- the and requesting to trade the as us. the we're received because with would shipments course, are and cooperating imagine, question. complying we rules comments this add it's the for regular of all of the on matter,

there's going to on? was So is nothing already related new to all this whatever

comment . I we October, Yes. last but any add yes, to did this disclose I just believe. this, can't

from Bank Arya line the comes from question And next America. of our of Vivek

China you demand stay that have to understand DRAM incremental trying You what mentioned that these expect you shipments. I'm means And did healthy. to because

outlook? shipments you assuming is, question first I those So January guess DRAM in your what for quarter specific the are

Or could it your could And does Just what to China conceptually, least flattish level, sales sales next even fiscal comment they as mean high at should in you grow? strength that stay impact your say to understand from we strong year? China the comes 'XX?

give to we in level DRAM QX, did Vivek, the QX. was for In in of ICAPS' shipments ready yes, strong QX. We'll China mix. our guide and for been very most so expect for mix rest you we to ship business it's QX, in products think And us. . of see a sales this it 'XX, 'XX as again. continue yet, highlighted, at 'XX business. It to particular, not elevated XX% to high be we elevated when of growth about And the a we're is China for for but

we to it that. but strong. For XX, largest the -- expect a was component strong to still as be be as not strong is it It 'XX, may China in

our QX you'll guide So that, still to elevated for an in again, but we're mix ready China. guide, see not

is this Vivek, Gary.

Actually, pretty for little through Code averages. go XX%. as said was back we more Just a it really previous the on down the think was remarks, prepared China same as Brice gets also bit, it full it's year. we what ZIP in would year, was the historical the to the much year, And but .

question from Caso next . our comes And of Chris from the Wolfe line Research.

ICAPS unpacking you Just another question what on some said. the of just

I of So along the growing where perhaps like your bit with could historic just as back that, incremental to that with other the . And guess function of coming that's line a what down? averages, to you're It going is talk in ICAPS of China sounds with business. then opposed the you seeing part business customers. China again, non-China of just you to little is a some said weakness,

Okay.

normalize On the It's average normal back XX%. after DRAM reason I QX. second elevated around part, the because will the China is think just its comes to shipments

we had So in DRAM high QX.

'XX, in that business what of significant and say in then and general, slow again would should after growth down that had even is ICAPS' higher again. QX, mostly 'XX. . And significant, we thinking growth in I in be that ICAPS expect We it will

think point, digits to years. looking is guide growth strong a this year, ICAPS for of expecting single QX we're So right when And term, high long your for now mid- across ICAPS. to several actually we

But we lower see do utilization.

fab We have see as did the some utilization in retime from projects. customers And pushouts lower they of their we seen different some QX.

So a was be will strong we strong gone that it's But through. for of higher do cycle think growth be much because than again, it as XX%. may ICAPS, in not as 'XX that year it 'XX it's the

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

Gary, 'XX on WFE. I question had a

may little remarks, and really logic gave up application NAND your sounded thinking color down edge be by a You and and you're ICAPS prepared foundry in DRAM, it good like leading bit. flattish

Curious if WFE and you're next market overall these thinking the you can into quantify year? perhaps about applications perhaps different how

you importantly, backlog the for X more And you that be fair consecutive highlighted how to assume outperformed could what have your guys today? sixth you year in see is market years, consecutive 'XX given it the

be to some future in see a This, but well logic, where Applied's 'XX, the positioned our power, we'll going optimistic. coming ramp the inflections also really Gate-all-around, foundry And that major would but relative I we'll I'm customers some backside see in we in more significantly to years. gate-all-around very that backside ramping ramp delivery. we're in also say performance, revenue revenue the that's leading 'XX, In years. significant for power and in

for And we track of those to each spend incremental on XX% of than more X and inflections the is overall more. for Applied, those We're major billion of inflections. opportunity capture can capture $X

as foundry in 'XX. position remarks, in for good Applied said really we think that we healthy business prepared in So be will logic the overall,

years. really of We've going well DRAM points where gained major feel forward, last the positioned inflections. we're for And case we're in XX the overall positioned. again, XX we another like is DRAM well share

to design see future share to drive opportunities there. We wins continue we and DRAM, those for inflections in have

again, goes architecture very over Packaging billion opportunity gain different all position And in $X is business a to today. we're us for inflections XX% And in that that Packaging, we have in as for forward. inflections Packaging. share an there, good the of In

all markets all ICAPS. offset Packaging, be as said, of opportunities, we areas foundry will the about, those those talked some So leading-edge 'XX, will weaker but of areas very in those those ICAPS that are And logic, for the us. in weakness DRAM, strong of we

