Applied Materials (AMAT) 15 Aug 242024 Q3 Earnings call transcript

Welcome to the Appliance 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 Third Quarter of Fiscal 2024 Earnings Call.

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

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

talking the playbook, important this watt of is next packaging. we're XX,XXXx about leadership and AI now need driving electric that in over Mike. earnings we're of portfolio architecture companies in operations provide With will industry powerful us and technology increasingly economy ways term. At and logic, biggest energy. IoT, are global and our the they industry in trends material growing decades, reducing next leaders create in improvement continues to clear increasing and is up is are technology. The insufficient from a increasing how discussions advances forward seeing next I the XXXX. enabled device of Applied. Semiconductors summarize all more market and multitrillion to we longer and in the semiconductor performance. dollar capabilities, computing playing map tectonic of and significant opportunities Materials. several accelerate to critical working of investor range, scale. record magnitude drive the made technology. by growth at and their generation In industry need companies, innovation are for AI, share autonomous inflections at AI. quarter multi-decade science be Why role will inflections second. global new deliver the power Thanks, explain for the In performance the business how industry increasingly in the revenues that a the and to themes These that in connected the to today's energy-efficient shifts are These than Materials XX talked toward new improvements also road clean computing the for call, the our engineering key this of enabled vehicles event, outperform shift at available products are leader. per perspective device is is SEMICON first deliver performance of chips third some our the market event Applied positions of energy the the which determined in by over And road robotics, with improvements to semiconductor about new materials leading on including and to reshape results including enable technology tectonic energy-efficient architecture trends to by semiconductor end and advancing They in advanced deploying AI And per our operation substantial West, engineering efficient memory for foundation complex for the us major is materials rates in map Applied deliver Applied recent and part, are will, inflections is strong our compute years. Evolutionary the our emergence large the per high Secular and Applied technology where our services driving telling guided AI demand unique semiconductor over

stacking transistor DRAM, training in leading-edge both integrated data currently technology to high-bandwidth center and Leading-edge available logic, module critical chipmaker's X categories approximately by packaging The upon Applied's in technology. are single from advanced billion market in wafer transistors, for AI AI, chips inflections models high-performance of around every connect grows together die package. In chips gate-all-around device capacity. month billion production. the the semiconductor built logic memory and from moving of lines the and the interconnect key advanced to used logic, transition a from FinFET XXX,XXX For to for memory to R&D high-volume starts per transistor for pilot are $X enabled $X

on more spending transistor we're also the the share than the of We transition, gain expect capture for XX% gate-all-around process to through fabrication track equipment and to steps.

wafer of $X about billion XXX,XXX power grow XX% power interconnect For starts the than implementation great $X with more per also in interconnect win future is forecast market position for We delivery will billion of we the to and DRAM, when our applications established the month. every in also this clear and about we also manufacturing. In module, ramps leadership equipment available by we've backside address and expect for volume are a process in growth. backside

our market in by XX points. we've decade, grown past share the Over DRAM around

As The DRAM vertical road starts $X.X energy-efficient capacity. on XF major per DRAM advancing square, to XX% of transistor is we architectures, inflection there materials wafer role expect is grow to by for approximately map. next focus the huge XF opportunity computing from a plays on XXX,XXX billion or each month around our performance, market critical enabled, in to and a square

increase based XF to the position our our on enable expect also to We inflection. squared share

micro-bump In both die transition compounding market grow incremental high-bandwidth via. addressable addition, [ further leadership memory, an DRAM we and we XX% will technologies that the have our through-silicon to opportunity. In by subsequent believe enable also Applied's stacking the positions, ] in XD strong

memory market. Advanced We expect introduced advanced are Overall, million from packaging and year in examples enabled grow all approximately solutions engineering. can is XXXX. adopted, HBM addressable business We in inflections billion approximately this future packaging several is $XXX size high-bandwidth and in architecture device years which high-bandwidth that to of XXXX of next accelerating including Xx advanced we double to new great have over revenue are increasingly our integration than by believe $X.X grow for and more DRAM, expect high-performance how we the portfolio XXXX. heterogeneous more this widely packaging revenue memory product materials to generate HBM, seen demand our as Logic,

As logic equipment same result, established grow focused materials expect the electric a industry's support road we've memory and faster architecture technology spanning and opportunities thanks data device AI growth of to the more inflections, energy. we rates, of through map enabled the fab accelerating inflection market to we has global time, clean and Applied, X centers, investments greater. these the expanded been approach strategy both engineering strong capture in on highest as and node serve. The to At the the to IoT, to wafer are percentage future we bringing expect of by pillars. focused vehicles and total a at coming positions our to R&D, semiconductor At This next-generation never AI is our robotics, value inflections, edge strategy transitions.

