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What changed in Applied Materials's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Applied Materials's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+293 added−331 removedSource: 10-K (2024-12-13) vs 10-K (2023-12-15)

Top changes in Applied Materials's 2024 10-K

293 paragraphs added · 331 removed · 218 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

55 edited+14 added−30 removed30 unchanged
Biggest changeAutomation Software Our SmartFactory® automation software portfolio coordinates and streamlines every aspect of a factory (the processes, equipment and people) to provide competitive advantage to customers. 6 Table of Contents Display and Adjacent Markets The Display and Adjacent Markets segment is comprised primarily of products for manufacturing liquid crystal displays (LCDs), organic light-emitting diodes (OLEDs), and other display technologies for TVs, monitors, laptops, personal computers (PCs), electronic tablets, smart phones, and other consumer-oriented devices.
Biggest changeDisplay Display segment is comprised primarily of products for manufacturing liquid crystal displays (LCDs), organic light-emitting diodes (OLEDs), and other display technologies for TVs, monitors, laptops, personal computers (PCs), tablets, smartphones, and other consumer-oriented devices. While similarities exist between the technologies utilized in semiconductor and display fabrication, the most significant differences are in the size and composition of the substrate.
Our ability to create differentiated value in the marketplace is driven by the capability of our people to anticipate technology inflections and integrate customer requirements. To achieve this level of value creation, we believe we must attract, hire, develop and retain a world-class global workforce.
Our ability to create differentiated value in the marketplace is driven by the capability of our people to anticipate technology inflections and integrate customer requirements. To achieve this level of value creation, we believe we must continue to attract, hire, develop and retain a world-class global workforce.
None of the information on, or accessible through, our website is part of this Form 10-K or is incorporated by reference herein. 13 Table of Contents Information about our executive officers The following table and notes set forth information about our executive officers: Name of Individual Position Gary E.
None of the information on, or accessible through, our website is part of this Form 10-K or is incorporated by reference herein. 10 Table of Contents Information about our executive officers The following table and notes set forth information about our executive officers: Name of Individual Position Gary E.
The SEC’s website, www.sec.gov, contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. These website addresses are intended to be an inactive textual references only. None of the information on, or accessible through, these websites is part of this Form 10-K or is incorporated by reference herein. 15 Table of Contents
The SEC’s website, www.sec.gov, contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. These website addresses are intended to be an inactive textual references only. None of the information on, or accessible through, these websites is part of this Form 10-K or is incorporated by reference herein. 12 Table of Contents
Dickerson started his semiconductor career in manufacturing and engineering management at General Motors’ Delco Electronics Division and then AT&T Technologies. (2) Mr. Hill, age 57, has been Senior Vice President and Chief Financial Officer since March 2022. He also oversees Global Information Services for Applied. Prior to joining Applied, Mr.
Dickerson started his semiconductor career in manufacturing and engineering management at General Motors’ Delco Electronics Division and then AT&T Technologies. (2) Mr. Hill, age 58, has been Senior Vice President and Chief Financial Officer since March 2022. He also oversees Global Information Services for Applied. Prior to joining Applied, Mr.
Prior to joining KLA Corporation, she was a Senior Corporate Associate at Wilson Sonsini Goodrich & Rosati, and a Litigation Associate at Heller Ehrman White & McAuliffe. (5) Dr. Nalamasu, age 65, has been Senior Vice President, Chief Technology Officer since June 2013, and President of Applied Ventures, LLC, Applied’s venture capital arm, since November 2013.
Prior to joining KLA Corporation, she was a Senior Corporate Associate at Wilson Sonsini Goodrich & Rosati, and a Litigation Associate at Heller Ehrman White & McAuliffe. (5) Dr. Nalamasu, age 66, has been Senior Vice President, Chief Technology Officer since June 2013, and President of Applied Ventures, LLC, Applied’s venture capital arm, since November 2013.
With respect to environmental, health and safety regulations, we maintain a number of programs that are primarily preventative in nature and regularly monitors ongoing compliance with applicable laws and regulations. In addition, we have trained personnel to conduct investigations of any environmental, health, or safety incidents, including, but not limited to, spills, releases, or possible contamination.
With respect to environmental, health and safety regulations, we maintain a number of programs that are primarily preventative in nature and regularly monitor ongoing compliance with applicable laws and regulations. In addition, we have trained personnel to conduct investigations of any environmental, health, or safety incidents, including, but not limited to, spills, releases, or possible contamination.
We utilize a distributed manufacturing model under which manufacturing and supply chain activities are conducted in various countries, primarily including China, Israel, Japan, Korea, Singapore, Taiwan, the United States and other countries in Asia and Europe. We use qualified vendors, including contract manufacturers, to supply parts, services and product support.
We utilize a distributed manufacturing model under which manufacturing and supply chain activities are conducted in various countries, including United States, Singapore, Japan, China, Korea, Taiwan, Israel and other countries in Asia and Europe. We use qualified vendors, including contract manufacturers, to supply parts, services and product support.
