Applied Materials, Inc.

remarks, all participants will be in a listen-only mode. Afterwards, there will be a question and answer session. I would now like to turn the call over to Liz Morali, Vice President of Investor Relations. Liz, you may begin.

Thank you. Good afternoon and thank you for joining us for today's call. With me today are Gary Dickerson, President and CEO, and Bryce Hill, CFO. Before we continue, let me remind you that today's discussion contains forward-looking statements within the meaning of the federal securities laws, including predictions, estimates, projections, or other statements about future events. Actual results may differ materially from those mentioned in these forward-looking statements as a result of risks and uncertainties. Information concerning these risks and uncertainties is discussed in our most recent Form 10-K, 10-Q, and 8-K filings with the SEC. We do not intend to update any forward-looking statements. During today's call, we will also reference non-GAAP financial measures. Reconciliations of GAAP to non-GAAP results can be found in today's earnings press release and in our quarterly earnings materials, which are available on our Investor Relations website at .appliedmaterials.com. I will now turn the call over to Gary.

Thanks, Liz. In our third fiscal quarter of 2025, applied materials delivered record performance fueled by strong, broad-based demand for semiconductor systems and services. However, as you will see in our guidance, we expect revenue and earnings to be sequentially lower in our fourth quarter, primarily due to uncertainties in our China business. Even with this Q4 forecast, we remain on track to achieve a -single-digit growth rate in fiscal 2025, which will be our sixth consecutive year of revenue growth. In my prepared remarks today, I'll give some additional color on our near-term outlook, provide an update on the longer-term secular industry growth drivers, and describe applied leadership positions at the major device inflections that enable our customers' roadmaps. The dynamic macroeconomic and policy environment, including trade and tariffs, has wide-ranging implications for the semiconductor industry, increasing uncertainty, and lowering visibility in the near term. For applied business, there are three main factors that mute our outlook for the quarter ahead. First is digestion of capacity in China. Second is our large backlog of pending export license applications, where we have taken a conservative position and assumed none of these licenses will be issued in the next quarter. And third is nonlinear demand from leading-edge customers, which is primarily linked to market concentration and fab timing. None of these near-term considerations change our perspective on the longer-term opportunities for the industry and applied materials. Leadership in AI remains a major focus for both companies and countries, driving large investments in infrastructure and R&D. Governments around the world, especially the United States government, are taking major steps to incentivize companies to build advanced manufacturing capacity onshore. One example of this is Apple's American manufacturing program, which was announced last week. We are excited to be a partner in this initiative that is designed to strengthen the -to-end silicon supply chain in the U.S. As part of this endeavor, we plan to invest more than $1,200 million in Arizona to establish a -the-art facility for manufacturing specialized components for our equipment. This builds on the more than $400 million we have invested in our U.S. manufacturing infrastructure over the past five years to provide the needed capacity and agility to support growing customer demand. Globally, we are now tracking more than 100 new fabs or major fab expansion projects, an increase of about 10% in the past year. In addition to robust supply chains, deploying AI at large scale requires significant innovation at every level of the technology stack, from models, software, and data center design to chip architectures and materials. AI's need for abundant high-performance and energy-efficient computing is reshaping the semiconductor roadmap and changing the way chips are designed and manufactured. This next wave of AI semiconductor innovation will be concentrated around five key areas, leading edge logic, next-generation high-performance DRAM, high-bandwidth memory or DRAM stacking, advanced packaging to connect logic and memory chips together, and innovations in power electronics to address energy consumption within the data center, and more efficient -to-data center power delivery. In each of these critical areas, major device architecture inflections are shifting value towards materials science and materials engineering, growing applied addressable market, and driving closer collaboration with customers. On top of this, these inflections create opportunities for us to grow faster than the underlying market. Based on our deep customer engagements, we have focused our investments and portfolio on the most enabling applications, and we expect healthy market share gains as these new technologies ramp in volume production. Let me walk you through some examples. In leading edge foundry logic, the transition from FinFET to -all-around transistors with backside power delivery grows our revenue opportunity by 30% for the equivalent fab capacity, and we are on track to gain multiple points of market share when these nodes ramp in the second half of 2026 and 2027. In this past quarter, our strength in leading edge foundry supported revenue of almost $1.2 billion for our metal deposition business, and we also secured our first wins in Mali deposition for the most critical device performance applications. In DRAM, we also have strong market share, and we expect our revenue from leading edge DRAM customers to be up around 50% in fiscal 2025. In the quarter, our strength in DRAM supported record results for our edge business, which surpassed $1 billion of quarterly revenue for the first time. In addition, we see customers adopting our new solutions to address the stringent needs of high-performance compute memory. We have recently secured new volume production positions at leading DRAM manufacturers for our next-generation gap-fill system, our most advanced chemical vapor deposition product, as well as our new Pioneer dielectric patterning system. Looking further ahead, when customers adopt vertical transistor or 4F-squared architectures, a transition we expect starting in 2027 and 2028, we see opportunities to win more than five points of incremental DRAM share. In advanced packaging, we have built a broad portfolio of solutions to enable both high bandwidth memory and heterogeneous integration. We have high share in the packaging market, well above the company's overall wafer fab equipment share. We are well positioned for future architecture inflections, and our packaging business is on track to more than double to greater than $3 billion over the next few years. In power electronics, we believe the market for data center power semiconductors could grow to $9 billion by the end of the decade. We are on track to grow our of this market with highly differentiated solutions that position us well for the future. As our customers race to bring these complex device architecture inflections to market, we are providing advanced service solutions that support them all the way from technology transfer into their pilot lines to optimization of device performance yield and cost in volume production. On a -over-year basis, our service business has now grown for 24 consecutive quarters. In addition, more than two-thirds of our service revenue comes from subscriptions, and we expect this percentage to further increase in the coming years. In the global race for AI leadership, having first access to new technologies has incredible value. To accelerate time to market for disruptive architectures in logic, memory, and packaging, we are changing the way we work with our customers and partners to increase the development and commercialization speed of next-generation technologies. This high-velocity co-innovation strategy that we established with our leading customers is supported by Applied's global EPIC platform, which provides unique physical and digital infrastructure to accelerate AI chip architecture inflections and improve R&D spending efficiency. Our new flagship R&D facility, the EPIC Center in Silicon Valley, remains on track to begin operations in spring 2026. Before I hand it over to Bryce, I'll briefly summarize. Applied delivered record performance in our third fiscal quarter, and we remain on track for a sixth consecutive year of growth in fiscal 2025. We expect revenues and earnings to be sequentially lower in our fourth quarter, primarily due to uncertainties in our China business. Our long-term growth thesis for the semiconductor industry and Applied materials remains unchanged as companies and countries compete to win the race for AI leadership. Applied is best positioned at the major device inflections that enable the AI roadmap. These inflections will grow our total market opportunity and support market share gains in the years to come. Now, I'll turn the call over to Bryce.