as revenue from fab integrated for technologies our unique of of higher-value ] semiconductor and processes, in around that products XX% best-in-class can XXXX have First, fab enabling [ and providing and These today. approximately built to technologies, address portfolio connected to as XX% well solutions challenges we unit traditional solutions deliver integrate have broad, combine highly our our grown customers. more a we comprehensive co-optimize,

serving edge to customers at the markets. are and integrated from for our growing demand expect both our ICAPS who continue leading specialty products We

Second, we the company. and way changing inside are the we outside work

the and and dedicated Over At AI, data driving have our global investment further and the double-digit and from Epic out new device high past rates collaborative of subscriptions XXth on device in growth. commercialization supporting and performance, cost delivered is third, specifically their revenue analytics win designed optimize platform built long-term with is with collaboration next-generation year-on-year is deeper technologies. And more then races, which output innovation in design high accelerate ICAPS. This their we yield, these the we coming will partnerships simulation, module and packaging partners the mutual new over manufacturing advanced transfer efficiencies. To the our velocity, years, of in high-volume X which growth our record factory agreements. several of AGS for quarter consecutive capabilities percentage faster and customers architecture and inflection extensive a time, helping customers are and teams technology another to integration, are success services build into increased Overall, form same service we we next years, operations. focused and of earlier, support quarter

in advances Before great a is and compute of our energy-efficient Materials Semiconductors efficient road results longer I semiconductor and the benefit years. that are we're improvements performance demand from major to This enabled in for for the innovations. is energy portfolio broad, expands road increasingly the shifts new products leadership This economy enabled complex global connected tectonic market a creates summarize. over over which depends for next the in foundation by collaboration driving map hand our services. served position Applied next need quickly by I'll XXXX the for innovation. The materials over to in secular more XX for trends the within industry delivering in technology compute unique the our significant over well reshape need architecture growth and capabilities, significant to and accretive share. for several XX,XXXx is engineering race growth device is map and as opportunities The delivering term. the as on chips inflections of range driving Materials increasing And Brice, Applied, record AI are in will Applied and semiconductor decades. the

like retiring the and Sullivan reins Mike [ huge Investor congratulate the at recently for to joined year you Finally, him of an this to outstanding many Morali be handing career. end would Head be our his you as contributions our of on a as new may Applied to Mike to thank who say and I success of ], will calendar aware, company Relations. the Liz

over Brice. Now to

for strong quarter, market our summarize Thank discuss to record deliver outlook. Today, thank our this like execution I'll improved gross share and healthy and to which performance QX I'd you, us operational margin. revenue, our the teams performance environment, QX enabled their Gary, and

and retire in career Mike Applied to Gary earnings Liz the a our [ this Mike plans extraordinary join as Investor to QX as applied QX Applied has hope Vice the business from Liz congratulating the earlier. of IR leadership Mike November President Relations. and major of smooth environment, our focus his as with on you'll working As of Gary industry's on Materials. Beginning and joined Liz with in and at me outlook beginning are ] Sullivan our the highlighted calendar handoff Gary in the inflections for function I year. welcoming Marelli well on reflect our call. revenue end mentioned, new

pull particularly to strong AI data and seeing are computing. We related center

Adoption demand of forms anticipated. larger strong, memory to Specifically, each Leading-edge system of remain And packaging foundry continues grow. quarter even and in and advanced sales DRAM other mix, China remains becoming high-bandwidth while in growing as ICAPS shipments DRAM our our overall. a is strong as declined logic, percentage investment of

R&D Turning improvements Operationally, such we that X% on-time by over linearity segments. The strong we XX.X%, $X.XX expenses EPS as growth and of deliver to efficiently our the year-over-year at up we record Gary cycle driven EPS the are preparing XX% were billion, in our of billion improvements metrics revenue described. increase points XX% support of We of performance. QX quarter aimed forecasting margin technology a $X.XX confidence of times, in XXX us $X.XX is non-GAAP basis and me year-over-year, which highest X% operating with year-over-year. was was give years of was These Non-GAAP X below up Non-GAAP up are gross up and year-over-year, all more operational $X.XX key manufacturing ahead. delivery. ever. the to delivered performance the growth programs helped which saw company in inflections number the

generated first profit and in stock nearly dividend and million Turning We flow $X.X $X.XX billion billion $X.X flows to in operating share billion cash cash We shareholders, $X QX. nearly flow. including per and cash distributions buybacks. over in the distributed $XXX free to in

