Applied Materials, Inc. Q3 FY2020 Earnings Call

· Earnings call transcript and AI-powered summary

Overall Performance and Market Context

  • Applied Materials delivered strong results despite COVID-19 challenges, operating at pre-pandemic productivity levels.
  • Semiconductor demand improved due to accelerated digital transformation driven by work-from-home, remote learning, e-commerce, and cloud build-outs.
  • Trailing 12-month semiconductor systems revenue increased 18%, and is projected to grow 25% for FY2020 at Q4 guidance midpoint.
  • Foundry/logic spending expected to grow in 2020, supported by strong leading-edge investment and custom silicon trends.
  • Memory spending projected to grow slightly faster than foundry/logic, with DRAM and NAND at similar growth rates.

Business Segment Highlights

  • Deposition tools (CVD, PVD, Epi) generated $5.2B revenue in 2019, gaining 8 points of market share (per VLSI).
  • Etch business revenue expected to rise nearly 30% in FY2020; Sym3 platform has shipped over 5,000 chambers.
  • Process Diagnostics & Control projected up more than 40% in FY2020, driven by new optical and e-beam inspection platforms.
  • Applied Global Services + 300mm upgrades revenue up 21% YoY; >90% renewal rate on long-term service agreements.
  • Display revenue outlook remains $1.6B for FY2020 with similar expectations for FY2021.

Financial Highlights (Q3 FY2020)

  • Total revenue up 23% year over year.

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Operator: Welcome to the Applied Materials earnings conference call. During the presentation, all participant lines will be in a listen-only mode. Afterwards, you will be invited to participate in a question-and-answer session. I would now like to turn the conference over to Michael Sullivan, Corporate Vice President. Please go ahead, sir. Michael Sullivan - Applied Materials, Inc.: Good afternoon and thank you for joining Applied's third quarter of fiscal 2020 earnings call. Joining me today are Gary Dickerson, our President and CEO, and Dan Durn, our Chief Financial Officer. Before we begin, I'd like to remind you that today's call contains forward-looking statements, which are subject to risks and uncertainties that could cause our actual results to differ. Information concerning the risks and uncertainties is contained in Applied's most recent Form 10-Q and 8-K filings with the SEC. Today's call also includes non-GAAP financial measures. Reconciliations to GAAP measures are found in today's earnings press release and in our quarterly earnings presentation materials, which are all available on the IR page of our website at appliedmaterials.com. And now I'd like to turn the call over to Gary Dickerson. Gary E. Dickerson - Applied Materials, Inc.: Thanks, Mike. This time last quarter, I started the call by outlining the steps we were taking inside of Applied Materials to navigate the COVID-19 pandemic. Our actions have been guided by two key principles: first, maintaining th

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