Hill served in various finance positions with Intel Corporation for 25 years, most recently as Corporate Vice President and Chief Financial Officer and Chief Operating Officer, Technology, Systems and Core Engineering Group. (3) Dr. Raja, age 61, has been President, Semiconductor Products Group since March 2023.
Hill served in various finance positions with Intel Corporation for 25 years, most recently as Corporate Vice President and Chief Financial Officer and Chief Operating Officer, Technology, Systems and Core Engineering Group. (3) Dr. Raja, age 62, has been President, Semiconductor Products Group since March 2023.
The rapid pace of technological change can quickly diminish the value of current technologies and products and create opportunities for existing and new competitors. Our broad portfolio offers a variety of differentiated products, including co-optimized and integrated materials solutions that enable unique films, structures and devices.
The rapid pace of technological change can quickly diminish the value of current technologies and products and create opportunities for existing and new competitors. Our comprehensive portfolio offers a variety of differentiated products, including co-optimized and integrated materials solutions that enable unique films, structures and devices.
A summary of financial information for each reportable segment is found in Note 16 of Notes to Consolidated Financial Statements. A discussion of factors that could affect operations is set forth under “Risk Factors” in Item 1A, which is incorporated herein by reference.
A summary of financial information for each reportable segment is found in Note 14 of Notes to Consolidated Financial Statements. A discussion of factors that could affect operations is set forth under “Risk Factors” in Item 1A, which is incorporated herein by reference.
Little, age 59, joined Applied as Senior Vice President, Chief Legal Officer and Corporate Secretary in June 2020. Prior to joining Applied, Ms. Little served as Executive Vice President, Chief Legal Officer and Corporate Secretary at KLA Corporation from August 2017 to June 2020.
Little, age 60, joined Applied as Senior Vice President, Chief Legal Officer and Corporate Secretary in June 2020. Prior to joining Applied, Ms. Little served as Executive Vice President, Chief Legal Officer and Corporate Secretary at KLA Corporation from August 2017 to June 2020.
Important factors affecting the competitive position of our Display and Adjacent Markets products include: industry trends, our ability to innovate and develop new products, and the extent to which our products are technically-differentiated, as well as which customers within a highly concentrated customer base are making capital equipment investments and our existing position at these customers. 10 Table of Contents Patents and Licenses Protection of our technology assets through enforcement of our intellectual property rights, including patents, is important for our competitive position.
Important factors affecting the competitive position of our Display products include: industry trends, our ability to innovate and develop new products, and the extent to which our products are technically-differentiated, as well as which customers within a highly concentrated customer base are making capital equipment investments and our existing position at these customers. 8 Table of Contents Patents and Licenses Protection of our technology assets through enforcement of our intellectual property rights, including patents, is important for our competitive position.
Significant competitive factors include productivity, cost-effectiveness, and the level of technical service and support. The importance of these factors varies according to customers’ needs and the type of products or services offered. Products in the Display and Adjacent Markets segment are generally subject to strong competition from a number of major competitors primarily in Asia.
Significant competitive factors include cost-effectiveness and the level of technical service and support. The importance of these factors varies according to customers’ needs and the type of products or services offered. Products in the Display segment are generally subject to strong competition from a number of major competitors primarily in Asia.
We enter into patent and technology licensing agreements with other companies when it is determined to be in our best interest. We pay royalties under existing patent license agreements for the use, in several of our products, of certain patented technologies. We also receive royalties from licenses granted to third parties.
We enter into patent and technology licensing agreements with other companies when it is determined to be in our best interest. We pay royalties under patent license agreements for the use, in some of our products, of certain patented technologies. We also receive royalties from licenses granted to third parties.
Dickerson(1) President, Chief Executive Officer Brice Hill(2) Senior Vice President, Chief Financial Officer and Global Information Services Prabu Raja(3) President, Semiconductor Products Group Teri Little(4) Senior Vice President, Chief Legal Officer and Corporate Secretary Omkaram Nalamasu(5) Senior Vice President, Chief Technology Officer Timothy M. Deane(6) Group Vice President, Applied Global Services Charles W.
Dickerson(1) President, Chief Executive Officer Brice Hill(2) Senior Vice President, Chief Financial Officer and Global Information Services Prabu Raja(3) President, Semiconductor Products Group Teri Little(4) Senior Vice President, Chief Legal Officer and Corporate Secretary Omkaram Nalamasu(5) Senior Vice President, Chief Technology Officer Timothy M. Deane(6) Group Vice President, Applied Global Services (1) Mr.
For additional discussions regarding the impact of compliance with income tax laws and regulations on our business and operations, see also “Management’s Discussion and Analysis of Financial Condition and Results of Operations– Results of Operations – Income Taxes” and Note 14 of the Notes to the Consolidated Financial Statements. 11 Table of Contents Our People Our commitment to innovation begins with the commitment to creating an environment in which our employees can do their best work.