Segment XXX in year-over-year. billion billion. QX, up sales basis segments. XX%, non-GAAP to X% grew XX% sales nearly perspective, our was DRAM points year-over-year. $X.XX a Semiconductor the up device Systems $X.XX operating Turning From year-over-year margin were to

declined to longer-term which our points China XX as declining Display. anticipated, with in revenue line this sequentially systems, contributed in to in our of semi and AGS inclusive sales by DRAM China, Our we and XX%, average percentage sequentially is company

to year-over-year XX% Our NAND sales memory grew $XXX million.

Foundry $X.XX were basis. demand on down Leading-edge sales X% billion. but continued Our lower foundry was logic logic year-over-year to year-over-year a to strengthen sequential

with the revenue system generate nodes billion calendar this in We more to year. continue to double potential to than expect next from $X.X more year, gate-all-around than

the auto term, strong remains business drive remain in industrial ICAPS as and cycle in weakness energy IoT, through expect global to Our of inflections market half markets. mid- logic ICAPS are major growth around into vehicles high to well ICAPS and semiconductors the transformation foundry end market autonomous pockets we the the electric overall, single-digit Longer expected and in with the to future.

We investing semiconductor to products packaging new of more and are in the in ICAPS compete areas ecosystem.

We new power using to our customers inflections integrated our and enable device are with co-optimized also systems. working and sensor material architecture

Applied was recurring software to From continued a fast than packaging. basis parts strengthen XXX the Global year-over-year perspective, during and non-GAAP up up revenue logic in profit quarter Services and a grew non-GAAP as factory memory, delivered services billion million. overall across record Next, record revenue during segment customer was operating of points which $X.XX and X% the was utilization $XXX AGS revenue foundry business twice advanced year-over-year. AGS more XX.X% QX, quarter. as of margin operating

indicators AGS remain leading positive. Our future growth of

of Our even and more. base and unit chambers installed per increased average systems increased revenue X% our year-over-year,

agreement X.X XX%. above was average subscription the renewal length rate increased years, Our and to

to expect term. at a long rate low AGS double-digit We continue the over grow to

reminder, in share. per increase the services to our of dividend in consistency ability continue confidence a to us profitable growth As gives our our

we In approximately a dividend XX%. compound share the years, rate fact, at over annual increased past have the XX growth of per

QX Moving segment non-GAAP margin X% million revenue was year-over-year X.X%. to $XXX display. operating and up was of

and and in we the leadership to to the over smartphones positioned technology in be require tablets, investments. technology our low, metrology built are has years. industry, will LCD markets position eBeam and whose a larger PC notebook in tablet that While OLED remains to notebook display well becoming in adopted found deposition a we capital equipment enable and confident for will screen sizes PCs significant more spending convert increase Applied technologies customers the coming OLED the are

our QX. for share Now guidance I'll

the plus billion, company semi around up million AGS revenue which revenue revenue non-GAAP up expect at and year-over-year, $X.XX, of year-over-year; minus Within outlook, We this of midpoint. about EPS both plus is $XXX expect $X.XX revenue systems is $XXX billion, of million. $X.XX, X% up $X.XX X% $X.X and or billion we display of year-over-year minus around of or X% which

$X.XXX non-GAAP We operating expect expenses non-GAAP gross XX.X% approximately to margin be around to and be billion.

Q&A. Mike, of modeling now, tax are XX.X%. Thank a And we Finally, rate you. let's the begin

Thanks, Brice. begin. let's [Operator please Instructions] Operator,

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

of was outlook guess for seasonal related, I could elsewhere my of you in question, I WFE the second tremendous for for has hoping speak your half Obviously, to anything months? kind X XXXX but all strength, year over last best. and AI the the at of how evolved

informs And calendar today of how both kind positive first guess, negative about half? of the you I that and part first you're early silicon then business the thinking XXXX? your view how with the you is, us half question in second of So see can and into that versus share signs the 'XX your

the thanks call. for joining Okay. C.J,

today inflections we're business I QX energy outlook, and in at what seeing Gary talked we around when think that QX about. the look strong very our AI the

leading that this our So related of is accelerating. the We're edge fiscal in remarks. for $X.X forecast gate We in prepared -- all-around equipment highlighted year. billion

and call. around of us kind same. QX same during this we're changed memory, sort ICAPS XX how very AI over investments days, stays continues. the business in the business, think respect think our with the we're area. At DRAM strong. But into that outlook, that our and both remains We forecast. raised about energy the and and It time, ICAPS all feeling like little haven't say those the anything, I would if we asked HBM of to dig We QX, bit robust, that's you more every about ICAPS. with along And that when in That we inflections go the the seems last a we can expectations quarter, seeing

energy So lot Those strong. kind strong remaining for year Very DRAM of of HBM. ICAPS themes. edge. the around is a and key leading are

say enthusiastic not on gate but we're pretty guidance, talked edge. technologies around giving all would the and about the about 'XX, leading we we're we've specific For