I Brice, if on to know And market? add anything want don't overall you the

each It's better tell of that's see see, think . can just you you the and markets to we way best We that's we what for good. give going I end -- forward. us insights No, communicate and the into what we

question comes And . of our from line the from TD next Cowen. Sankar Krish

I is on guess gross This Chris. is on the margins. behalf question have [indiscernible] of I

revenues of certainly Just ICAPS What the the in given sort implications normalization goes longer-term gross mix of of China coming also the down? comments and the quarters are about is margins of sort dynamics. to or China medium-term a

sorry. Krish,

So modeled, say I for for year. gross would margins, it delayed we to to we're a committed although still had investors, what we first,

to XX.X%. That's XX% margins. modeling what an raising as we're our we're goal So interim committed to

by we XX.X%. As you the was It highlighted, had of China. mix XX% buoyed in QX,

inflation that that underlying impacted away, uplift. expect we Last basis we continued market or do That If offset XXXX specific or all value primarily you to margin XX.X%. probably goal we to something of not be the in benefited make gradual And toward will and today as worth cost high strip that it's points by expenses forward. move our across XXX we if in pricing progress probably our is gross reductions. then of as highlighted work impacts improvements quarter, XX.X% in

our question And from Harlan the JPMorgan. of line comes Sur next from

attach especially are but advanced year-over-year still Great depressed the have logic to across continues across memory? The Utilizations to stabilized, trends. continuing subscription and business drive see they rise. foundry, team customer to base, services strong your

you low XX% And biggest AGS? the for the ICAPS into Are continue mix AGS still getting that factor? is year. it And to of X strong. your of about range operating shipments in remain to then of points that any quick line on last back still related? sight Or as just drive fiscal XX%, are sort Is on one, pressure through consecutive XX% margins a below XXX quarters basis inflationary QX XXX-millimeter

Harlan. Okay.

stabilized on utilization question First rates.

say would in lower because I rates highlighted just see no we ICAPS, in I as general, in utilization did think QX. I

point. And at so there is ICAPS some an this digestion there

about fairly you that's the leading would memory say of if across think look the and about you think logic, stable. rest been I components as segments, Otherwise, I the

set for AGS, grow us because smaller from side to tools removing for better margin and from the despite some products customer we operating service margin year forward, a did back of remove shrank that's really thanks China business in the highlighting year business of the had. perspective that some margin this the we the going setback and and what the at the On ability our

installed But going be will base, rate need a forward, a agreements will that with to subscription we we're in again, business, business. services just more that for components margins improving and intense and growth our the for double-digit customers low that tool those of growing be And services to win-win and the then with our spares the for and services ability information services. have committed

. question next from of our Srini Pajjuri from James. line comes And Raymond the

ICAPS of question My given about half you're your expecting, talked I about is things. being past, you the business slowdown a in on Gary, think couple of well. ICAPS and as the

you over versus next talked How ICAPS exiting, ICAPS non-China a term. where guess business do I about other And fiscal see business months? see do China bit the you mix, say, 'XX? let's down the XX the slowing guess, the short you I in

Srini.

foundry business. So the ICAPS half total is of logic

that -- So in that's it's historically, code. been ZIP

about the So stronger compute memory so NAND, memory, mix. than memory about is X/X storage foundry about logic is is DRAM the that's being with X/X, ICAPS X/X,

the remaining point split our going with in going mean business forward about the logic I in very see we that And of mix you would between in I overall still have leading changes some edge that, strong continue foundry forward. X/X small any time, mix, could and ICAPS. will that expect but

about the in So big inflections, high-performance if lot edge a but different computing, AI you there's for many growth computing of industries. think across there's

similar logic leading about pretty foundry we be the is ICAPS, to X/X memory. So mix that when we at look X/X talked what think to we've going much before, markets, X/X

And . another have you Brice, to add want Or question? then did you did anything?

