This phone conference is discussing the revenue situation for the 2025 fiscal year. At the beginning of the meeting, all participants can only listen, and then will enter the question and answer session. The meeting will include predictive statements about future events, and actual results may deviate from the forecasts due to risks and uncertainties. The meeting also mentions the use of non-GAAP financial indicators and provides ways to access relevant financial reports.

Applied Materials performed well in the third quarter of the 2025 fiscal year, benefiting from strong demand in the semiconductor systems and services industry. However, the company has lowered its performance expectations for the fourth quarter, mainly due to uncertainty in its Chinese business. The company remains optimistic about the long-term prospects of the industry, especially in the field of AI. It plans to invest in establishing advanced manufacturing facilities in the United States to support the growing demands of global clients. Future AI semiconductor innovation will focus on areas such as logic chips, memory technology, advanced packaging, and energy efficiency improvement. With its advantage in material science and engineering, Applied Materials is in a leading position in the industry.

The dialogue content shows that semiconductor equipment suppliers can achieve faster growth than the market by deepening cooperation with customers and investing in the most promising application areas. Specific measures include focusing on cutting-edge technologies such as the transition from FinFET to GAA transistors, enhancing metal deposition business, and innovating DRAM and HPC memory solutions, thus expected to significantly increase market share around 2027. In addition, by adopting a vertical transistor architecture, suppliers anticipate further market expansion opportunities in advanced packaging and high-bandwidth memory fields.

Applied Materials has a high market share in the packaging market, and in the coming years, its power electronics packaging business is expected to exceed $30 billion. By providing differentiated solutions, the company aims to increase its market share in the data center power semiconductor market, which is expected to reach $90 billion by the end of this decade. Applied Materials is accelerating AI chip architecture innovation through its global Epic platform, improving research and development efficiency, and plans to launch a new research and development center in Silicon Valley in the spring of 2026. Despite uncertainties in its business in China, the company expects to achieve growth for the sixth consecutive year in the fiscal year 2025, and remains optimistic about the competition in the semiconductor industry and its leadership position in AI in the long term.

It reported strong growth in its semiconductor systems, global services and display businesses, with semiconductor systems revenue reaching $5.43 billion, a year-on-year increase of 10%, global services revenue reaching $1.6 billion, a year-on-year increase of 1%, and display business revenue reaching $263 million, a year-on-year increase of 23.6%. Overall revenue reached $10 billion, with a non-GAAP gross margin of 36.4% and non-GAAP earnings per share of $2.48, reaching a historic high. In addition, the company's cash flow and free cash flow performance were excellent, with free cash flow reaching $2 billion.

The conversation covers the company's outlook for Q1 performance, citing a slowdown in Chinese customer spending and a decrease in demand from high-end customers as reasons for the decline in performance. It is expected that total revenue for Q1 will be $670 million, a decrease of 4.9% compared to the same period last year. Non-GAAP earnings per share are expected to be $2.11, a decrease of 9% year-on-year. Revenue from semiconductor systems and AGS are down 9% and 2% respectively, but revenue from core services and OLED screen-related revenue has shown significant growth. The company is adjusting its strategy to focus on key applications to address short-term uncertainties, while maintaining its long-term growth strategy unchanged.

The decrease in orders in the Chinese market, attributed to the digestion period after a large number of shipments in 2023 and 2024, was discussed. It is expected that this trend will continue for several quarters. Regarding logic technology, although there is strong demand, future growth is uneven due to factors such as trade uncertainty, delayed capital expenditure decisions, and high customer concentration. It is expected that advanced node capacity will significantly increase, but the specific timeline is still unclear.

The dialogue discussed the significant growth of business in China exceeding expectations, as well as the weaker performance of non-China business. It was mentioned that the Chinese business contributed 30% of the revenue in this quarter, showing a significant increase compared to expectations, while business in other global regions remained relatively weak. Additionally, the impact of reduced demand for advanced process equipment on overall performance was analyzed, as well as expected adjustments for future quarters.

