Summary of Applied Materials Inc (AMAT.O) Management Callback Notes Company Overview - Company: Applied Materials Inc (AMAT.O) - Date of Call: 13 February 2025 - Market Cap: US400 million impact** from restrictions in China, divided approximately 50/50 between equipment and services. - About 50% of this impact is expected to occur in FQ2, with the majority of equipment impact also in FQ2. - Services impact will continue into FQ3 and FQ4, but will not increase [2] AGS Growth - Due to the restrictions, AGS (Applied Global Services) is not expected to grow at a low double-digit rate in FY25, but is projected to resume low double-digit growth annually starting from FQ2 [3] Advanced Packaging - Management foresees some headwinds in the first half of the year for advanced packaging due to a high installation rate of HBM (High Bandwidth Memory) equipment last year. - However, revenue from advanced packaging is expected to double over the next 3-4 years [3] Tariffs - Management is closely monitoring tariffs and is cautious about raising the gross margin baseline due to potential tariff impacts. - If tariffs are sustained, the company may adjust its supply chain and could potentially pass on costs in the long term. - Most of the supply chain is located in the US and Japan, which are not expected to be impacted by tariffs [4] Display Market - The company expects an increase in OLED penetration across all device types and has a strong solution in the OLED space, including the MAX OLED solution announced last November. - Despite a currently low display equipment market, management is confident in future growth [5] Operating Expenses - The company expects R&D expenses to grow in line with revenue, while SG&A (Selling, General and Administrative) expenses will grow at a lesser rate [6] Financial Projections - Current Price: US194.00 - Expected Share Price Return: 5.3% - Expected Dividend Yield: 0.9% - Expected Total Return: 6.1% [7] Risks - Downside risks to the target price include: 1. Variability in fab utilization and capital equipment orders, which are closely linked to stock price. 2. Competition from large peers in the semiconductor equipment industry, despite AMAT's market leadership in several sub-segments [10] Conclusion - Applied Materials Inc is navigating significant challenges due to geopolitical restrictions, particularly in China, while maintaining a positive outlook on growth in advanced packaging and display markets. The company is also managing operational costs and potential tariff impacts carefully.
Applied Materials Inc (AMAT.O)_ Management Callback Notes
AMD·2025-02-16 15:28