here. add I'll just on, just for Yes. investors reminder Srini, a just

We prior in Our to whole single for consistent be component. digits as quarter, saw we mid- well to that faster we for as semi did ICAPS see to expect single China. China. growing be But -- and is to several we And we consistent high as do than expect for longer-term mid- that communicated digits view do high geographies non-China. our the

not in So definitely just China this a global market a isn't market communicated. we even half of is market, as the China

what And goes guide and continues lighter very far the or be ICAPS an as that's very slowness year, would includes I to is then any as our say strong strong.

about is stronger. it here 'XX with was we're but way grow. the to strong, we is 'XX may lower very to expect We a even take thinking market So breath utilization, continue this

And from the line question our next Arcuri from Timothy UBS. comes of

you more flat -- well, they said know up year-over-year. billion they number, have WFE billion $XX and be provide first, it's because suppliers, it they're $XX $XX else's to like really billion I been pretty but I now a reticent said XXXX everyone $XX billion can't - guys $XX if first, said billion, then saying you add all X

you will what you year? be give sense WFE can this of think a So

I do year. even going this gain mean share billion, to it's you're still $XX agree I if

But -- question want on for so part message XXXX this year what's WFE? the -- the find I out I the first you baseline to is, message being WFE to willing -- of committing are year? XXXX? the what changing. yet? guess then is And next that to make But mix commitment up you but Or are I the not hear about you're

Tim, thanks for the question.

So of last were having those markets. NAND X in to position in and we the for 'XX what and . year numbers feel heard our those markets, strong and few from to and were highlighted was ICAPS us, went growth for that we best other as how the leading and through quarters, those report helped leadership And a markets 'XX, we us exposure we've DRAM we weakness a see also, all how primarily. logic it's some just us for of offset seat.

guide the should They definitely, with what of what see would will that help market the overall our calculation and the your can math. be. everybody So numbers with can do be

up And the DRAM especially in will ICAPS calling of market. logic with will strong. grow think a seeing think breath ship. QX then gate-all-around characterize to we're low begins think utilization. through We lower for come continue 'XX, we're not off be year, each we're to We ICAPS we in trying do -- total. Again, what position. a the we to will still, but strong leading think as take NAND may

in continue. So was that see and to expect we'll plays out. then that Packaging how to we have 'XX, strong And

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

look us understand I did just high for mid- you was if grow to recovery long-term decline in leading-edge as that do And think 'XX? growth the ICAPS. help we single-digit wondering ICAPS into offsetting about then it relative fiscal 'XX, of you spending could in . What just how

second Joe, can you was repeat the What second part? the part?

the recovery in logic of foundry Yes, offsetting ICAPS? leading-edge the just weakness

Okay.

the we're part, hearing very a an XXXX different I growth perspective. think in be what from been we've on equipment high. saying was semiconductors perspective still of growth So the is might from first what estimates

So said we've we And faster in equipment plus. described it that in 'XX 'XX at . was from perspective. XX% an

obviously the we is growing preparing the semiconductor see. fast, actual that going not that equipment forward. growth the the that's for rate So but approximate market in

sales perspective. be actually our the on lower strong, a offsetting and ICAPS very is do utilization. And our guidance, strong side, We in ICAPs. leading Again, then logic QX QX see continues from to

some pushouts. seen We have

strong. strong won't So as we're it expecting a as be in year very still 'XX, was although that it

leading node well, investments, in as year the earnest. where expect to because up in that offset start ship some past pick lower logic, through and we with growing And especially is few we'll new gate-all-around, quarters. been see leading to the has logic

Yes.

positioned that, for add inflections. as I earlier, we're thing major well other said the I The would is really

and gaining If look ramp well those starts been logic, for to gate-all-around spending in 'XX. share DRAM, at positioned inflections. you foundry we're in We've

it than 'XX. And spend the Packaging of as they more believe at we're at 'XX. still We in packaging in architectures was be 'XX will and positioned XX% said, different capture to those of strong strong all Brice ramp as

So of strong Applied and all for again, areas will be 'XX in continue those to beyond.

