Applied Materials at Bank of America Conference: Strategic Growth Amid Challenges

On Wednesday, 04 June 2025, Applied Materials (NASDAQ:AMAT) presented at the Bank of America Global Technology Conference 2025. The company outlined a strategic focus on AI-related demand and innovation, while addressing challenges such as trade restrictions and competition. Applied Materials, experiencing its sixth consecutive year of growth, highlighted both opportunities and risks in its business landscape.

Key Takeaways

• Applied Materials anticipates a 7% growth this year, driven by AI-related demand.
• The company is significantly derisked from trade restrictions by focusing on mature logic in China.
• A new innovation platform is being built in Sunnyvale to enhance customer collaboration.
• Gross margin improved to 49.2% last quarter, with a target of maintaining over 48% this year.
• The packaging business is expected to double in the next three to five years.

Financial Results

• Gross Margin: Increased to 49.2% last quarter; aiming to maintain over 48% in 2025.
• Revenue Growth: Projected 7% year-over-year growth; DRAM market growth for international vendors at 40%.
• Capital Return: Plans to return 80-100% of excess profits to shareholders through dividends and share buybacks, with dividends growing 15% this year.

Operational Updates

• China Business: Approximately 25% of equipment business, focused on 28nm mature logic technology.
• DRAM Market: HBM accounts for 16% of wafer starts, nearly doubling last year.
• Services Business: 85% recurring revenue, with two-thirds under contract subscription.
• R&D Investment: A new collaboration lab is under construction in Sunnyvale to drive innovation.

Future Outlook

• Industry Growth: Semiconductors expected to grow in mid- to high-single digits CAGR.
• Wafer Starts: Anticipated annual increases in DRAM, mature logic, and leading-edge segments.
• Packaging Business: Expected to double in three to five years, driven by innovations in bonding and interconnects.
• Capital Allocation: Focused on funding R&D and investing in technology inflections.

Q&A Highlights

• WFE Growth: Industry projected to grow in mid-single digits, led by leading-edge demand.
• China Strategy: Emphasis on mature logic helps mitigate trade restriction impacts.
• DRAM and HBM: International DRAM vendors growing at 40%, with HBM as a key driver.
• Packaging Tools: HBM packaging tools contributed $700 million to the $1.7 billion packaging business in 2024.

For more detailed insights, readers are encouraged to refer to the full transcript below.

Full transcript - Bank of America Global Technology Conference 2025:

Vivek Arya, Analyst, BFA Semiconductor and Semi Cap Equipment Research team: I guess it’s still morning, and good morning, everyone. Thank you for joining us for this session with Applied Materials. I’m Vivek Arya from BFA Semiconductor and Semi Cap Equipment Research team. I’m really delighted in order to have Bryce Hill, the Chief Financial Officer of Applied Materials join us. Typical fireside format, I have many of my questions, but please feel free to raise your hand if you would like to bring something up.

But very warm welcome to you, Bryce. Really appreciate you joining us.

Bryce Hill, Chief Financial Officer, Applied Materials: Thank you, Vivek. Appreciate the invitation. Always nice to be here with you. Thank you.

Vivek Arya, Analyst, BFA Semiconductor and Semi Cap Equipment Research team: So maybe as a start, Bryce, just give us your state of the union. How has the demand environment kind of shaped up? I know a lot of macro crosscurrent, but how has it shaped up so far versus what your expectations were at the start of the year?

Bryce Hill, Chief Financial Officer, Applied Materials: Yes. First of all, applied materials, I would say we’re not surprised by the dynamics of the year. We’ve been focused on this evolution of compute in terms of energy efficient compute. And most importantly, right now the things that are being driven by AI. AI is pulling on a number of the elements of the semiconductor portfolio.

