Q2 2024 Earnings Summary
- Significant Growth in Gate-All-Around Technology Revenue: Applied Materials expects $2.5 billion in revenue from gate-all-around technology in 2024, with the opportunity to double that amount in 2025 as the technology ramps towards high-volume manufacturing.
- Strong Demand and Growth in High-Bandwidth Memory (HBM) and Advanced Packaging: The company anticipates its HBM-related revenue to increase sixfold in 2024 due to higher utilization and capacity expansion, and sees opportunities to double its advanced packaging business over time driven by the growing importance of heterogeneous integration and AI applications.
- Leadership in Key Technology Inflections Driving Market Share Gains: By focusing on enabling major device architecture inflections like gate-all-around transistors, backside power delivery, and advanced DRAM architectures, Applied Materials is positioned to capture more value and outgrow the market through its broad and connected portfolio of materials engineering solutions.
- Applied Materials expects a significant drop-off in DRAM shipments to China in the second half of the year, potentially impacting revenue if not fully offset by other segments.
- The company's NAND business remains slow, with growth primarily coming from technology upgrades rather than new wafer starts, indicating continued weakness in this segment.
- There is uncertainty around the company's guidance for gate-all-around revenue, with changes in reporting leading to confusion among analysts and potential challenges in forecasting.
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Gate-All-Around Revenue Growth
Q: Will gate-all-around revenue double to $5B in 2025?
A: Yes, we expect $2.5 billion in gate-all-around shipments this year and have the opportunity to double that next year, reaching approximately $5 billion in 2025. -
Advanced Packaging Outlook
Q: When will advanced packaging revenues double again?
A: We anticipate our advanced packaging business, currently estimated at $1.7 billion for 2024, has the opportunity to double over the coming years due to strong industry demand for AI computing and high-bandwidth memory integration. -
China DRAM Decline and ICAPS Growth
Q: How is Applied offsetting the China DRAM shipment drop?
A: As China DRAM shipments decline in the second half, we see strength in ICAPS and leading logic shipments filling the gap. Our Q3 guidance reflects this shift, with ICAPS and gate-all-around technologies compensating for the DRAM drop-off. -
HBM Demand and Growth
Q: Can HBM revenues multiply again in 2025?
A: We're seeing strong demand for HBM, with orders increasing. We've raised our growth outlook from a 4x to a 6x increase this year and expect incremental demand moving forward, though we're not providing specific estimates for 2025. -
Process Control and Diagnostics Growth
Q: Will process control intensity rise faster than WFE?
A: Yes, our process diagnostics and control business is a significant growth driver. We're on track to grow our CFE systems revenue around 4x in 2024, representing about 50% of total eBeam system sales, driven by major architecture inflections. -
China Revenue Normalization
Q: Is China revenue returning to 30% of total?
A: Correct, as the incremental China DRAM shipments decrease, we expect our China revenue mix to normalize to approximately 30% of total revenue by the end of the year, which is in line with historical averages. -
Materials Engineering Value Capture
Q: Will adding more value improve profitability?
A: We believe our leadership in materials engineering and deep customer collaborations on major device architecture inflections will allow us to capture more value and enhance profitability as we deliver increased value to our customers. -
NAND Market Outlook
Q: Are NAND customers resuming equipment purchases?
A: While the NAND market remains slow, we expect growth over time driven by technology upgrades rather than new wafer starts. Storage demand is important, even for AI applications, and we anticipate NAND will grow at the speed of semiconductors. -
Backside Power Delivery Timing
Q: When will backside power delivery revenues grow?
A: Revenue from backside power delivery is small in 2024 but will grow in 2025. Significant ramp is expected beyond 2025 as the technology advances, and we're supporting both architectural approaches in this area. -
ICAPS Demand in China
Q: How is ICAPS demand trending in China vs. non-China?
A: ICAPS demand in China remains strong, with Q1, Q2, and Q3 showing robust performance. We're monitoring over 30 factory projects in China, and utilization and yields are improving, indicating a large and important market for us going forward.
Research analysts covering APPLIED MATERIALS INC /DE.