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

good in that some Great, be trends ICAPS you've DRAM talked And China might seeing coming that thinking being these you talked deceleration. about down. there of about some in DRAM and you have

to They foundries the the they spending as lot. we should the utilization your business? we've were extent you that part spending be indicator about low that of seem The see utilization down. be the those It China lead Do a thinking a to seen portion ICAPS that? lot, coming and still of a for already was of

for the question. thanks Joe,

China and base happening did ICAPS visible China, think little of from the in down serving utilization think broad in customer different for perspective. global cycle. markets. a all what's that bit a have are general end come about in When. We this I utilization that's we definitely a

and perspective mature to coming And time. perspective so is are yields on working is product our -- up their ramping over they yields our

So they this the a -- where partly each in these projects. of are just is statement product I curve think of maturity of

as of committed long in It's a it's they're that, about a we from the perspective, across that list customers. that's it. think and fab total, total a chip a of installed being to way do are number place They projects being country. the in whole. from we that and market When think the incentives a goal think but the capacity we as production to a place of being self-sufficient have they're about long put

that market view going will we a be stable forward. our portfolio So of part

is the this the going Joe, as Brice customers be efficiency said, it's spending, those of Yes, less, especially look with for new many to at if you Gary. Also, years.

yields to standpoint. device a wafer the the be from going versus much -- the are So less starts output, the

of going the market domestic number So will overall again, impact output. there a demand years. with the healthy And that's we again, keep their think, that to gap for

in we've my finish -- This in point. We pushouts signal is that, why less thought, that slightly growth strong Yes. a utilization, last business. Joe, 'XX just we some sorry, think what roaring we've seen ICAPS the and saying than the be that's statement. be missed as will that's think a global and as And strong one years. X in won't just do to We the we're year. saw do will lower It 'XX. the it seen it the be a I

of line Deutsche the And from . our comes Ho Bank. Sidney question from next

Semi I down to year this still is comments look Great. DRAM the the And the a the even Systems last business. exceed market bit. If revenue double-click is for year to at want in to of tracking grow quite 'XX. But I DRAM and XX%. on your just peak XX%

from may market that The question maybe outperformance a much you have I better the being comes we of share thought have? this lot gains versus is how maybe than

be the anything Are you unbusiness capital drives intensity to the seeing structural that of higher?

spend? talked is, that market roughly And clarify, Is DRAM of 'XX. the flat assuming you WFE terms in also DRAM products to to of just it my last for your part about for expecting demand in I'm strong, remain true which

Sidney. for Thanks the Yes. question,

process rules running the So the to within clarified this we customers was do the business some strong of year. of recently to the because China the trade shipments rules. where they're allowed strong be was partially DRAM within think

And think it we expect spending market matches think that continue new upgrades, over So without year, is to was of -- necessarily where China those that a looks lot a market fairly shipments that and the recent actually a even of we But perspective. we partial equipment technology strong not I normal DRAM that think the we explanation. like years when from an that's that capacity, time.

Sidney, the Certainly, an server, from content an is compute than stronger much higher talking on memory X example if memory. customers. at with server. AI you storage And Yes. just for than DRAM the is there industry forecast them standard look just

on optimistic months. And So road again, I've X this and lot pretty just demand. a of longer are compute . memory time DRAM customers term spent the the last about

Chin from comes question Stifel. Brian of line next the our from And

spending peers or next WFE reference double your of $X But contribution AI than year next against the difficult I One could to a think know see year, AI augmenting figures. point benchmark provide can you that WFE stated it's billion of year, year? more these this on you this even for of beyond? how account I recently

but foundry half tying in to just expect first your Is logic in that next And of comments, second a advanced foundry a lower like you just of year. But off but maybe sounds logic clarification, calendar clearly levels calendar these it earlier kind X-parter, in dipped improve it's half. spending, correct?

Okay. Thanks, Brian.

On data points workloads. of the think we or think higher expect CAGR a workloads. that data first just part Gen supporting We that our for probably XX% AI, last cycle, but relevant I we at going fair. AI that highlight are AI points. to And about we did That's some WFE the X% believe is not provided that's forward. And all AI, I grow

you So whatever think and true in and I we equations, on DRAM using, that rate, would use leading for HBM true our if would the that's WFE side. number X% what use you're that think your be be logic and for XX% growth

question, in really not it's -- of And our from logic quarter expecting half the logic, will then will ICAPS advanced -- quarter. the to accelerate be and strong in NAND first our on we're guidance, second another similar really leading be strong DRAM the to sorry, 'XX. it guidance in In second a quarter prior of it and half strength first

in you dynamic that have So still QX.