If you think of leading edge technologies that make GPUs and CPUs and accelerators, If you think about compute memory, the DRAM that’s associated with that strong pull for investment there, there’s a special kind of DRAM, the high bandwidth memory that’s being stacked for those AI type performance systems. And then when companies put all these components together in a high performance system, they’re putting them together on novel packaging techniques, multi chip packaging techniques that also pull on the equipment profiles that we have to build those advanced packages, the interconnects, the substrates, different types of bonding for those chips. All of these things are being pulled very strongly. So our business, we’ve grown, will be our sixth year of growth right now. We said we’re growing about 7% this year in our business and I would say we’re not surprised.

We think semiconductors are a secular growth. If you look to the back at the investments that we’re making in the business, hopefully investors can see that we clearly think it’s secular growth. We’re building a large platform for innovation with our customers near our facility in California in Sunnyvale. And so we think that the business is growing as expected and that we’re demonstrating in those fast growing areas, the share gains that we hope to demonstrate. And then the one sort of headwind that we’re all facing is 7% growth for the company that might sound it doesn’t sound fantastic.

It’s not like the 40% growth rate you see in HBM memory or the 40% growth rate you see in AI. What’s happening? Well, the last two years there was heavy investment in mature logic technologies, especially in China. And so we knew that as we got to this year that there’d be some digestion of that capacity still a strong mature logic market globally but not as strong as the last two years. So what you see is the leading edge is very strong.

It’s accelerating. It’s being offset a little bit this year by a slower mature logic business that serves the markets that we call ICAPs, IoT communications, auto power and sensors. And that’s kind of the dynamic this year. Very strong AI, little bit slower from a mature logic perspective and no surprises. We think it’s the secular growth that goes with the business.

Got it.

Vivek Arya, Analyst, BFA Semiconductor and Semi Cap Equipment Research team: Now on, you know, we’ll talk about kind of broad industry growth and then specifically on on applied. So broad industry growth, many of your peers have suggested kind of a mid single digit ish kind of, you know, WFE environment, right, this year. I know Applied has not given a specific number for the year, but does that seem like in in the ballpark? And the the reason I think that question continues to come up is that, right, some of your peers are actually growing double digits, right, this year, obviously with a different mix of business. So is it that people are underestimating WFE growth for this year?

Or is it that some of the growth is coming in areas like packaging, which is not like classically front end, what is included in the

Bryce Hill, Chief Financial Officer, Applied Materials: classical definition of WSE. Yes. So I do think that we look at the overall equipment environment as growing. The way we answer that question, Vivek, in terms of, since we don’t give a year guide, the way we answer that question is we have two quarters of actuals right now and one quarter of outlook. And we said the business is growing at approximately 7%.

So obviously there’s growth so far year over year. We think it’s those dynamics that I described. It’s a lot of the leading edge that pulls that way. And as far as the mix and the compares to other companies, when you’re looking at Applied Materials, we’ve grown for five straight years and if there’s other companies that are experiencing different growth rates, they may have been more associated with NAND and so they may have had years that were lower and so the compares play into that. So again, when we look at the overall forecast for devices, the semiconductor devices themselves, we think all the devices are mid to high single digits for as far as the eye can see.

And of course that’s a CAGR, an annual growth rate type forecast. People don’t try to pick the one quarter that won’t grow or the one year that might have a slower economy. It’s typically a straight line, but that’s the way we plan our business as we expect semiconductors because of the productivity advantages, because of AI, because of the other applications that are emerging like robotics, those types of platforms. We expect semiconductors to be a great investment area and that’s the way that we’re managing the business.

Vivek Arya, Analyst, BFA Semiconductor and Semi Cap Equipment Research team: Right. Now on the rule of China, right, as a group, it’s the largest, right, 30 plus minus percent of sales for the industry. Do you think a lot of the effect of restriction and other things that are known, obviously it’s a evolving situation, but as far as you are aware of, is the effect of all those restrictions, etcetera, already kind of captured in industry expectations at at this point or are is there a prospect for for changes?