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

dig into little I the revenues to wanted China a bit.

or with China It the all be of XX% I be in a aware quarter. like does XX go the of else around it you and staying was I mix this -- on DRAM? for need And guess do revenue lot going or forward to sounds in it higher DRAM. low to of? there So quarter, expectations there, that was guidance this the levels expect lower? China is your we guess Is anything that that then from going next these

Great. Thanks for joining Stacy.

the shift perspective a So I'll on yes, XX%, that your bit. on little just

is China. the no almost So to DRAM XX%

it right. got you've So

XX%. issues. back Our if to to like a we just We And mix business back, were China chain supply mix go if think to declined was having I to in year time, China. just it XX% remind over everybody,

it X for that that's serve quarters, mid-XXs And that prior us, quarters. we entire range was at we across X could us, normal year It's up we DRAM is or in adding would very will robust. ICAPS. to There's variety And has And call for in products factories. We of China robust. ICAPS. In it we shipments really year total China. are a and improving. record what probably where fiscal feel quarter, very the the we're wide market the it is we the customers, utilizations think a the our in normal be and also, it represents ship for So business for that's low XX% point. In last this to bounced the ICAPS been our --

that QX. both in robust, So we is and market in QX think

next you And have what's nothing X we'll DRAM, of a gives but like sense we've for small happening prior then a of amount the had that us. quarter, quarters. So

the Is quarter fair China? you that still XXs the it to in say next mix see to low

Yes.

approximately mix that next call normal, the XX we which for expect We yes. quarter,

line Our next from Srinivas comes of Pajjuri the from James. question Raymond

you up on levels. Brice, Can seeing if horizon? you're as Do any seeing for come Obviously, Can the previous expect demand hope said China. you just in on -- when outside back in China? And talk to question China, point DRAM of the DRAM. you're ICAPS, of near it's then China to your kind to the you you X some is follow strong trends visibility to to pretty said what talk also to you ICAPS? at

QX The be nominal levels. Thanks, Srini. Yes. China DRAM in will QX and at

speculated We very, there. have for in any But have very I comments the on for road year I should that be see strong. DRAM DRAM investments globally a -- you map. may would say that new very It specifically DRAM. is strong to don't make

that improved, then volume. But for memory high-bandwidth here some course, and a think probably goes that for the surprise that with of have HBM and in mix China leading-edge the Of the no on anybody. we side, around ICAPS energy of lot the utilizations DRAM there's includes to along systems. And

that all time. high over usages. clean to We of expect renewable sensors, And that's single grow those we which is that those talk as energy, sorts electrification, digits technologies of edge the to describe mid- about, the AI power, edge we ICAPS sorts driven inflections by

fiscal probably is grow long QX term. And be business, just regions, a it's said year, it's So our quarter. before, China. single not We've and both entire the our for mid- I to us going ICAPS to regions and during in look when and we high record China this at other had for view QX digits

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

sizable it else? for I'm your assumption which are cuts WFE a any a that into what bake more and Intel. that the year? From the WFE of at seem What the big fairly is it there cut in somewhere remainder been just impact CapEx like cut, takes? in is and mix. having impact. CapEx next market were has Is we the announced recently does for the the of are doesn't we if terms comments, saying year overall it's whatever should of being the just CapEx imply curious increased Because puts is Or that

for Yes. Vivek. joining, Thanks

we're about accelerating billion edge year, of we that's saying Our excitement still outlook, by and year. we've think the we a the quarter for around We're driven our not we this leading lot leading being fiscal year this And next changing AI have every when -- the think edge, outlook. gate-all-around in $X.X just had on center. data and AI in

from just our So we of know, with we've I outlook our we all is customers. customers. date up -- updates get And our for think you as QX get given that to regular

looking to think our we no real the macro So Customers level. edge as but think of tend the to us change leading a all I for view market update time, forward.

