APPLIED MATERIALS INC /DE (AMAT Q4 FY2024 earnings call

• Gary Dickerson highlighted record revenue and earnings, with the company delivering a strong finish to fiscal 2024 and fifth consecutive year of growth. - Progress made on priorities including driving R&D programs, operational and supply chain improvements, and sustainable scaling. - AI driving growth in semiconductors, with energy-efficient computing as a unifying force. - Integrated solutions account for ~30% of Semiconductor Systems revenue and expected to grow. - EPIC platform being built out to accelerate innovation. - Services business growing double-digit, with strong subscription revenue and high renewal rates.

Semiconductor Systems: Q4 sales were $5.18 billion, up 6% year-over-year. DRAM sales declined 10% year-over-year, NAND was flat year-over-year, Foundry-logic sales increased 12% year-over-year. Applied Global Services: Q4 delivered record revenue of $1.64 billion, up 11% year-over-year, with non-GAAP operating margin of 30%, up 2.7 percentage points year-over-year. Display: Generated revenue of $211 million, in line with expectations as the industry experienced lower investment levels.

• Fiscal Q1 expected total revenue of $7.15 billion, plus or minus $400 million, with non-GAAP EPS of $2.29, plus or minus $0.18. - Semiconductor Systems revenue expected to be approximately $5.3 billion, up 8% year-over-year. - AGS revenue expected to be approximately $1.65 billion, up 12% year-over-year. - Display revenue expected to be approximately $175 million. - Non-GAAP gross margin expected to be approximately 48.4%.

• China revenue declined to 30% of total, in line with expectations but could impact performance. - Change in administration could bring potential restrictions or policy changes, with uncertainty around its impact. - Slower end markets in ICAPS sectors like automotive, industrial, analog, and image sensors posing risks to revenue.

Q: What's seen or expected for China mix and ICAPS strength?

A: China mix expected to remain ~30%, ICAPS market healthy globally but slower end markets in some sectors.

Q: Drivers of gross margin increase and sustainability?

A: Underlying rate improved to ~48.0%, driven by product mix, operational improvements, and value pricing.

Q: Directional on WFE growth and administration risk?

A: Expect WFE growth, but change in administration's impact is uncertain.

Q: China sales percentage and normalization?

A: China sales ~30% normalized, was elevated earlier.

Q: Value-based pricing details?

A: In third inning, strengthening evaluation of value provided for integrated applications.

Q: Advanced node revenue doubling and increment?

A: ~$2.5B in fiscal 2024, expected to double in 2025, increment from gate-all-around nodes.

Q: WFE intensity for $1T semiconductor market?

A: Expected to stay in mid-teens.

Q: Value-based pricing and technology steps?

A: All technology steps critical for energy-efficient computing, integrated platforms key.

Q: Services business margins and growth?

A: Structurally changed with corporate expense allocations, but growth and margin improvement expected.

Q: DRAM growth and NAND outlook?

A: DRAM strong with HBM growth, NAND slight growth but different dynamics.

Q: China sales outlook and ICAPS market?

A: China sales expected to hold, ICAPS market depends on its evolution.

Q: DRAM/3D DRAM and lithography intensity?

A: Complementary, materials engineering intensive for DRAM inflections.

Q: ICAPS weakness sectors?

A: Automotive, industrial, analog, image sensors slower.

Q: China revenue outlook?

A: Expected to hold at ~30% levels, depending on ICAPS market maturity.