Bryce Hill, Chief Financial Officer, Applied Materials: We definitely feel like Applied is significantly derisked from these trade changes, if you will. And the reason I say that is because Applied Materials business in China today is mostly mature logic or is all essentially mature logic business. So we’re not selling to DRAM customers, we’re not selling to NAND customers, and we’re not selling to customers who might be trying to do leading edge logic. So in the past couple of years, it’s been forty, forty five, 50, 60 five nanometer type products that we’ve been selling into the market. And as we look forward for the next couple of years, we think it’s going to be heavily weighted towards 28 nanometer, which is at this point like a 16 year old technology, right?

So we don’t feel that’s an area of concern in any way and we think that we’ll be able to compete in that market. We have a great footprint in 28 nanometer. We expect to compete well. And what we’ve said Vivek is, as long as we’re able to serve an account and we’re not restricted from that, we’re actually having good results in competition. So our share is good and we think we’ll do well there.

When we compete in China, we’re not just bringing a unit tool or a single tool that offers some result, We’re also bringing a world class supply chain with experience. We’re bringing our service business offerings which can help customers ramp to top yields and keep those yields in place. And we’re bringing innovations and continuous improvements to those customers. So we think that when we’re able to compete, we’ll do well Got

Vivek Arya, Analyst, BFA Semiconductor and Semi Cap Equipment Research team: it. One last question on kind of the WFE forecast. One thing that yourself and Gary have always mentioned is that the the chance for the semiconductor industry in its march towards a trillion dollars. Right? Which then roughly mid teens WFE intensity, you know, leads to that hundred 50,000,000,000 or so.

I think that. But in the last many years, China’s WFE intensity has been far higher, right, than the rest of the world. So as they become a smaller part, right, of the sector, can the industry still maintain this kind of WFE intensity?

Bryce Hill, Chief Financial Officer, Applied Materials: We think so. Know, one of the ways we anchor this and I’m sure people that are listening here do the same thing. We do look at those anchor points like a trillion dollar semiconductor business in 2030 or a 1,500,000,000,000.0 in 2035 estimates out there like that. And people use the intensity equation and say how much equipment should be sold in that year if we use the percent of equipment relative to those semi sales as an intensity number. Intensity numbers have gone up in recent years from mid teens to higher teens if you will and now they’re coming back down as this China effect.

And frankly, some of the pricing on semiconductors has changed that equation. But we think that’s still a good way to think about it. If you look at wafer starts, wafer starts for DRAM, wafer starts for mature logic, wafer starts for leading edge increase every single year. And the devices don’t magically show up with the same capacity. When we say there’s mid to high single digits on the device side, that’s going to be more factories, more equipment every single year.

I think that’s our expectation. The one place that’s been different is NAND. NAND is, know, the advances in bit density have allowed relatively the same wafer footprint to deliver the output, but there’s still upgrades in NAND and that’s what you see in that business. So going back to the overall theme, yep, we’re absolutely convinced you’re going to see more and more semiconductors, you’re going to see the footprint increase. And then if you say, is it possible that one year will grow less than others or be below trend?

Sure. We, you know, it’s it’s it’s an uneven growth rate. And the last thing to add back just to circle back is ’23 and ’24 equipment grew faster than semis. That’s a lot of capacity that went into place in China. So we know, especially in ICAPs, that there’s a time when equipment’s going to grow slower than semis and we’re in that, our last quarter was like that and we’re in that now, but we’re still demonstrating growth overall.

Got it.

Vivek Arya, Analyst, BFA Semiconductor and Semi Cap Equipment Research team: Now, within the spending pie, how should one think about the wallet share that deposition and etch, right? Your main businesses can get versus lithography. Like what can did wallet share one way versus another?

Bryce Hill, Chief Financial Officer, Applied Materials: Yes, we’ve said that as we look forward to the new technologies like gate all around technologies, the next generation of transistor beyond gate all around, we think will be CFAT. The next generation of DRAM technology 4F2. When we look at these technologies, we expect the materials engineering, maybe not just deposition and etch, but materials engineering in total. So non litho steps, if you think of films and treatments and measurement techniques and materials change like implant, if you think of all these different types of equipment, we think all of those will be growing in those nodes. So it’s not uneven in terms of the growth.