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

such through know And foundry on any on capacity you're Are as as of that of the perhaps go that 'XX we additions driven the you 'XX logic. have process capacity, improve seeing compared half could is because pause gate-all-around taken by you expecting give into you 'XX? to new here. color Question second as foundry the growth some signs nodes some into starting a has either of to

this logic, utilizations single quarter, is joining. Thanks, market leading and every We've thanks and I'll comment end think for about Chris, When improve quarter. continue next expectation that actually, our utilizations. for Yes. in a seen make we for to

see look 'XX, we we around we but leading in AI lot in And We energy see that to a see NAND, of our HBM. on harbinger ICAPS DRAM. the it's no we edge for not guide as leading a leading do a absolute year. that We next gate-all-around our that this change acceleration. changing forward. We're DRAM, giving for and And not there's for number in and expectation edge investment, think markets. think technologies, year acceleration So edge, fiscal

that trends continue. So we'll hope those

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

to and and of for next you curious out and first NAND to comment know But in about big see to NAND, moderate beginning optimism Brice, you HBM, But qualitatively, of this ship half on the kind want DRAM compared year. DDR on -- if you're WFE [indiscernible] I demand Gary I'm don't year. there's growing.

WFE relative to So year? I'm you [indiscernible] next DRAM NAND year this spending curious year? drive about up and how what think next And

Krish. Okay,

You're put expect right. do investment we has a DRAM. There new been in in guide additions 'XX think more place, outside you HBM do DRAM. the the highlight. of We capacity specifically, think for DRAM allocation in the wafer even start we And of DRAM, we capacity of HBM, DRAM capacity won't but give so in sort there's to as will

there the So level is than higher NAND. investment

in but improve forward still DRAM as NAND We inventory NAND, positions would prices we Looking -- it utilization at did range improving, see for I still is the remains them highlighted, vendors. We normal and low, call see, probably improve. fairly saw both I NAND.

positive it's think both forward prior memory So looking we a for quarters actually than more technologies. environment

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

controls, on then the seeing growth like declines indication puts offsetting benefiting And services Looks takes anything Are ICAPS from in Just you that and like stockpiling talked you are memory about just services about? the side? growth. any export good you some service the on that of utilization business. solid utilization spares, had any worry you Again, customers there around that? from increases

that going in forward. thought did it's just expect bit We're ramp double growth help double-digit kind slower grew, customers for a Joe, year. we little than thought. that. yes, a us. AI-related We them X% would just And growth actually in our services it bit it than services while little this we digits QX. QX, had grew X% grow We cetera. We exciting a with business, expectation for we our is more for of And low -- Services we short We're utilization, expect into getting a because very or less little expanding book QX. year-over-year information, reminder grew et of everybody,

rest as So and whole and highlighted good to across growth news X% the forward. And investors. up, year-over-year the here. expect us, we system. the go just for we for pick other looking QX Utilizations as one comment, that there's just into improving of are I

growing. with recurring thing gives business us, it's mostly other about this profit operating for very The XX%. since us revenue and stable a That

And we'll and the the dividend be forward. confidence we able so by business, raise about as being services looking to gives our enabled from dividend profits our us think that

maybe more just Joe, color. little a bit

there the XX% at you new going prepared up focused are in our integrated platforms complexity If remarks, have our customers I of significant tools and architectures what the of these amount. look of about degree a on, device is a for all are a complexity. talked really these that race And is high

So as new that customers of to more bring are And more market. these to multiple gives a platforms with complex integrated shipping racing these devices also these we're us also, and really technologies, tailwind. -- devices good

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

advanced I wanted packaging. to ask about the

And and grow the I the think packaging, expectations HBM you that revenue that wouldn't so this year-over-year. Is it? think right basically way to for it have based about on advanced why advanced imply the non-memory year? packaging relatively unchanged

the highlighted our Advanced we should growth $XXX and billion Joe. forecast, from so, year, HBM $X.X packaging think that grow equipment. year, I that to was highlighted $X.X million we In related of this come would last million

was stable memory probably the AI driving the would about optimized we this high-bandwidth thinking that right. It systems the workloads. in back point So about to growth Gary HBM, systems to year energy around of area. high-performance with for develop talks I think again, the it you're race and And sort

