Applied Materials (AMAT) 14 Nov 242024 Q4 Earnings call transcript

welcome to the Applied Materials Fourth Quarter Fiscal 2024 Earnings Conference Call. [Operator Instructions] I would now like to turn the call over to Liz Morali, Vice President of Investor Relations. Liz, you may begin.

Thank you. Good afternoon, and thank you for joining us for today's call. Gary and are Hill, and today CFO. me Dickerson, CEO; President Brice With

let that securities remind forward-looking we statements me Before continue, events. you estimates, or the of about future predictions, statements meaning today's the including federal laws, projections other within contains discussion

differ the those most uncertainties and with results X-K We a in these our as Form intend any mentioned is forward-looking XX-Q to filings risks may forward-looking Actual of concerning risks these in do not statements. statements recent and result SEC. and materially from uncertainties. Information update discussed

non-GAAP During results measures. ir.appliedmaterials.com. I'll today's Investor call, today's in we will the found which turn be now earnings of also earnings non-GAAP our over reference are to quarterly website release to on Gary. and financial our Relations GAAP at in call press Reconciliations can materials, available

earnings would revenue these XXXX to fourth With of I growth. outstanding fifth and Applied Liz. team our hard the results. our finish and in Thanks, strong global delivered delivering fiscal and for work Materials like recognize our commitment to of a year record quarter, consecutive

responsible. ago, priorities As our that I better R&D ensuring industry growth, sustainable this call, the future and environmentally supply to scale I'll in year accomplishments key over differentiate connected making XXXX begin November enable year-end the improvements and serve customers that programs for portfolio company's our company the XXXX, past inflections to drive at are we further is our we're extend and chain productivity said and months. that leadership ways enterprise to operational A highlighting the across our call, XX and by our key in driving unique

on packaging. position made made all services delivered to and Zero year, We our strong initiatives We our business. and R&D DRAM past advanced We our and flow double-digit at of build-out and of our the these areas. performance, EPIC margin significant collaborative supported and strengthened are key Net track, in in parts operations growth in and inflections logic our playbook. including supply strategic platform cash major our we've deployment improvements chain Over progress the the that

increasingly remarks driving secular the innovation the material innovations and major our In that Applied a is road platform for and I'll map engineering service our offer connected science becomes we device solutions emerging and enabled with three the are collaborative the in high-velocity creating how growth are company clear why incremental industry the industry's trends semiconductor materials by map prepared today, unifying complex, key where products. new talk third, to driving large-scale portfolio advanced our unique has inflections growth energy-efficient First, how are and semiconductors topics: industry; my computing and and about increasingly architecture make for up how as as road second, in force R&D leadership; opportunities

coming clean years, we and changes artificial experience of energy lifetimes the the electric major and intelligence. biggest In with in autonomous robotics, to advances our automation and transportation, are going technology

significantly improvement a AI computing more need it leading the XX,XXXx potential To of is scale this to provides to energy virtually and large realize full efficient AI catalyst more are talking economy. than is industry endless tectonic All the XX AI, today. at computing per area capture create of to a therefore, before. AI watt shift and years. biggest has the in ever will semiconductors, applications almost the made than possible the the drive performance Deploying about are these require and for shifts The by of potential every which tectonic over be to next companies the semiconductor value transform AI,

made see device up a this efficiency in we logic, map emerging be insufficient. of energy technology Instead, of magnitude, innovation packaging. architecture memory advanced improvements and multiple will deliver evolutionary inflections road To new

our significant Applied customers for deliver This creates extend and the value to to market. more in differentiation opportunities three

we First, to supply material are as steps, solutions built highly we solutions. customers combining etch integrated and and co-optimized deposition, system, innovative into have a their energy-efficient integrated process By broad, material that enabling connected adjacent portfolio enable and chipmakers can inflections. an modification such to unique of as providing and we technologies comprehensive architecture

XX% portfolio them Integrated we even to around Systems solutions for our and our future. expect larger part become in Semiconductor account an revenue, the of of

driving next-generation Second, to broader and bring and collaborations partners we with our faster. to earlier are technology customers market

years rates build and several is Our global specifically efficiencies. improve that we learning, out accelerate will increase the to of investment over designed next cycles EPIC platform success mutual

focused underway In in construction well the U.S., R&D is a next industry for share key online And to more Center where hosting about business advanced track at our are are our and Valley week in come in opportunity EPIC their packaging on leaders EPIC in complexity technical manage customers as we helping Silicon XXXX. details services, we summit on increasing we Singapore. strategy is of will in the the scales. And third