The way I think about it is, if you’re building a larger house, because these are devices with lots of transistors, right? If you’re building larger a larger house, it’s not just wood and nails that increase, it’s everything. It’s windows and piping and carpet and carpentry and all of these things. If you’re thinking about the devices, it’s going to be a continued growing mix of all those device steps. All right.

Vivek Arya, Analyst, BFA Semiconductor and Semi Cap Equipment Research team: The final question on China, What’s the state of competition there? Do do you see the domestic companies becoming a lot more capable than than before? Because, you know, it is still a large exposure to this one region. And if most of their buying is in more mature nodes, which people might correctly or incorrectly say that, well, that is less capable technology, but do you think their domestic vendors are becoming more competitive than they’ve been in the past?

Bryce Hill, Chief Financial Officer, Applied Materials: I think China last quarter was approximately 25% of our business. So we said that for our equipment business, investors should probably think that’s a number in the medium term that makes sense. It can be higher for the company if you add in display. So it’s approximate size. When we think about competition, the first dynamic is there’s some companies and some end device markets that we just can’t serve.

So they sort of have free reign to serve those accounts. And we do think just by getting the reps of having to serve those accounts that those equipment improve. And that’s why when we compete against those types of competitors, I think they can, they are improving and they get closer to the sort of metrics at the device performance level that customers measure. But when applied comes, you bring those other elements. It’s the top level supply chain, the best components in the world, the most proven components plus the services, plus the experience, plus a roadmap for how to improve the process from there.

So there’s a reason why when we look at the accounts that we’re serving, we’re doing well from a share perspective. We think the share is holding up there. So I think everybody, Vivek in the industry, that’s just competition and we’re okay with competition. We’ve got a roadmap of products and a pipeline of products that we continue to develop even for the mature logic space. That’s important innovation for us.

And we think that’s going to be an important and growing market for Applied going forward.

Vivek Arya, Analyst, BFA Semiconductor and Semi Cap Equipment Research team: Got it. The one of the place Applied has been very strong, Has been DRAM, right? A lot of share gains over the last decade or so. How is DRAM investment this year? I think we kind of get the HPM is strong and everything else is mature.

But when do you see the non HPM part also start to recover kind

Bryce Hill, Chief Financial Officer, Applied Materials: of both, you know, so China, know restriction, but ex China, are you seeing any recovery there? Yes, I think this one’s an interesting one because if you look at the DRAM market year over year for Applied, then you would say, oh, it looks flat. It looks pretty strong, but it looks flat. The dynamic there is in 2024, we were shipping business to two large Chinese customers, right? So in 2024 in Q1 and Q2, our Q1 and Q2, I said that there was not only our normal business to those China customers, $500,000,000 each quarter incremental business to those customers.

This year, Gary in our earnings call said that if you look at the international vendors of memory in DRAM, they’re growing at 40% this year. So what’s happening is we don’t have those China sales in 2025, but the international companies have grown much faster. And I think it’s both the HBM effect that’s about 16% of wafer starts now, that’s nearly doubled in the last year. And it’s also just that utilizations of DRAM have clicked up and they’re actually in a good healthy range at this point. So companies will be continuing to make investments.

Vivek Arya, Analyst, BFA Semiconductor and Semi Cap Equipment Research team: Are you able to distinguish between what is going to HBM because, you know, it’s essentially the same Right. DRAM. It’s the We

Bryce Hill, Chief Financial Officer, Applied Materials: do as far as, you know, the way we can see into that equation is what’s HBM and what’s not. We get a view of that from the amount of packaging, the stacking, packaging equipment that we sell to each vendor. So that gives us an idea of what sort of capacity it is, but also we’ve just got third party information and company information that says the number of wafer starts that are being devoted to HBM memory each time period.

