Applied Materials, Inc. Presents at Citi's 2024 Global TMT Conference, Sep-04-2024 09:10 AM - NasdaqGS:AMAT

NasdaqGS:AMAT

** Key Points from Brice A. Hill's Presentation**

• AI and Data Center Growth: Strong energy and investment in AI and AI data centers, particularly in high-bandwidth memory (HBM) and advanced packaging. Major companies are significantly raising their forecasts for these areas.

• ICAPS Market: ICAPS (IoT, Communications, Auto, Analog, Power, Sensors) has been growing strongly, driven by mature technologies. China is a significant contributor to this growth, but it is a global trend. Applied Materials is investing in innovation in these older technologies.

• Materials Engineering: Materials engineering plays a crucial role in advancing semiconductor technology. As devices become smaller, new materials and capabilities are essential. Applied Materials invests heavily in R&D to develop these materials and the equipment to manufacture them.

• Advanced Packaging and HBM: Advanced packaging, especially HBM, is expected to grow significantly. HBM sales are projected to reach $1.7 billion, doubling in the next few years. The primary driver is the need for higher performance and density in high-performance computing devices.

• DRAM and NAND: DRAM, particularly high-bandwidth memory, is a key focus. Applied Materials provides the majority of the additional steps required for HBM. The DRAM market is evolving with new process capabilities, offering more opportunities for Applied Materials.

• Gate-All-Around Technology: Applied Materials is engaged with all major players in the ecosystem for Gate-All-Around technology. The company expects to double its equipment shipments for this technology in 2025, indicating a significant ramp-up in capacity.

• Hybrid Bonding: Hybrid bonding is a critical technology for advanced packaging, enabling higher density and performance. It is expected to ramp up over the next 2-3 years.

• Foundry Landscape: The foundry landscape is dynamic, but Applied Materials remains optimistic about the overall demand for equipment. The company's outlook for leading-edge technology and Gate-All-Around remains strong.

• ICAPS Demand: ICAPS demand is robust, driven by multiple geographies. It constitutes about 50% of Applied Materials' logic business and is expected to grow mid-to-high single digits annually.

• China Sales: China represents about 30% of Applied Materials' sales, including services and display. The company expects this percentage to remain stable, barring any new DRAM technology approvals.

• Services Business: The Services business is a key driver of low double-digit growth. It is characterized by recurring revenue, high attach rates, and increasing complexity in equipment, requiring more service and spares.

• Display Market: The OLED market is expected to grow, particularly in PCs, notebooks, and tablets. Applied Materials is well-positioned to benefit from this growth.

• Gross Margins: The company aims to achieve a gross margin of 48% next year, driven by cost reductions and pricing strategies. Operating margins are also a focus.

• Capital Allocation: Applied Materials distributes 80% or more of excess profits to shareholders through dividends and buybacks. The company is committed to raising the dividend, supported by the profitability of its Services business.