in deploying service transfer manufacturing. device chip of yield, R&D, then help from new and our high-volume to advanced up technologies are performance, products lab to optimize speed We their them and output fab accelerate cost

service our and form have these a subscriptions in long-term with supporting growth. a with signed tenure revenues parts average high renewal customers. in year, X-year we consecutive AGS is of the of the the record business These agreements a XXst first agreements. This This delivered agreements subscriptions year multiple Overall, of coming in double-digit service high their quarter, from of a our growth growing. percentage record is and year-on-year quarter rate

approximately those $X.X in from nodes revenue of and grow R&D companies into the to translating market through major double our the opportunities from available gain we than their results lines advanced leading-edge share Across we device and are the more revenues transitions. XXXX, business, started We production. high-volume architecture first in generated year pilot nodes gate-all-around as In the the technology fiscal these moving inflections XXXX. logic into billion expect

Overall, $XX $XX approximately node the month FinFET-based node billion transistors market XXX,XXX capacity. grows and for to every backside from per to distribution, with gate-all-around billion of power a wafer from starts Applied's available transition around

We XX% for for capture generation to also gate-all-around up to range the the more equipment high nodes XX% than process mid- spending of fabs. from FinFET expect the

In to memory, AI DRAM, capacity capacity much produce dies is are revenues in is their also DRAM XXXX, which the that same our memory means to makers year-on-year. grew stacked The fiscal centers, the more packaging. logic advanced than high-performance significantly XX% for high-bandwidth in and dies especially DRAM in than accelerating die critical plans, of high-bandwidth where Xx Compute technology up a needed than volume wafer standard and are larger are DRAM, connected with memory chips. a used more data

for DRAM stacking great further of needed XXXX, In available $XXX is steps our packaging example the this, of than fiscal increased HBM packaging revenues a market. more top million. die our grew On to strategy around share innovation next-generation the on of how the market points XX past By the steps enabling DRAM our inflection-focused decade. succeeding. for has increased by most is focusing over our technologies, Applied

will improvements as device cost even architectures and inflections consumption further are our DRAM architecture packaging engineering XF in another and Advanced next-generation materials of squared provides inflection XD major next-generation DRAM Future significant more that chips. available performance, is intensive. the market energy expand

decade, in through micro than Silicon bump strong establishing have been positions enable advanced and investing We leadership to packaging Via. technology new in for a more

DRAM, new packaging business to solutions introduce inflections that as we and generated power product XD billion addressable Gate-all-around that distribution, In semiconductors and Xx adopted power transistors years. next-generation materials overall this market. in grow are is by We examples fiscal portfolio our XXXX, the are device widely packaging all advanced close and backside years in of XF enabled in of integration double squared up more last our heterogeneous engineering. architecture advanced size $X.X X revenue, believe will coming

materials deposit nodes. which As or is the advanced a percentage at at and equipment technologies of remove as to materials level, needed of result, modify an materials property overall atomic all engineering, materials, a spending growing the shape spans

over summarize. Brice, me I let to Before hand

technology strengthened we operational ramp growth that earnings over volume at performance XXXX, In several and Applied inflections grew fifth across services, improvements We and will customers parts the fiscal our and the chain. consecutive Applied position double-digit delivered in We revenue the and our year. years. supply drove key in next for production

energy-efficient ahead beyond, and see XXXX to look industry. key we the and remaining driver semiconductor we computing AI As in the innovation of

the becoming dependent materials us right puts to that Materials map and increasingly believe grows the time, market engineering, and investment on great Applied for position this road strongly industry's addressable us tailwind has the and a strategy partnerships the right capabilities, which cycle. the I future. Applied's outperform a in And for provides at through

architecture inflection differentiated solutions win to the them our delivering customers are to races. device We help key

velocity scales. commercialization collaboration drive We increasing helping customers service with growing customers success are and mutual And by to R&D and we rates. and our as complexity innovation optimize partners the industry business are manage strengthening

to hand over Now Brice. I'll

and Thanks, everyone would the share, had Gary, which enabled billion to earnings and revenue shareholders work to via today's to delivering generating execution and cash results. We per healthy their us over and like and record for dividends to repurchases. a operating distributing strong entire these thanks $X hard fiscal excellent call. team joining flow share I achieve XXXX, Applied thank Materials

margin year-over-year was year, fiscal basis a rate fiscal since in X.X% pricing. highest optimized XX.X%, business segments. XXXX value-based sales growth we up basis, annual billion, were full all X our the and and XX net our on gross margin For progress gross made year-over-year points with $XX.X on as Non-GAAP operations up