Vivek Arya, Analyst, BFA Semiconductor and Semi Cap Equipment Research team: So how much of DRAM WFE, Well,

Bryce Hill, Chief Financial Officer, Applied Materials: the WFE, what I gave you the 16% is the wafer starts. And I don’t actually have a breakout of the WFE. That’s harder to tell.

Vivek Arya, Analyst, BFA Semiconductor and Semi Cap Equipment Research team: On leading edge, it seems like as people talk about AI and leading edge, but a lot of the AI products are actually on n minus one or n minus two nodes right now and TSMC has very good utilization there. So do you see continued investments in those five slash four nanometer nodes? And then how does your opportunity change as TSMC is going to two nanometer, which they think is going to be a really big moat

Bryce Hill, Chief Financial Officer, Applied Materials: for them? So when we look at leading edge foundry equipment purchases today and not trying to be specific about any particular customer, but I would say the right way to think about it is it’s almost all gate all around node purchases. So companies are not buying equipment today for existing technologies. They’re buying equipment for the next technology, which each customer has a different naming convention for a gate all around or gate all around plus backside power. And you should think, I think that’s the right model that you should have in your thinking that that’s where all of the purchases are going today.

Vivek Arya, Analyst, BFA Semiconductor and Semi Cap Equipment Research team: Okay. And how does your opportunity change as they step through from two nanometer at some point, right to more advanced nodes? Like is there a specific way to look at how your content changes?

Bryce Hill, Chief Financial Officer, Applied Materials: I would expect and I haven’t examined particular nodes, but as you know, Vivek, each node typically adds process steps. And so the way we would view it and it goes back to this materials engineering intensity, I think two nanometer or a gate all around node generally had 200 more process steps than a three nanometer node as an approximation. And those process steps, it goes back to what you were saying. Some are deposition, some are edge, some are cleans, some are epi, some are, it goes through the treatment list, goes through the list of products that are needed to create that additional density and additional performance for a smaller transistor. And so, yes, as we look at each node going forward, what a foundry sells when they’re selling to their customers, you’ve got to sell more performance, better power characteristics, and hopefully less area, a smaller transistor so they can pack more performance into a similar sized chip, a hundred millimeter squared as an example.

And so the only way they can offer that technology and hopefully charge a little more for it is if they offer that kind of performance improvement and that requires those extra steps that we’re talking about. Yeah.

Vivek Arya, Analyst, BFA Semiconductor and Semi Cap Equipment Research team: On packaging, right, that’s been an area of very strong growth, right? It has, I think tripled in the last four years or so. So how much of that is CoVOS and how much of that is HPM? And as people start migrating to HPM4, how does that change your opportunity?

Bryce Hill, Chief Financial Officer, Applied Materials: Let’s see. Last in 2024, we said HPM packaging tools were about $700,000,000 of our $1,700,000,000 packaging business. And this year, I think the way we’ve described it is that business continues to operate at approximately the same level. And the way I think about it is our HBM is we’re still selling HBM at a good rate, but not quite at the same rate as we did at the tail end of 2024 because that was the sort of initial capacity buys for some of those customers. So they continue to invest, continue to add capacity.

It’s a little bit slower rate than it was at the very end of last year. And shifting to a longer range view, this is where our CEO Gary describes this

Vivek Arya, Analyst, BFA Semiconductor and Semi Cap Equipment Research team: as one of the

Bryce Hill, Chief Financial Officer, Applied Materials: intense competitions across the industry. When you think about, everybody reads articles about the will we have enough electricity in the world to serve all the data centers? Well, the leading cloud service providers and leading data center product developers are thinking about how do we make these devices more energy efficient, get a lot more performance and get the utilization of every single component up very high and have it consume less energy. And there’s going to be innovations Vivek on the bonding techniques, the interconnects, the substrates, there’s going be innovations across that whole stack as well as the devices themselves, which goes back to process technology. Every single generation going forward and Applied is involved in all of those pieces.

We’re investing in all those pieces. Packaging is important business for us. And that’s why, you know, we say that we expect it to double again over a period of time, I would say, think three to five years for that.

