Applied Materials Inc (NASDAQ:AMAT) Q3 2019 Earnings Conference Call - Final Transcript

Aug 15, 2019 • 04:30 pm ET


Applied Materials Inc (NASDAQ:AMAT) Q3 2019 Earnings Conference Call - Final Transcript


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Welcome to the Applied Materials Earnings Conference Call. During the presentation, all participants will be in a listen-only mode. Afterwards, you will be invited to participate in a question-and-answer session.

I would now like to turn the conference over to Michael Sullivan, Corporate Vice President. Please go ahead, sir.

Michael Sullivan

Good afternoon, and thank you for joining Applied's third quarter of fiscal 2019 earnings call, which is being recorded. Joining me are Gary Dickerson, our President and CEO, and Dan Durn, our Chief Financial Officer.

Before we begin, I'd like to remind you that today's call contains forward-looking statements, which are subject to risks and uncertainties that could cause our actual results to differ. Information concerning the risks and uncertainties is contained in Applied's most recent Form 10-Q and 8-K filings with the SEC. Today's call also includes non-GAAP financial measures. Reconciliations to GAAP measures are found in today's earnings press release and in our reconciliation slides, which are available on the IR page of our website at

And now I'd like to turn the call over to Gary Dickerson.

Gary E. Dickerson

Thanks, Mike. Our results for the third fiscal quarter demonstrates strong execution in an environment that remains challenging for the time being. Overall, our view of 2019 is consistent with what we have previously communicated. Within our served markets, foundry logic spending is strong, while investments by memory and display customers are significantly lower than last year. We also remain mindful of the broader macroeconomic risks.

During this industry down cycle, my primary focus is ensuring the organization is executing on the initiatives that will put Applied Materials in the best position for the future. I believe the opportunities for Applied are compelling. As powerful new demand drivers emerge in the form of IoT, Big Data and Artificial Intelligence. So, even though we are prudently managing discretionary spending in the near term, we are fully funding R&D to accelerate customers' roadmaps and building new products and capabilities that will underpin the Company's growth in the years ahead.

In today's call, I'll begin with a brief update on the near-term market dynamics, I'll then talk about emerging technology trends and Applied's strategy to address them. Then I'll finish by highlighting some of our recent accomplishments.

Starting with the current environment. Our views of the semiconductor and display markets are largely unchanged. In memory, spending has softened slightly since our May call. On the supply side, we still see customers making disciplined investments, while adjusting factory output to reduce inventory levels.

On the demand side, we believe the price elasticity of NAND is starting to take effect in the form of increases in the average bits per box for both smartphones and PCs. Based on our current visibility, we remain optimistic about 2020 with an expectation that NAND investments will recover ahead of DRAM.

In foundry logic demand has strengthened as the year has progressed, as we see customers accelerating the ramps of their leading-edge nodes. Demand for specialty nodes that serve the