X.X% was to basis basis, year-over-year earnings operating non-GAAP a On year-over-year profit Non-GAAP margin points. operating up grew non-GAAP XX per X.X% share $X.XX. and grew

expectation with revenue, gross operational sales in by communicated XX% offsetting quarter-over-quarter and driven headwinds on mix margin nearly China XX.X%, and year-over-year slightly and QX, up up a net growth by $X.XX on line Non-GAAP For the of lower a year-over-year was our average. China fiscal basis, Systems related previously to and Services. both in improvements, revenue. declined to solid a were favorable billion, historical driven basis, Semiconductor our X%

roughly Non-GAAP and expectations interest with record as $X.XX, share benefiting XX.X% funding operating of income, a expenses a higher $X.XX from margin, our higher gross earnings share programs. per billion rate long-term repurchases. Non-GAAP X% we prioritized were was effective and in line revenue tax year-over-year up and or lower strategic

fueled QX XXXX. sales were sales critical for purchases year-over-year, gate-all-around basis sales NAND XX.X%, year-over-year, QX, normalizing as for China the the invested X% billion declined including XX at $X.XX increased the demand. DRAM points XX% Foundry-logic investments given nodes flat the customers from inflections. margin given elevated year-over-year. segments. leading-edge XX% in operating year-over-year, foundry-logic Non-GAAP was technology China increasing driven fiscal by down Semiconductor to system by edge, robust mix. were growth of to up sales enable leading Turning year-over-year,

high given demand serve for power period. the auto, nodes, customers ICAPS and year communications, Sales sensor ago in the year-over-year, IoT, the were markets, which across down

Moving sales. a partially to $XXX billion XX% a in delivered was Applied in QX, and in basis a Global income percentage revenue offset record AGS and decline Non-GAAP record operating up X.X robust XXX-millimeter by on equipment driven of by non-GAAP year-over-year, $X.XX services, Services, margin up was million. points operating of XX%, year-over-year growth

we installed many in Year-over-year, operational under a increase in increase and XX% tools X% saw base including increases service metrics, agreements. a the across

maintained years, average renewal we Our and XX%. contract than of X.X rate greater length increased to a

IT our Lastly, the increase OLED and time, weakness with capital investment revenue the expect demand. in ongoing be to like as and market lower in industry investments of our of $XXX to generated adoption business Over PCs line tablets. in technology support an levels, notebooks, display end there expectations we devices amidst million, experienced

We the OLED coming enable technology. IT customers inflection with well positioned our are for to

balance $XXX in flow Capital billion. cash of cash $X.X billion. in equivalents billion Cash cash cash operating cash the $X.X Moving in with and $X of XXXX. operations and the billion cash quarter flow flow billion ended We million the expenditures sheet quarter generated billion. and $X.X was to and total, were fiscal and $X.X from flows. was free $X.X we in In debt free

repurchases. $X.X dividends distributed $X.X in billion share We and to million in $XXX quarter, billion shareholders including the in

billion up repurchases, full billion $X billion the distributed from $X.X $X.X shareholders, For in which was through fiscal we to XXXX. XX% share year, of

approximately available remains share billion As end quarter, authorization. the our of repurchase $X.X of the under

sequential we QX. are let we As With seeing and that outlook in leading-edge in mind, logic for growth nodes contemplate share memory. QX, our demand strong me in and fiscal fiscal ICAPS the

a of revenue or plus plus EPS increase minus both $X.XX, million an non-GAAP approximately year-over-year of $X.XX, $X.XX expect of minus We representing on or X% basis. and $XXX total billion,

million. Semiconductor billion, of expect billion, approximately is Systems which $XXX We which up and display revenue year-over-year; up XX% X% revenue revenue approximately $X.XX approximately is AGS year-over-year; $X.X of of

and mix gross by a XX.X%, non-GAAP of expect margin $X.XX driven billion. and pricing of non-GAAP favorable cost and expenses We operating approximately improvements, approximately

is currently approximately record rate XXXX our consistent in majority a our the In with momentum We closing, markets, with rules outlook had are per of effect. and XX%, a fiscal we trade tax across earnings strong and share. modeling fueling revenue of

Our positions on and center us the portfolio data from megatrends and edge capitalize secular shaping the computing, landscape Internet of to uniquely Things AI technology the display. to

shareholder this sheet, ready our balance are is healthy generation please. we and distributions. the begin Underpinning now strong to solid investment-grade Q&A cash Operator, session,

