Santa Clara, Calif., April 6, 2021 – Applied Materials held its 2021 Annual Investor Conference, announcing revenue, performance, and cost-to-market (PPACt) improvements by helping customers accelerate chip power, performance, area, and time to market (PPACt). A plan for profit and free cash flow growth. It also announced plans to generate 70% of future service and parts revenue through subscription-based long-term agreements.

Applied Materials also outlines five key inflection points that will drive growth and the need for innovation under its long-term strategy. At the macro level, the digital transformation of the global economy is accelerating. In computing, AI workloads have created the need for new architectures based on entirely new types of silicon chips. In the field of chip manufacturing, the slowdown in the development of 2D scaling under the traditional Moore’s Law has created a need for a “new strategy” for PPACt aimed at achieving continuous improvement at the chip and system level. Another inflection point is the need for a more sustainable and equitable development of the industry. Ultimately, customers aren’t just looking for better products, they’re looking for better results, which has transformed Applied’s business model to one where solutions are delivered via subscription.

“At the heart of our strategy is becoming a PPACt-enabled company,” said Gary Dixon, President and CEO of Applied Materials. “We have a vastly superior product portfolio and strong technology integration capabilities that will accelerate the Customers create value and position us as a leader to advance chip manufacturing for many years to come.”

Applied Materials has deployed strategies to meet increasingly complex customer needs. Many clients are engaged in discussions on trends in computing, semiconductor technology, services, and environmental, social, and governance (ESG).

Applied Materials summarizes progress in its semiconductor systems business. The company’s product portfolio has grown from unit process equipment that can only implement a single step to co-optimized systems with pre-validated process combinations, integrated material solutions that combine multiple process technologies, enabling the production of new materials that are only achievable under vacuum conditions. and chip structure.

Dr. Deyin Liu, Chairman of TSMC, said: “Over the past 30 years, TSMC and Applied Materials have had a wonderful journey together. After 3nm, in order to maintain the speed of continuous technological improvement, we believe that each other will need to work more closely together. , innovating in new transistor structures, new materials, new system architectures, and new 3D integration technologies. This is an exciting time, and we look forward to working with Applied Materials to explore future semiconductor innovations. “

The company also demonstrated the new Applied AIX (Actionable Insight Accelerator) platform through a case study. The platform relies on big data and artificial intelligence technologies to empower semiconductor engineers and accelerate the discovery, development and commercial deployment of new chip technologies.

Lee Seok-hee, CEO of SK hynix, said: “It is well known that improving the scope of additional processes is the key to realizing technology node migration, but it is difficult to sum up in numbers. In many cases, it requires not only materials, processes, equipment and other fields. cutting-edge new technology in the world also requires that these factors be optimized based on the integration of multiple process steps. Changes in each process variable will affect other factors at various levels, so it is critical to accelerate the learning cycle to find the optimal solution. If Applied Materials’ ability to develop new process technologies that are co-optimized with related process steps can reduce development complexity for chipmakers. Coupled with collaborations in sensors, big data, and artificial intelligence, the impact of multiple process variables can be analyzed. By mapping and predicting, we can speed up the development process.”

As Electronic products become more intelligent, the silicon content of each device is also increasing, including specialty semiconductors based on mature process nodes. Applied Materials is meeting this growing demand through its ICAPS business unit (Internet of Things, Communications, Automotive, Power and Sensors). The company’s ICAPS business has annual revenue of more than $3 billion.

Tom Garfield, CEO of GF, said: “GF focuses on the largest and most pervasive part of the semiconductor industry, where the impact of technology is most widespread. Fifteen years ago, the rise of the smartphone upended the semiconductor industry, resulting in the New features such as image sensors, battery management, secure payments, etc. This also gave birth to the Internet of Things, where almost everything can now be connected to smart devices. Gary Dixon and his team saw this trend early on , and have built teams to specialize in this area of ​​innovation, adding new capabilities to semiconductor products at all nodes. Today, GF is also leveraging many of Applied’s technical capabilities for technology innovation and production.”

To support the sustainable development of the semiconductor industry, Applied Materials drives an ESG Action Plan internally and works with suppliers, customers and the computing industry to deliver on its ESG commitments.

“Micron is committed to reducing its environmental impact. We applaud Applied Materials for setting similar goals and working to improve the eco-efficiency of its production systems,” said Sanjay Mehrotra, Micron’s president and CEO.

2024 Financial Model

In the base case assumption of the 2024 financial model, Applied Materials plans to achieve revenue growth of more than 55%, non-GAAP EPS growth of more than 100%, and semiconductor system revenue growth of more than 60% on the basis of fiscal 2020. . The company also announced that it will return 80-100% of free cash flow to shareholders.

Applied Materials also has plans to grow its global service business by more than 45%, expanding services from existing spare parts sales and maintenance to full-service, and improving customer outcomes from R&D to manufacturing through a subscription model. The key to this growth strategy is to expand the application of digital services and remote functions based on sensors, data analysis and artificial intelligence.

In the Display production equipment business, with the development of OLED technology and its widespread application in smartphones, notebook computers, tablet computers and TVs, Applied Materials expects to enjoy the dividends of this wave of development. The company plans to achieve an average annual increase in operating profit of the display production equipment business of about $600 million over the next four years, by 2024.

“This new target financial model of ours builds on the momentum of the reporting business,” said Dan Dunn, Senior Vice President and Chief Financial Officer of Applied Materials. “Combined with a focus on execution, discipline and profitable growth, we will drive a A financial model with high ROI, generating strong free cash flow and generating substantial returns for shareholders.”

About Applied Materials

Applied Materials (NASDAQ: AMAT), a leader in materials engineering solutions, is behind nearly every new chip and advanced display produced worldwide. With technologies that can change materials at the atomic level under production-scale conditions, we enable our customers to make it possible. Applied Materials believes that our innovations will drive the future of advanced technology.

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