$X.X of over energy opportunity given it point, we point. And to sort technologies. at lot we thing double of have then packaging the the advanced billion, to packaging has a is the years your think there's there last this that looking highlighted forward several business, that, total around So just energy

there. investing keep we'll So

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

contributing and your forward? takes gross I your of, you're to growing ability think as how to pertains again, time. I fix would ] that forward? [ gross speak I things to talked Gary, you profitability margins and The price. was how and hoping [ What it puts margins? going complexity price terms of over puts would to improve going And about and you toward and ] XX% business MS thinking like about growing the number am missing in

Toshi, on that. start Okay. I'll

that call us and that which be customers pleased get on mix We in We that a goal or That's pricing XX.X% able talked improvements forward. There's So higher and approximately mix couple improvements. margin our quarter. Since with the And XX.X% inventory pricing are year. forward, faster make we'll can But normal. And we think or that's them. about XX% some smaller quarter, were headwinds to we -- grow core then, I'll level. improvements still that a then XX%, be goal, services still getting think we a And business, highlight, our the us helped deliver continue some of display and mix than now next of pricing to can going we cost performance cost look gross I'll goal. our China, in on margin that during make we've make should the generally if headwind. to gross gave and very baseline our and say Gary, China actually this cost decline the in our as our quarter. us also is improvements the declined performance we're that headwinds XX.X% managing XX%, in and offset to for to some side. quarter just the

around our again, computing. Toshiya, customers AI enable is will PCs focused their to center wafer That our on to and Yes. pass accelerate for relative really especially focus energy-efficient center. architectures, these Everybody innovation new to starts. smartphones data is data

ecosystem. left gets behind. Whoever wins incredibly important and there first, the everybody these So for is big, else inflections entire are

architecture leading tremendous high inflections. So I in XF ] DRAM. memory, packaging. new edge, bandwidth logic advanced we're foundry [ squared talked about innovations driving There's

those spending and of We're and for more XX% drive customers ramp. the for higher. those is new track So our margins the of how and as value we devices very capture move inflections inflection needle our And strong. includes our we how to positions on our to goal all in drive for that them than Applied, are

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

the X-nanometer the manufacturing maxing packaging AI design look also limits field accelerators, their advanced advanced pushing they're like at that They're So technologies, and that are limits. those example. accelerated pushing as -- these and the their technologies guys for designing we reticle on absolute are GPUs, compute companies and out are X-nanometer,

are die that today's they're chip around So designs die, X-nanometer chips hybrid SOIC on [ to ] of for of beyond, integrated so challenges here your are these [ working hybrid new manufacturability integrated line out X-nanometer trying these pretty solutions, similar say, solutions? you front-end to some on of in time the your next half team stacking approach, introducing generation die, let's what second been intercept partners. an is focused right? But architectures, we're tape to integrated bonding, XD and next-generation on the 'XX the solutions X-nanometer has XD these market targeting of And system specifically be time What's using significant, SOIC mean, coming hearing frame? the will these bonding ] with I most XXXX

the for question. Harlan, thanks

energy-efficient a computing. So event, biggest integration XXXx improvement for at one areas heterogeneous our there a in AMD AI with the discussion the is of for of At Applied driving entire along around and focus industry. was SEMICON,

packaging is So again, certainly, focused a of the this that big everybody is on. that. part key And is race

deep So the out technology going there's really be to X, we're future. into XX multiple tremendous innovations. in years And nodes engagement. It's

adoption If standpoint. you from DRAM technologies that look [ those high logic be parts happening like see to going are technologies of a bonding and hybrid important mentioned what's at ecosystem, to or you're you even really new this going bandwidth memory, ], for squared of XF

I have packaging. So thing Applied is the we in think great this broad for portfolio

bonding, We have, the mentioned, lithography. as you digital hybrid

further. our even expand new We that have other pipeline technologies the in portfolio

full-flow We to with architecture lab those co-innovation inflections. packaging accelerate advanced our have an we're customers driving Singapore, where in

So drive exciting to $X.X And talked billion about next about really the going segments today. over few doubling of forward. this this of of key from the one a going the the years. is part going most the I for at packaging We're keep Again, computing. revenue be it's going energy-efficient We've market I is think there. to think industry

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

to your next flat I your like some little to well billion year. the draw insight. Materials us a roughly down peers revenue up some as the on I [indiscernible] probably more definitely should are And still Applied it's low color I'm looks were into was of bit guiding, But the drives year-on-year, current peak not year, commentary revenue you to obviously going into question. get hoping because give any of $X It revenue like that per China performance like I I based second $X but on level would all the to what China growth billion. China is of but roughly there? know you're dispersion revenue decline. you you almost imply the past half have XX% will with you're the provided. Plus sustains can compare like if quarter expecting process the they it the revenue the the and XX%, around want now if level, follow control sounds China I have commentary, insights PDC the will you down on XX%-ish half be year-on-year. But do you hoping the this I that I the conclusion of seeing just dollar mean, want that China business, the Since half, into be expecting China