And Instructions] question the [Operator Rasgon Stacy our from from first Bernstein of comes Research. line

mix The I Do splits between to about ICAPS a year. as in how QX. at see you guess, seeing you XX% suggested and us first or to China little And strength wanted we that China surprise into you China you're guess, the number you going mix next I and -- think maybe term go out there saw or one what off world we through next the I expecting near ask how for as go was that either year? through you can moving sustaining strength ICAPS of rest talk

there. a Thanks the couple of signals question, China for Great. Stacy. the Yes, mix,

in So normalized serve we and had reported, after XX% and down earlier in that demand that China come as we DRAM quarters. that's QX we

Our across mix. still about China the contains outlook we -- ICAPS the When XX% is very think is approximately it in healthy. world, QX for also

QX. lower our So than we said it's prior

in So it's 'XX, globally. is China, a bit healthy. QX little healthy healthy world lower it's of of and very the a perspective. than across healthy ICAPS 'XX level market QX It's from the And but still total was

expect we at ICAPS talked digits that, We've said to over time. the Having mid- high to device markets grow single about level. the

markets continue Automotive, capacity. for. in to slower signs all analog, to been slower. to customers that sensors ICAPS. are are image industrial, have watch add are end expect There We There markets

QX, the we kind our strong. little and go of QX been lower. would it we've see if So looking a bit our But as investment far to as remains

like for And so mix. isn't China it. to are, China increase if margins my gross increase in mix margin the follow-up sound up, doesn't then, Got gross due going is an it

gross drivers go to talk next And you talk sustainability to back into through Like closer as the you can I about do we increase the guess, year? you that ranges margin margins the of QX? get year. end So the as think maybe we through gross go for target of

Yes. Thanks for the question on that.

perspective the want margin, is, shape XX.X% So from where we our to has and underlying gross modeling the think at business that this way about your rate we our point. improved to

that's to logistics, -- and has management, scrap overall cost and it in value implementation business, pricing. top So we've of made the management, bottom our inventory improved, improvements our

gross So a the working on equation. of elements margin lot

product based so In we XX.X%, baseline, QX, in particular, strong sort in it's above that guiding that's and -- XX.X% of on really mix we're that QX. have

longer improving term, the is work XX% think think of to about continue course, to on we for So and right that. level you we'll,

is Gary. this Stacy, Yes.

we're a that customers There's for the really of bringing number markets. of inflections. enabling tailwind to great in provide a lot And focused inflections also technology on things the we're of that a very our winning Applied. One is different

So tailwind is one us pricing more for that we're a is products. improvement thing shipping as valuable also

to that's part opportunity And continue we seeing you're what great have to that forward. gross that So think going of that in margin. drive increased I a

J C Muse from the And of our line comes question from next Cantor.

perhaps hear was or about to your of the hoping added guys how it thoughts love risk maybe -- first terms thinking How terms I WFE, growth? in restrictions direction? more know you you're don't you in the Would the you 'XX, to going perhaps importantly are potential administration, talk directionally. to but more want about other there. of importantly, 'XX speak I could And change the in about thinking

Okay. and for for for Thanks thanks the us. up question, staying CJ,

So on the WFE directionally for 'XX.

our closed fifth we growth. just of So year

what out, if by So you for print it the 'XX, have we we'll then would zoom about the trillion is industry industry, but XXXX. see shown $X And whole talking semiconductor expect growth. to we're across

and basically across certainly capacity of consistent that having added view think year. the view. industry industry most I the wafer that's have added And starts across given single the every that we

So to growth year-over-year. guarantee I'll that it's just QX out our but call 'XX, hard was

And Our what across logic completed edge to invested years. far are component might there. those QX is X it's as nodes growth the see administration, in the year-over-year, accelerate world. and in we we're change leading can't the on gate-all-around just of we speculate being change that Last as -- starting as really early,

more input one. to So wait for that we'll on have

Very helpful.

a As gross is the floor on accomplishment. good follow-up pretty XX% a now margins, a is

about time? I hear how love got kind think growth to So guess, how over of beyond And you to there? that would

Yes. as call a call to it floor, aggressive peak can I be but won't don't I think I either.

for XX.X% QX, but mix that's on we make continue for XX.X% So that do to improvements to baseline. QX, positive expect

significant So introduce and pipeline. improve improve we'll is that we value we our projects continue existing, the pricing. have in the cost to And as value new our equipment of equipment

to So to continue we progress. make expect

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

big the doing leading of the the them the extremely well, On X edge, IDM one of as them, much. among foundries other is X kind and not