Vivek Arya, Analyst, BFA Semiconductor and Semi Cap Equipment Research team: I see. On gross margins, one of your peers has set a 50% gross margin target, even though their scale is smaller. And I understand everyone has different mix of businesses, right? So it’s not exactly apples to apples. But how do you think about that as a potential target for Applied?

Like what stands in the way of Applied getting to those kinds

Bryce Hill, Chief Financial Officer, Applied Materials: of numbers? So on gross margins, a year ago we were 47, mid-47s and we had set an internal target. Can we get to 48 and get over 48 this year? And we’ve demonstrated that so far, 49.2 in the last quarter. This quarter we’re guiding in our outlook for our Q3, we’re guiding 48.3%.

What I would say first to investors and analysts in particular is we’ve got three reportable operating segments, right? Our display business, we’re looking at the opportunity of OLED and that business could grow. It’s a nice call option on a new technology in that business. It has lower gross margins than our core equipment business. Our services business, which is our fastest growing business at low double digits is what we typically describe that as from a growth rate perspective in the services business that also has lower gross margins.

So I’m just reminding people when they look at our total gross margin, there’s components there. The core equipment business, we’ve made improvements that’s why we’re now in the 48 and we expect to continue to make improvements. We have worked hard on pricing over the last two years, we’ve made significant progress in pricing and we’ve always had good cost improvement programs. So the way I think about it Vivek is on that equipment business, you should expect continued improvement sort of at the pace that we’ve

Vivek Arya, Analyst, BFA Semiconductor and Semi Cap Equipment Research team: been demonstrating. I see. On the services side, right, which is a very, I think, attractive part of semi cap industry, which often gets more depreciation it should. But talk us through what the different building blocks are of your services business, how much is tools, repairs, you know, refurbs and so forth. How much is cyclical versus how much is kind of more predictable subscription type contracts?

Bryce Hill, Chief Financial Officer, Applied Materials: Good question. So first, thinking about the investor perspective, one thing that we’ve done is we’ve correlated highly, would say, I wouldn’t say tied, but correlated highly, our dividend payment with the profits of our services business. And what we’re thinking there is our services business is very much a recurring business. So 85% of that business we put in the recurring category and two thirds of that we say are under actual contract subscription. We have high renewal rates on those contracts.

So we feel very good about the recurring nature of that business. And so when you think about our dividend, we’re talking about low double digit growth rate for our services business over time and I’ll come back to the drivers. And we’re going to continue to correlate that we raised our dividend 23% a couple of years ago, then 25% last year and now this year 15%. And so we’re kind of winding that up to highly correlate that and so that’ll help investors. Think one of the reasons Vivek you said, it’s kind of sometimes under notice.

So we’re trying to increase the emphasis for paying attention to that business by doing that connection. And then the business itself, a few drivers, why is it low double digits when our equipment business is growing slow, more slowly than that, maybe mid to high single digits over time. And the reason is every time you ship a tool, expand your sort of field of tools that are available to serve, right? Every single day we ship a tool that grows our installed base. The second thing is that customers are more likely today to buy services partially because of the government contracts that they have or government incentives that they have where they’re building in new cities or new areas.

And, just to have that experience labor is a big help to them. And third, we’re adding services per tool. So we’re raising the revenue per tool from a services perspective. A lot of that is AI driven, is services that come from helping the customers. We see all of our tools and the way they operate.

We’re able to help design the best parameters for operation for that equipment. And then we can share that with the customers so they get better performance as they bring those up. Those are the dynamics that add together to get to the low double digit growth rate that we’ve articulated for the services business. And then if you try to say, well, okay, it’s recurring, 85% of that business or more today is recurring, how much of that is absolutely run rate or how much of that can be volatile? There is a little bit of volatility in there because as utilizations go up or down at our customers, when utilizations are lower, they need fewer spares.