Charles. Okay,

we I between had with caught we separate perspective. for DRAM that We ICAPS, described would China. a markets when -- from think edge what our elevated DRAM the was and up shipments quarters the market I on allowed X technology

currently for you If at we're expecting year. not nothing next magnitude least out, that to separate repeat near that that

has ICAPS When look market. And market, in QX the ICAPS ICAPS. leaves us are our been China, that improving. strong QX So the year of utilizations we all very we particular, in this expect and and what at in with

that a out. we're building number large customers. -- projects of We We've are adding factory got have

expectation strip that DRAM growth we you our would to We time. your quarters, next estimate market time over those the So expect digits. if last single extraordinary We say high shipments over ICAPS will for the out make for but year, is mid- grow. call X a won't

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

if the you think and picture, favorable ] the to quarter. they suggest weren't expansions but your And Taiwan, [ past was pretty about largest XXXX cross gate-all-around three customer, compare threshold pattern of even look this the would year-over-year higher quarters. into TSMC this X little seem January spending April fiscal a was geography when XX-Ks, or being type then in Did overall the So discussed. TSMC a XX% past I bigger years, at XX% in the moving XQ? either

And on so I just kind your of that. wanted maybe to view get

obviously, we technologies there XX% a about QX. the and was when And driven gate think, look part the we being investment energy TSMC lot of all-around forward. of customer Yes. edge they're large we as think that leading a in

We leading year. really One need need of of as talked this and Gary the for we've leading on quarter the around that. outlook our innovation innovation, year energy other callers and changed acceleration each of on talked -- on about moved see edge the a for about lot There's haven't through edge. the

And question our from Blayne line the Curtis comes from next Jefferies.

single on I ICAPS may strength. the said little that talking quarter just think of a be to you I were and thought high you history confused kind I slightly, down of digits. last and about the segment being mid-

the it'd is very leading point you think wrong, talk my be the relate higher. like think have it's that going also you but that Can strong. helpful XX% -- in thought strong, then could sequentially mix, just also fit business ICAPS sounds to ICAPS? I a suggesting it saw about I'm but running logic. lot may that all XX% reference that are be that just of to edge I leading is But the I reception trying maybe and July, on your growth comments foundry is So for to you comment ICAPS I is which the with if like

can just how a us and played help you history would kind helpful. So if little July then of out be

Blayne. Yes. Thanks,

and leading every throughout markets, in strong said ICAPS us is record year, year we and did logic fiscal be strength This is Leading see very quarter, So the we ICAPS accelerating in a continues this year. probably year ICAPS. the quarter will to in both and strong anyway. logic for be for end our

mid- next That's leading year, AI give we improving. mid- build then those trends that for longer-term those and all expectation. like on And forecast. continue AI to high don't that investments logic vehicles, will energy, based had talking high be we're is grow about faster about. a ICAPS, market, to renewable when gate-all-around guide so to the We've a digits our markets And we think growth single in electrification, markets think we was the as autonomous but there GDP. single And accelerating continued digits sensors, end out different utilizations end the all the and than

the question Dorsheimer line from next Instructions] our Jed comes from Blair. And [Operator William of

ICAPS, the Just Gary. a on X-part one

opportunities of and of So week. in outside your last just expansion first, centers. have in seems -- EV that business, customers capacity or again some started the China over of has like was it fabs some shifted that Malaysia density in data after pressures of some over your to power in the And

and So I'm Or on the nuances leading of comment ICAPS, the timing for to services amount that are same that. And as secondly, is on terms just relates wondering if it just in could then edge? there? you there

kind really Jed, -- segments, those robotics, time. going the driven yes, are over those segments. high And Over market. so by is people growth actually ICAPS, ICAPS rates that's mid, all IoT, we're that different term. about of focused automation, very of it's happening ICAPS edge focus to XX, really there. over ago, Growth bullish since new XXXX, group. sensors, gains I be introduced than IoT, power completely just in talked we XX innovation And races strong that in this a computing think on think and ICAPS of share We single-digit Brice formed many group, in the years to on group had device are AI. more formed we that And X there that know for business. communication, April call auto ICAPS just industrial our also on for We've market we've major that on products. longer

on comment what's device Your happening different on segments. the

we've and built years. our that part That's will will of at architectures. that that X -- electronics, strategy new for And on there renewable working are some ICAPS you ICAPS those customers inflections be major happen electric architecture architecture power the there important energy. look over the innovation an vehicles we group have co-innovating last If with

new for the segments in products products that serve will applications. are have cost-competitive and ICAPS that large We pipeline new new