So still overall player industry year? expectation next outlook is that very they it edge the others, and well strong, sufficient even -- the strong leading is to very strong stay that to continues for the is fall of you very when X that kind growth behind, doing are give is if say the

market other is kind is, well doing dichotomy not So I this how as the of in extremely -- I'm direct have well? and just much the are player where you X doing guess question handicapped the X

with term long for for Yes, end question, Vivek. we about business the demand the think that starts really markets. forecasting Thanks the way the

the of are be footprint eventual foundries that PC, the if think will the edge, we you think center, things market intelligence that of which data capacity what amount smartphones, serving all end artificial So that need of of demand. sort independent it drive of our those requirements. will to -- match leading view, And about each

And be the installed. capacity haven't so from high at leading-edge changed amount a of really level, to our expectations that needs we

I would forecast say our so their And change factory and as changed. schedules forecasts, really hasn't customers micro their

Gary. Those I've these of amount for would all improvement a The a time very energy-efficient companies. is is large. different big focus really significant been add this is everybody AI spending of in What that are growth. of with Vivek, is driving I computing. die sizes lot

improvements when in significant we one computing not leading-edge every we over look backside in are the in that so power distribution, just 'XX, you're changes energy-efficient the longer through really we or of And forward, inflections, Applied like And XX% power thing enabled term, architecture foundry-logic. but these to architecture in XX%. where is those gate-all-around look see growth for improving efficiency, good

So really, really it's important.

matters. of gate-all-around we're And was percent efficiency energy One we've talking really customers and nodes the customers through inflections new those said as power. every improvement to well backside to gain share as talked going that positioned I of our with about, are

So look Brice leading-edge the really as -- that great this at to said, and forward. standpoint, we're growth we a going overall in gives And foundry-logic. pretty really us optimistic puts relative that tailwind from market an

line Citi question Malik And from Group. Atif comes our next from of the

for their I Is Brice, view? But that your XX% you I the to next for mid-teens decline down decline about year. And between earnings I of for you well talked a guys year. on China WFE have a peers the XX% China China anywhere know next that sales. And about Brice. last kind still not have offshore and some of right your ranging as talking sales call, normalized is sales being you're basis XX%? for a from XX% on about question believe talked

in shaking room some you heads the don't we I -- if have heard right, last I recognize was We we here. XX%. don't quarter the XX%. But recognize Atif, the think

QX our approximately Our revenue. China our quarter of is this is for total also. -- outlook quarter share XX% reported XX% And a quarter QX as

to up rate. allowed. specific some quarters shipping that's DRAM normalized even China we when we mid-XXs. demand was the think into a was that because So that a was elevated customers for it It And few were

our then, range. QX, several outlook, And and look the we -- consistent come a XX% when back include normal as significant the XX% of our that which all Since services we down our think sales And to in business, over China. company. the has and that's does highlighted our it's business includes the approximately display in is for semi past with That businesses. our that that's we we've think systems, years, includes

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

you your can gross inning value? of pricing it your times I that? expand initiatives margin. Brice, driving how but and I concept script IMS Applied, and essentially broader kind exactly what of your pertains it new isn't value-based you're think mentioned that's tied than know Or necessarily if in in this to it doing of with a on you the are Gary customers? couple to is both you primarily And you guys a capture Is trying offering? to as which at

value -- Yes. say events, is had we had we of since chain. a always what through shock was COVID the the changes the with Thanks, a the of of our because cost, that Toshiya. to -- bit pricing were reason we in in supply We've chain had reconcile that coming supply always the in and terms tools, also the cost say we thought about And had the had I we are but company. that. We've would inning. third I levels value

provided stimulate especially evaluation we for being applications unique of So that application company. each had to really the integrated the to value are those our and

we're providing, process think customers. in more the communications And for value providing process analytical making We're of that the so with And the our customers. our we systems progress strengthening and and since and create -- it's do we're training the the we're process tools that. our in

important computing. positions of the product never around the businesses I and inflections more I've different that these for technology within key optimistic across pipeline if Toshiya, been Applied, look energy-efficient Yes. And that have. our are all pipeline regarding we

our -- the platforms, of that's absolutely inflections. And these for that's integrated are about crucial mentioned, those you XX% technology revenue. as So

if gained or of last in our segments. I the at say are I But in that will have even points that look for expand or of over market available foundry-logic or valuable new DRAM, and where the products packaging incredibly we XX share advanced would these we've ICAPS, some XX pipeline years,

robust of we capabilities, help think us pipeline a pricing will and really that a from standpoint. value have I

So continue as of said, a room Brice I have to think we grow. to lot

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

Brice, you just gave number a now.

advanced that to said double. is going node You revenue

billion, think, year. going said was going to going be cannibalize, this You think next it $X.X I is NX, year. to I And you double though, of NX. said some all to incremental, that's because it's Not NX, would

mean, do of how you that much of but I'm much sense is, sure be of I would of do sense it be? some of how you would it a So a that have incremental? have