Sometimes they idle a tool and so that takes down that rate. But I think that’s a lesser component of the equation. Is

Vivek Arya, Analyst, BFA Semiconductor and Semi Cap Equipment Research team: there a higher services component proportionally in China versus non China

Bryce Hill, Chief Financial Officer, Applied Materials: or We’ve said it’s roughly same level proportional. Similar mix. Okay.

Vivek Arya, Analyst, BFA Semiconductor and Semi Cap Equipment Research team: And then finally, I think what we have seen with Applied is a very strong capital return program, right? Especially the last few years you’ve grown dividends, I think like mid twenties percent, right? A number of those years. How do you think about, are you targeting a certain dividend yield or do you think that, it’s this kind of consistent double digit growth and then buybacks is really and you had a big buyback plan, right? Or addition you had in March.

Bryce Hill, Chief Financial Officer, Applied Materials: Yeah, question. So first let me emphasize just the strategy of the company because it informs the distribution side of the business from a capital perspective. So the strategy and a lot of people will know this in the audience, we’re investing in inflections and we are heavy R and D investors. So I mentioned that we’re building a new lab in Sunnyvale near our campus. It’s about two blocks west of our campus in Santa Clara.

And this is a long term collaboration lab Vivek, the idea is that as you keep pushing the frontier of semiconductors, it’s going to require more and more collaboration across the industry. These devices are more complex and new techniques, new materials, etcetera. So we’re investing in that process of bringing our customers in and working closely with us on the longer term roadmaps. And if that works well, then we’ll have good positions in those new processes that come up.

So first rule of capital allocation is fund that roadmap. We have a 25% to 35 return on invested capital. So when we look at our opportunities, we’re looking at a lot of good opportunities to invest in and you see us making that investment. So R and D CapEx first, we’re making those, you can see that. Then when we turn to excess profits, we’ve said we’ll return 80% to 100% of our excess profits to shareholders.

We just talked about dividend. I would say there’s not a target from a yield perspective. The mental model I have is we’re going to grow that at that services profit level. That’s the way we’re going to think about it. And it should translate to that low double digit growth rate after the 23%, twenty five % and fifteen % of the last couple of years.

And then the rest goes back through share buybacks. And then for the share buybacks, we’re typically in the market every single quarter and we try to be a little bit price sensitive in the quarter. So that’s our philosophy. One

Vivek Arya, Analyst, BFA Semiconductor and Semi Cap Equipment Research team: final question that I get a lot and would love your perspective. The semi cap industry has such outstanding return metrics. Why does it trade at lower valuations than analog companies?

Bryce Hill, Chief Financial Officer, Applied Materials: Wait, I should ask you that question. I think there’s obviously one of the things we think of back when people ask us the question about the multiples and that’s why I would ask the audience, look at the growth rate of the business the last five, six years, look at semiconductor equipment and semiconductor devices over the last ten years. I always think that there’s investors who may have met people in our industry or companies in our industry twenty, twenty five years ago when it was a lot more volatile and people come to us with sort of that perspective. And so I think the volatility hasn’t gone away, but because there’s so many more markets that are using semiconductors, You think of it’s not just PCs and smartphones and in the old days not just analog and MCUs. Now you’ve got the AI data center, you’ve got people talking about robotics, you’ve got companies working on smart glasses, you’ve got all sorts of new things.

And as we know here, everything is using more AI and it’s pulling on more semiconductors. So it just goes back to, we think there’s going to be secular growth across this whole equation. I can’t promise you that it won’t be uneven growth and it just grows every single quarter or every year, but we’re certainly investing for the growth. And so I would say that, yeah, people should look back at the history and make up their own minds on what the right multiple is for this type of business. Excellent.

Vivek Arya, Analyst, BFA Semiconductor and Semi Cap Equipment Research team: Yep. Thank you so much, Bryce. Appreciate it.

Bryce Hill, Chief Financial Officer, Applied Materials: Good to see you.

Vivek Arya, Analyst, BFA Semiconductor and Semi Cap Equipment Research team: Thanks. Thank you all.

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