PWW

Portfolio AI Insights

pww.comApplied Materials, Inc. Presents at Morgan Stanley’s Technology, Media & Telecom Conference 2024, Mar-04-2024 08:00 AM - NasdaqGS:AMAT

NasdaqGS:AMAT

Brice A. Hill [Senior VP, CFO & leads Global Information Services] 💬

**- Strong Performance and Strategy: Applied Materials invested $3 billion in R&D, focusing on technology inflections identified in customer roadmaps. This strategy led to strong performance in the ICAPS market (IoT, communications, auto, power, sensors), HBM (High Bandwidth Memory), and DRAM, which offset weaknesses in NAND and leading-edge markets.

  • Market Dynamics:

    • ICAPS Market: Grew significantly, especially in China, but is expected to see some digestion in the future.
    • DRAM Market: Strong, with increased shipments to China due to relaxed restrictions. DRAM is expected to remain strong, driven by HBM and AI.
    • NAND Market: Currently weak, but expected to normalize over time as new investments are required to advance technology.
    • Leading Edge: Expected to take over from ICAPS, driven by gate-all-around technology and new nodes.**

  • China Focus:

    • Investment: Strong investment in China is expected to continue, driven by national strategy and government support.
    • Capacity and Utilization: New factories are being built, and capacity is expected to grow, though yields are currently lower than world-class standards.
    • Regulatory Impact: Business is adjusted to existing rules, and no significant changes are expected.

  • AI and Advanced Packaging:

    • HBM: Significant growth in HBM, with Applied providing over 50% of the equipment for additional steps.
    • Advanced Packaging: Expected to grow from $1.1 billion in 2023 to $1.5 billion in 2024, driven by AI and high-performance computing.

  • Services Business:

    • Stable Growth: Services business is growing, with over 2/3 of revenue under long-term contracts.
    • Future Outlook: Expected to grow in the low double digits, driven by a growing installed base and new service capabilities.

  • Cash Management:

    • Reinvestment: Prioritize reinvesting in the business, including a new Epic Center for customer collaboration.
    • Shareholder Returns: High free cash flow will be distributed to shareholders through dividends and buybacks, with limited M&A opportunities.

  • Competition and Innovation:

    • Local Vendors: Chinese vendors are gaining share in mature technologies, but Applied focuses on innovating in leading-edge areas like gate-all-around and backside power.

    • Technology Roadmap: Applied expects to gain share in new, complex technologies, driving growth in the TAM.

Feedback