it see that So really leading would be logic. half we second improving

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

thinking -- intensity, at prepared I to may probably be you're which which you you faster this semiconductors, or to upside fast there remarks, higher. go year already high grow think mentioned in your WFE the implies XX-year is than roughly go WFE as to of expect kind

do I example, be? Taiwan the versus XX-something level could is really, thinking statement in the their your XXs. expecting I just percent their For your a to from where want the statement? normalized they in upside to I behind go think to current is level what understand customer capital largest your How reconcile intensity So think

else's Charles. anybody won't Thanks, our But we probably from with compare has It's been perspective, growing. hard it Okay. to comments. --

we've new One there mature be used the used used particular that that, in without intensity reasons that's raised business, be and before, it's and capacity, case. and because to industry growing the the have to The of overall facilities been longer is it's equipment and product the technologies, made really starts investments no available wafer as available is described growing. ICAPS, level. just And

from engaged think processes, more and perspective, types those intensive leading DRAM, NAND expect new technologies. the we what other is capabilities and requiring that's in. When logic more to actually steps to new of our be And equipment with R&D equipment we an

it's more up to intensity that intuition than that So over expect we time. go

. One moment question. for next our

more. X have operator, for time we And . Yes.

a Research. Certainly, follow-up our the is next from of line question Rasgon question from Bernstein Stacy

me more I little letting the year. more slip the of trade-off to here. for wanted edge one Thanks leading next just ICAPS explore the between and in a

would down, said logic foundry leaving I or sort it you some it. you said So of of a ICAPS know is offset target, but

WFE for given levels dynamics? least the up, 'XX that is versus Are 'XX the or a down flat you thinking standpoint, overall logic, foundry at in those

Stacy, call it's we Brice. didn't make on Yes, that. a

make probably everybody to a heard I know us of kind You the probably components. wants call.

we similar in we're things a dynamics out play saying still in what as QX. be QX, ICAPS. But to QX The we're forecasting have is assuming very strong will

a You'll utilization market. strong some know But you'll have there a been in is strong market, DRAM have we lower there pushouts ICAPS and have that ICAPS.

as to So the that market it in 'XX. strong was as we're not expecting -- same be

know at gate-all-around. look and dynamic. weak in be same that And leading including it's also logic, we weak QX, that leading and in ramping, flip QX is new logic we When technologies will

Whether we'll with but play help out. to whatever or to tell smaller yet, we throughout let that expecting than we're happens have ICAPS, just that's year. the So bigger can't that

a calculate?. though. like that to sounds the one either over is other, fair Is way It dominating

make make can you -- it's at point. call think to a not . don't I Yes. easy this yes,

our from For we Dorsheimer . final have Blair. line William question, the of Jed

Just just confirm quick -- to the you to pushouts see auto on -- end you part. I market? ICAPS Was in you the comment started can related? X do want that that

the Can you X? then want like the And seems you there, get don't any into but also in Second, that's know investigation, ICAPS. those it to can't confirm or I detail

Yes.

for questions. thanks On the Jed, second, the

commentary discussed just I matter. can't to legal second, any previously what with add the respect the to we On

this point at a would first industrial. where one, the situations mixed and mixed On being different on as inventory is we ICAPS markets. point the Actually, slowest definitely the there's reports all probably

Just to for comment a add you.

even On that from a be market. slower we're in may much the it the because unit perspective, auto density say of EVs but cars, newer auto weakness expecting in not side, of would chips and the I

I think So guess of the would that. that's way I

thoughts? like Brice, . question. your give for that, you us to Jed, would closing Thanks, your Okay. with And

like really sustainable progress teams I perspective, closing the have and year-end a operational our made. From Mike. Thanks,

with proving Our share put did a great in R&D in resilience wave we've Semi a it and our its of advanced like us position collaboration across for also sight the been have in gate-all-around, a XXXX. year, to next grew had our business a year, business line backside services and in Systems market We down over customers XX% just investments power spending. making of record inflection . The now of packaging.

sets At us the and free margins gross increasing for strong we're up same time, cash this flow, increasing generating and distributions. shareholder

for I happy you get hope we in U.S., the the California. and to in meantime, I the at you Southern you Thanksgiving. enjoy Conference safe a hope Fargo of Wells of In those see many

the Mike, call. you, thank close and Now let's

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

program. participation your Thank conference. today's in you, gentlemen, conclude This for ladies and does the

day. Good disconnect. now may You