Tim. Thanks,

shipped double expect this the doubling approximately next month equipment approximate capacity, year. to raising of we've starts we billion said to $X.X our we've for was XXX,XXX to wafer approximately in shipments approximately And the increment do gate-all-around us $X is So the the 'XX, described also if what wafer I has we billion. about investment to yes, $X it, billion, starts a of for per $X billion fiscal across for and think that with gate-all-around And gate-all-around what is to nodes nodes, industry.

our the nodes. of are gate-all-around So logic this point sixth about thinking then towards -- it think the be in most the shipments leading-edge are one And from about at if that increment you're I perspective. would

revenue replacing was the at that is that nodes of most So past. prior in

then, to of like longer-term much coming know then be has the to has down value talked since And Gary, $X before much that do revenue? intensity got helpful. that's longer-term XXXX, revenue spent it's to in XX.X% you come question be it trillion very WFE spending is, WFE down. support think what you been And Very, about to kind used as my much it really, XX% number. this in which but is, China I gets and COVID But to how semiconductor

support $X that don't much to of you want about the spend trillion or Brice, Gary. worth do think if has think know, you for semiconductor do how I How answer you to So industry revenue? like to WFE that?

elevated have can -- equipment the investment, I because semiconductor Yes, over we that jump this investment intensity revenues. seen on the in WFE

China on So years that capacity. that intensity largely ramped China ramp up we've seen the as over couple increase, in significant of past

decrease this the look in the So at a we to point do as forward expect should little we're mid-teens, forecast. that in comfortable as the it in over time somewhere a bit But stay it metric. we mid-teens

increasing technologies partnerships innovative Applied co-innovation the materials been Tim, nodes is Materials. we're customers. that concept would never integration multiple stronger deep engineering really from intensity decade would with and customers we're technology device our more other our we forward of ever, thing has than say in of And with all all so engaged is with this I out our of intensity deeply with over the Yes. I technologies, teams, what see customers. add going besides very capital where co-innovating high-velocity our overall a

that different of will I again, across a visibility these deep us have So in good position. think, market all and very we very, segments, put

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

value this Gary just these of therefore, DRAM, other critical. to Is Brice, whether to the where technologies down? about vertical go so on it around, value to wanted steps is, I'm gate gate gate all follow up more it? kind thing? pass some curious asking gate next think In come around do, like squared power does of think of really that backside intensity -- and to added it's by some value-based a XF get of around difficult part just be words, even to all driven or steps delivery as or the how there's pricing pricing all argument. once was I'm The difficult and lot all specific the might to again we around reason a to I do it not

Krish, for Gary. the this Thanks is question.

XX So years. or X that about talking energy-efficient improvements some It's accomplish the to companies say in of And the CEO I there, even those And do hard really on is wafers go X% would computing focused why improvements. expensive to system we've they the energy-efficient is lot. are types years telling in of nodes, XX,XXXx XXXx the me entire in though computing. advanced was improvements improvement companies heard even most go because X those these value worth a more industry

difficult. about is of when around are DRAM difficult. you different is and think nodes, all squared Backside all difficult. XD these gate yes, So power XF

areas capability And we very platforms. are unique have integrated these our of All very, challenging. with

enables energy-efficient X a platform that XX% in critical that's have computing. really for technologies with We multiple obviously, improvement And resistance.

So think I thing this generation gate one-shot the all don't first with is a around. of

extremely All critical of customers, positioned. I Applied and think, is things, well are for these

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

On growth team's services year-over-year that an strong demand business, into improving 'XX environment of performance consecutive trend sustain year. going next clearly sorry, semiconductor and looks the to quarters --

a you driven much annuity-like and more Additionally, profile. guys have revenue recurring attractive

XXX still revenue X was 'XX are below margins a base. operating that quarters for at in drove that However, consecutive points, and lower basis frame XX% the X, about you level 'XX fiscal time and

lower. XXX percent basis prior about your were and operating profitability points revenue XXs that for below long-term maybe targets then And also XXX, low targets

on into structurally expansion? range margin is growth? there sight of to sort So changed? for there the lower Or Is operating XX% continued what's has still getting AGS been responsible of something line the that low

Yes. is Harlan, thanks question. There the structurally changed. that's for something

and are a reduction during central our profit there. begun expenses that in operating of corporate more accountable year, allocating have expenses this of that was each the and portion our supporting We segments of our for

increase we continue over think to our see made. you that allocations operating with think make able the for even to the generally. us I allocation those last I profit So X is business that expectation that we'll improvements And quarters be improving