Discussed the global capacity adjustment situation, pointed out that the reduction in production capacity in China and advanced technology fields is about 500, while emphasizing that the remaining global production capacity has a positive impact. However, specific customers affected were not mentioned, indicating that the adjustment was not caused by China.

The growth expectations for Q1 and fiscal year 2026 were discussed, emphasizing the strong performance of DRAM and leading-edge logic technology. Despite the uncertainty in the Chinese market, it is expected that the growth in these areas will be sufficient to offset potential negative impacts.

Discussion on the performance of the Chinese chip market in the third quarter exceeded expectations, but it is expected to return to normal in the fourth quarter and be lower than the level in 2024. It was pointed out that China is making a lot of new investments, but the growth rate is lower than expected. In addition, there is a deviation between the capacity planning and actual demand in the leading logic field, and it is expected that the business volume will continue to be lower than 2024 in the coming quarters.

Discussed the backlog of Chinese licenses, emphasizing that these licenses have not been included in future revenue forecasts. At the same time, elaborated on the relationships with global leading enterprise clients, as well as the mechanism for updating client expenditure forecasts, demonstrating a clear understanding of current client plans.

The conversation discussed the future growth expectations of advanced packaging business. Despite a decline in investments in advanced logic, the business is expected to maintain steady growth, with the goal of surpassing $3 billion in the coming years. Applied Materials has a high market share in this field and is focused on enhancing energy-efficient computing through continuous innovation and collaboration with customers. They are optimistic about the market opportunities brought by AI and energy-efficient computing.

Discussed the sales changes in China in different quarters, especially the sales fluctuations between April and July, as well as sales expectations for the October quarter. Mentioned the potential impact of licenses on revenue, but emphasized that it will not bring revenue growth in the short term, and the specific amount of the license was not disclosed.

The dialogue discussed the strong growth trend in the DRAM market, especially the driving effect of HBM technology on DRAM demand, and the expectations for the sustainability of future growth. It mentioned that HBM accounts for 15% of DRAM capacity and predicted that the DRAM market will continue to grow in early 2016, emphasizing that this is not a temporary fluctuation.

The dialogue discussed the investment in advanced manufacturing processes in the non-linear construction sector, as well as the strong performance of the DRAM market. It mentioned the capacity expansion of the gate all-around technology node, estimated to be in the early stages currently, with more nodes expected to follow in the future, demonstrating long-term growth potential.

Discussed the stability of revenue in the Chinese market and the uncertainty of advanced edge business in logic outsourcing. It was pointed out that the revenue in the Chinese market is expected to remain stable in the next few quarters, while the logic outsourcing business is difficult to predict future revenue due to increased customer uncertainty. Emphasized the challenges of communicating with customers in an uncertain environment and the expected adjustments to multi-party investments.

Discussed the market share of $450 million in GAAR revenue, as well as comparisons with expectations, highlighted adjustments to the $500 million target and factors that did not go as planned, emphasizing that this is not a market share issue.

The dialogue discussed the technological transformation of advanced logic customers in the fields of AI and energy efficient computing, including key nodes such as all-around gate and backside power distribution. The applied technology is leading in these areas, and it is expected that revenue will increase by about 30% with the same number of wafers started. Applied technology has extensive cooperation with customers, especially in transistors and wiring, possessing core enabling technologies to meet customer design requirements, and is expected to perform excellently in market share and revenue growth.

Discussed the company's cautious spending strategy when facing revenue challenges, as well as expectations for long-term growth markets, especially the dual exposure strategy in the logic and DRAM markets. Also mentioned collaborating with customers to gain clearer visibility for the coming quarters and emphasized the importance of technology advantages in gaining market share.

The discussion focused on the stable signs of ICAP's business in non-Chinese markets and the ongoing challenges in the Chinese market. It emphasized the flexibility of the global supply chain to cope with market uncertainties, while also looking forward to the future growth potential of ICAP's market and the company's continued focus on high-growth areas such as AI.