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Applied Materials, Inc. is a global leader in materials engineering solutions, providing manufacturing equipment, services, and software to the semiconductor, display, and related industries . The company operates through a direct sales force, with operations and manufacturing activities in the United States, Europe, Israel, and Asia . Applied Materials' offerings are highly technical, catering to the needs of semiconductor systems, global services, and display markets .
- Semiconductor Systems - Focuses on manufacturing equipment for foundry-logic, implant, packaging, metal deposition, and chemical vapor deposition (CVD), significantly contributing to the company's revenue .
- Applied Global Services - Provides long-term subscription service agreements, accounting for a substantial portion of parts and service revenues .
- Display and Adjacent Markets - Offers solutions for the display industry, maintaining profitability even during industry down cycles .
- With your advanced node revenue expected to double, how much of this growth is truly incremental versus replacing revenue from prior nodes, and how do you assess the sustainability of this growth moving forward?
- Considering that approximately 30% of your revenue comes from China, primarily in the ICAPS business, do you expect this level to hold given potential geopolitical risks and how might changes in trade policies impact your outlook?
- Despite the strong growth in your services business, operating margins remain below prior targets; what structural challenges are preventing margins from returning to the low 30% range, and what actions are you taking to improve profitability?
- You noted an increase in gross margins due to favorable product mix and value-based pricing; can you provide more detail on the drivers behind this improvement and discuss the sustainability of higher gross margins in the current market environment?
- As you see customers adding DRAM capacity, particularly for high-bandwidth memory, how are you managing the potential risk of overcapacity in conventional DRAM, and what strategies are in place to balance investment and demand?
| Customer | Relationship | Segment | Details |
|---|---|---|---|
Samsung Electronics Co., Ltd. | Purchases equipment & services across multiple segments | All | Contributed 12% of net revenue in fiscal 2024, 15% in fiscal 2023, and 12% in fiscal 2022 |
TSMC | Purchases equipment & services across multiple segments | All | Contributed 11% of net revenue in fiscal 2024, 19% in fiscal 2023, and 20% in fiscal 2022 |
Intel Corporation | Purchases equipment & services across multiple segments | All | Contributed 10% of net revenue in fiscal 2022, and less than 10% in both fiscal 2023 and fiscal 2024 |