Timm Schulze-Melander • Rothschild & Co Redburn

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CFO Brice Hill clarified that visibility is not necessarily better in China. The forecast is based on an expectation of a natural digestion period following a massive investment year in 2024. In contrast, the uncertainty in leading-edge logic stems from customers making commitments later in the current environment, which has reduced the multi-quarter visibility the company previously had.

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CEO Gary Dickerson stated that while advanced packaging is a key inflection, the company's investment risk is mitigated by high visibility into the industry roadmap. He explained that through a strategy of 'high-velocity co-innovation' with customers, Applied can confidently place bets on new technologies, noting the packaging business has grown 4x in the last five years.

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CEO Gary Dickerson described advanced packaging as a critical industry inflection where Applied is a leader. He stated that the company's risk is mitigated by deep, collaborative relationships with customers ('high-velocity co-innovation'), which provide high visibility into the industry roadmap. He noted that packaging revenue has grown 4x in five years and he expects this high growth rate to continue.

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CEO Gary Dickerson stated that packaging revenue comes from a broad range of architectures, including HBM, but declined to comment on specific customer ramps. CFO Brice Hill explained the tax item was a non-cash charge from revaluing a deferred tax asset in Singapore due to newly renewed, lower incentive tax rates, calling it a one-time event.

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President and CEO Timothy Archer did not provide a specific share target for Moly but highlighted Lam's leadership in ALD metalization and its first-mover advantage with tools in production. Regarding advanced packaging, he noted that increasing complexity grows Lam's SAM and that the company targets gross margins for these products that are similar to its other high-tech applications.

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President and CEO Timothy Archer expressed confidence in Lam's Moly leadership, noting they are the only company with ALD Moly in production for foundry logic and are building on their historical strength in ALD metallization. For advanced packaging, he stated that as schemes get more complex, Lam's SAM grows, and the company aims for these applications to have gross margins similar to its other technology-enabling products.

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CFO Doug Bettinger noted the spares business is performing well, benefiting from favorable utilization trends and a larger installed base. CEO Timothy Archer explained the NAND opportunity is already a mix of upgrades and new tools. He expects this mix to become more balanced over time, with new greenfield fabs eventually driving more new equipment sales as demand visibility improves.

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CFO Roger Dassen explained the full-year IBM guide implies some moderation in H2 as high-margin upgrade activity declines from H1 peaks, though this is partly offset by growing EUV service revenue. CEO Christophe Fouquet stated the next key milestone for High-NA is demonstrating tool maturity and reliability with the new EXE:5200 systems, which is critical for customers to commit to high-volume manufacturing.

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CFO Bren Higgins explained the margin improvement from Q4 to Q1 was due to a favorable product mix with more higher-value systems. He detailed that the service business is uniquely affected by tariffs because its high contract penetration makes KLA the importer of record for service parts into regions like China. Long-term responses include process optimization and potential pricing strategy adjustments.

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CFO Jason Child deferred specific FY'26 guidance but reiterated past comments about mid-20% royalty growth driven by v9 and CSS adoption. CEO Rene Haas added that CSS royalty rates also increase with new versions. On deal complexity, Jason Child stated there is no structural change, noting that while large, new contracts naturally take longer, the underlying factors remain the same.

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President Jason Wang clarified that the wafer-to-wafer hybrid bonding is for RF front-end module applications and is performed in-house. On the long-term competitive landscape, Mr. Wang stated UMC's strategy is to build differentiation and minimize exposure to commoditized products. He highlighted UMC's geographically diversified manufacturing footprint across Asia, now extending to Arizona via a partner, as a key competitive advantage that offers customers supply chain resilience in a tense geopolitical environment.

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