Yes, markets to all these also and then tremendous are high-volume different in first into tremendous and customers for inflections time technology, there's as Harlan, big time market in transfer then of you pull going We're -- ramp manufacturing, our technology driving these innovation through opportunities. also those accelerate faster are those to transferring right, innovations services.

for of with of next service different a over And here I've meeting been innovations. traction there's quarter, the real the lot many customers these

margins higher in customers we our create the So that and drive our future. the continue will value for drive to

maybe quick that. appreciate a I And just follow-up.

an with time focus technology these spent capture, sort customers value your also as new the -- dynamics? systems. lot can of integrated solutions. mean in So you time. you and with a get ultimately terms imagine on Gary, lot cycle Do a your about of especially I increase guys you in integrated of talking better with enablement additional the wafer system, of more which transport integrated module process throughput, operational eliminate benefit increases I activities, manufacturability transfer

of these benefits smaller kind get with accurate your systems? this You assessment quantify right? and to also any potentially footprint, operational some Is an integrated way of tool

Yes. Thanks the question. for

the when these So but but aspect, and focused architecture. these we're technologies these innovation in our one is of is combining optimize focus all on computing improvements cost a And huge energy-efficient we're always cost really there customers is other innovation. also thing new together different in architectures, different device helping

to that in drive discussions of these a there different simplify with when costs. lower we really them we're cases number enable where So processes technology can companies, are

shaping technology that reduce Another example pattern our number can our where customers EUV about, we've steps. is the talked of with

then innovation back opportunities. here a we are number that getting biggest was operating I talking of can drive service services, again, lower. of about kinds with one to our were there customers and their overall costs And So of recently, those

opportunity there our business. focus, I this our for systems -- So really a service and business is both are big and also think an

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

You plans, were mentioned in seeing customers prepared especially accelerate you DRAM the HBM. remarks capacity that for

But to strong to talked make that growth HBM sequentially memory capacity to continue the comment think expect from you look just understand DRAM? people the January quarter? just spending. want are that I about I then we most conventional about And into right? add to customers sure how think do be seeing for I you

high-bandwidth Joe, memory. we haven't we calculated allocated the high-bandwidth how And by was about memory more adding would are in HBM. about driven do capacity production, see wafers customers of of in demand rate. DRAM XX% growing towards I actually that wafer a much say start now DRAM HBM is XX% right at is What capacity. total,

strong. And allocated customers. high-bandwidth anyway, in the But memory, growth sense see DRAM to see capacity added equate fairly each do see be do high. capacity the and that capacity exactly do the footprint. what's we very quarter overall in is being increases that we to we So we rate continue more to doesn't My see market do there

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

I If have DRAM, in obviously, strong question, very your Brice. previous the a at follow-up to look I fiscal 'XX.

think I at growth. percent you said And $XXX million you XX-plus kind quantified of HBM the roughly.

that's of growth. XX points roughly think about I

understand declined. guess, last next, China So overall obviously or probably that's how HBM I grow. because think as just believe the trying about some And to months, the DRAM already will to I is year, in fiscal look there XX declining out growth I'm I to

you So all DRAM it's to think do challenge? expect, I next grow in, going be do to year? guess, Or you a

Yes.

across comments capacity continued we've market. -- about that. of to couple the be will trillion talked in trillion added a side to be $X term, the wafer ecosystem support $X And semiconductor on Long market that view the our view that there. So our

in and expect I X/X memory. to be past X/X that be the we foundry-logic to think articulated about we've for WFE,

about share haven't We DRAM. for gotten specific what the is

now, guide, strong QX the right DRAM our a the talked models. and of intelligence a about high-bandwidth in today, and usage from pull QX memory artificial continuation. that's seeing But we're And we market, our

not fair but it's that we capacity expect a be call and So 'XX, to over on the we're are I added those time, dynamics. making think

when in optimism fairly and comes And some NAND. transition. spending you one it. particular, is Got I on guys [indiscernible] definitely then NAND. in WFE another it been tech about there know maybe on But cautious quick to transitions have

you So terms tech opportunity next for for of just how thinking NAND want and to transitions in year hear the thoughts you're guys? your about about

little see From the in on is And perspective, to the our Yes. a a and macro we NAND for at NAND comments different DRAM. bit the slightly DRAM, QX in growth of do dynamic outlook. level similar macro

see On wafer the across the capacity, starts we added ecosystem. more DRAM side, do

because the high that so the has rate that been of NAND NAND, amount so rate the bits are seen of profile. and impressive demand the haven't in On so bit that think actual shrink I the technologies the we density, it's delivered actually

wafer starts hasn't so been NAND And on needed side. the there new

of market. has most an been So upgrade that

case, our outlook bit for NAND in a that So the in different. little in QX. of see But an any we is dynamic slightly uptick