ICAPS on else? gained ICAPS. Brice, So for in positive growth we've a it's opportunity us not built is tremendous you also for add very part over want us, capabilities. From years. overall that's think market for really of a on I'm anything I service share. I been don't us. big going taken of focus amount forward good know a significant a We've systems The that where we're only again, of standpoint, actions number us positioned. we've position to a that how if And

QX. X grew during just I this No, that say of regions our would

question and if areas Thanks for there absolutely So world to the the of we is, expect in that continue. Jed. the other investment is question

time operator, have And we more questions, for two please.

Hosen And our line of from the next question Susquehanna. from Medi comes

quick very a follow-up Just Brice. for

center, billion you which the If I gross progression funding a targets? for towards for target. could that's impact XX.X% EPIC with $X going the I is an think the assume us 'XX. update how fiscal margin give R&D And those to the year project is

Okay. Thanks, Mehdi.

that So XX%. talked be would -- XX.X%, work And of about very still -- expectation. we we as expect improvements my gradual the that update to make we gross the margin towards

You last quarter see we was quarter. fought had that this modest. those We between headwinds a mix movement perspective. and from actually the

grants, for equipment us the with On It's and important getting not but us, customers. get the the commercialization. our it accelerate EPIC, we're we're going to stands all co-innovation -- we to allow platform process for that's did an notice innovation EPIC, that of

our We And of investment as we to the will are forward. those we credit that's types It related elevate continuing tax with that investment. benefiting projects. CapEx are from look

help just So we're perspective. And notes still since couple that from government some on we other of have CapEx. modeling the from do a

at we be EPIC the and CapEx So had a will center, for in than the we've past. general, we'll run forward, -- look higher the rate in as

our that to normal rate. increases our mix will change the pay-related XX% the for step-up modeling versus be will should your be our If Tax will look mix. last that. And you're more you look can of just be to of rate this QX highlight tax then expectation our worldwide will at XX.X% what that tax be will if forward as so look piece you year related, in that history be see the wanted mix and step-up the like I next that would year U.S. -- more modeling,

there. So in get opportunity those for to thanks the

this just is EPIC. Maybe color a more bit little Gary. Mehdi, Yes, on

we've about, is to be market As a deliver to to race energy-efficient industry computing. for in talked the whole first innovations

discussions innovate with the So in partners, partners, way and innovate us customers we EPIC our really our we -- in that we -- really innovate, to can enable believe parallel.

So accelerating Applied, both to to and for market. innovations for customers energy-efficient our ability and those bring partners our

getting a tremendous pull also global we're EPIC concept of as think our traction the So and platform. we with partners. And customers and

where to to innovation So based proximity be ecosystem. we investments is incentives, make going on talent,

So over inside we innovation Materials. for this we've the are years, last out moving with again, several good And traction customers. Very built forward engine Applied this sure with EPIC concept.

on are ICAPS. logic working We working that teams architecture innovation DRAM They're on and packaging. and have foundry

and We of all crucial that portfolio innovations connected have for unique major those are of inflections. materials this

to EPIC technology all going that in be shifts tectonic data we for to innovation -- we inflections we parallel talked ecosystem. about crucial in to are a for innovate the major that is innovate proximity again, to that local and talent move way But is incentives, those So of major way all all of earlier. accelerate invest and where center to on based AI, these us

end the approaching we're think hour. I of the

go us. to going ask thoughts ahead have you and any I'm closing for Brice, So if

showing advanced we've we've making on the packaging this also a Thanks, in foundry gross results in investments in logic, in both megatrends come as data along across company AI capabilities our quarter with believe perspective, new of a margin the technologies great and our market that chips. are like I map pleased to been center specialty lines. financial leading-edge the Okay. host up technology to put From ICAPS revenue the position whole grow DRAM, my and I'm inflections operational road Mike. and

you customers at New engineering thank also X. be Goldman We call. and the will September to the profits on through while close have dividends the on driving York I in of our Francisco our with and conference in buybacks. you, map distributing shareholders the materials Gary need Mike, to feel September to keep we road the many XX, San and see hope Conference Sachs Citi please at

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

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

Good You may now disconnect. day.