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

as sounds course, normalized a it It of into China like But still XX% level higher the of sales. did normalized you XXs go than view in recent quarters.

reasonable remains could I minus? stable if plus areas or ICAPS XX% curious, like improve China DRAM was So it go and that or in 'XX more leading-edge below foundry is

question, the for Brian. Thanks

will variability vast the of most business our the that on us be China. of the ICAPS based in now. think the I health of for majority That's right

edge have and can't and served we can of NAND we DRAM most serve We in the serve, leading China. business that

just is most the market the vast on will business evolves. and that how the -- majority ICAPS, of So of ICAPS depend it

still world. I for a the couple of are that slower. and investment positions slower. the markets there's of our sensors that, might slow strong is that industrial Those ICAPS QX signals be that automotive, markets are Earlier, are shared QX end said across and having are higher analog image outlook say But rate and that inventory

to matures. so over do to we'll see to medium the customers And that capacity just continue add We have how expect term.

technologies AI-driven longer-term toward just of question from the intensity could its if DRAM a and the and about and around Can end. vertical even introduction compare earlier for was on potential here. here arise? decade DRAM. DRAM This bit overall. contrast ask you like maybe timing where increasing messaging differ, guess, also I might seems differences lithography prior little your I spending talked to a a transistor outlook XD upbeat today of ASML DRAM little for right. Maybe bit All They

help and I'll thing then one here. will say Gary

view I complementary, think is very my it's complementary.

course, to more actual demand of more the the the equipment side litho So materials. business of do as there's and on more requires equation that,

a has Gary So comment.

deeply the DRAM their We're memory road with all of engaged maps. companies on Yes.

relative will And time, intensive. engineering is that as deeply that near the key that's think that XF everyone that technologies is So DRAM, channel And we're materials the that would in engineering the significantly is will out be I where vertical inflection transistor, is and believe focused materials really everybody again, We architecture I also one on squared, say enable on known and intensive. to further also in focused more term. more that XD inflection. engaged

So intensity really with again, comment but high with On those teams, companies. working other would increase of with their that deeply I we're that device their those will seeing, I people we're engaged we and different architectures, those teams, engineering say all on can't confidence inflections. are have materials what integration

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

wanted strength to the ICAPS. I up in follow

and sort That's edge lot said the You automotive, in category. analog trailing industrial, weakness sensors. of a of there's image

that is So what sort that I'm there Is leave does that's that just still it what imply spending? that's wondering does it's strong? aspect And of doing geopolitically-related well? of

Yes. Thanks, Joe.

power-related stronger are the -- the I some are that from I two think markets. those power and some of the think components of than Those microcontrollers discussions. recall I

a is, So but our wasn't as 'XX QX strong. very I our high QX be ICAPS in think to fairly It we continued quite see still 'XX, as across in strong it's what market.

So we'll watch just have evolves. this to how

the $X utilizations right to the continues towards customers are market. a to continue But XXXX now add lower Our perspective grow will underlying trillion this that as utilization than capacity is level. ideal bit market semiconductor little

go some could we think investment do this we through be slowing there as year. So of

comes the question And from today of then our line final Rakesh Vijay from for Mizuho.

and a XX? kind when question the it Just look revenues, do to quick China Brice, levels through you the at you on at hold Gary these China of to side. expect XX going

Thanks, Vijay. QX are it our guide, XX%. We in highlighting -- we approximately is that also

and ago, DRAM mostly at market us, I looking much So we're the that point. not -- we've serving that I'll historically. number say just that's few the seen this And for the and -- ICAPS historically, edge or highlighted no a leading NAND that been It's minutes we're business.

as the point, have that shakes with ICAPS grow that end this matures. so at it of expect the been We'll time. will over out to And business fact it's over change see market to how strength to do restricted time the 'XX really We the particular that market.

This any today's remarks. back does conclude question-and-answer like hand the further program. program the to Brice I'd of session for to

secular in the We're Thank call. call. fiscal for with year. we benefit industry-leading technology QX And from strong position a and you products and our in today's services driving portfolio for and to with strong I'm demand. operator. poised uniquely please you, megatrends delivered of the Thank pleased close joining Liz, an performance the

for the Relations Brice, available you be the on today's and Investor call by Pacific p.m. Materials. thanks in Thank to X:XX Time Thank joining you, everyone continued interest website replay A today. Applied today. your will call of for

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

disconnect. You may Good now day.