For additional discussions regarding the impact of compliance with income tax laws and regulations on our business and operations, see also “Management’s Discussion and Analysis of Financial Condition and Results of Operations– Results of Operations – Income Taxes” and Note 12 of the Notes to the Consolidated Financial Statements. 9 Table of Contents Our People Our commitment to innovation begins with the commitment to creating an environment in which our employees can do their best work.
Nalamasu served in several leadership roles at Bell Laboratories. (6) Mr. Deane, age 58, has been Group Vice President, Applied Global Services since September 2022.
Nalamasu served in several leadership roles at Bell Laboratories. (6) Mr. Deane, age 59, has been Group Vice President, Applied Global Services since September 2022.
Research, Development and Engineering Our long-term growth strategy requires continued development of new materials engineering capabilities, including products and platforms that enable expansion into new and adjacent markets.
Research, Development and Engineering Our long-term growth strategy requires continued development of new materials engineering solutions, including products and platforms that enable expansion into new and adjacent markets.
We invest in our employees by providing quality training and learning opportunities; promoting inclusion, equity and diversity; and upholding a high standard of ethics and respect for human rights.
We invest in our employees by providing quality training and learning opportunities, a compelling career path, promoting inclusion, equity and diversity, and upholding a high standard of ethics and respect for human rights.
Our practice is to file patent applications in the United States and other countries for inventions that we consider significant. We have more than 19,600 active patents in the United States and other countries, and additional applications are pending for new inventions.
Our practice is to file patent applications in the United States and other countries for inventions that we consider significant. We have more than 22,000 active patents in the United States and other countries, and additional applications are pending for new inventions.
The importance of these factors varies according to customers’ needs, including product mix and respective product requirements, applications, and the timing and circumstances of purchasing decisions. Substantial competition exists in all areas of our business.
The importance of these factors varies according to customers’ needs, including product mix and respective product requirements, applications, and the timing and circumstances of purchasing decisions. Substantial competition exists across all the segments of our business.
Also, to help expand professional breadth, we use a federated model where the segments and functions provide technical and job-specific training tied to their disciplines, while general professional, management, and leadership training is provided at the corporate level. All training is coordinated centrally and aligned with common objectives through Applied Global University.
Also, to help expand professional breadth, the segments and functions provide technical and job-specific training tied to their disciplines, while general professional, management, and leadership training is provided at the corporate level. All training is coordinated centrally and aligned with common objectives through Applied Global University.
Royalties received from or paid to third parties have not been material to our consolidated results of operations. In the normal course of business, we periodically receive and make inquiries regarding possible patent infringement. In responding to such inquiries, it may become necessary or useful for us to obtain or grant licenses or other rights.
Royalties received from or paid to third parties have not been material to our consolidated results of operations. In the normal course of business, we periodically address the possibility of patent infringement. In responding to such inquiries, it may become necessary or useful for us to obtain or grant licenses or other rights.
Information on net sales to unaffiliated customers and long-lived assets attributable to our geographic regions is included in Note 16 of Notes to Consolidated Financial Statements.
Information on net revenue to unaffiliated customers and long-lived assets attributable to our geographic regions is included in Note 14 of Notes to Consolidated Financial Statements.
Our backlog on any particular date is not necessarily indicative of actual sales for any future periods, due to the potential for customer changes such as new orders or cancellations. Customers may delay delivery of products or cancel orders prior to shipment, subject to possible cancellation penalties.
Our backlog on any particular date is not necessarily indicative of actual sales for any future periods. Our backlog is subject to change, including the potential for customer changes such as new orders or cancellations, and changes in export rules and regulations. Customers may delay delivery of products or cancel orders prior to shipment, subject to possible cancellation penalties.
These regulations, which differ among jurisdictions, include those related to financial and other disclosures, accounting standards, corporate governance, intellectual property, tax, trade, including import, export and customs, antitrust, environment, and health and safety, climate change, employment, immigration and travel regulations, privacy, data protection and localization, and anti-corruption.
These regulations, which differ among jurisdictions, include those related to financial and other disclosures, accounting standards, securities, corporate governance, public procurement and public funding, intellectual property, tax, trade (including import, export and customs), antitrust, cybersecurity, environment (including those related to sustainability and climate), health and safety employment, immigration and travel regulations, human rights, privacy, data protection and localization, and anti-corruption.
Competition in the Applied Global Services segment includes a diverse group of numerous third-party service providers and customers that perform their own service. To compete effectively, we offer products and services to improve tool performance, lower overall cost of ownership, and increase yields and productivity of customers’ fab operations.
Competition in the AGS segment includes a diverse group of third-party service providers as well as customers that choose to perform their own service. To compete effectively, we offer products and services to improve system performance, lower overall cost of ownership, and increase yields and productivity of customers’ fab operations.
We have operations in many countries, with some of our business activities concentrated in certain geographic areas, and global and regional economic and political conditions can impact our business and financial results. Our business is based on capital equipment investments by major semiconductor, display and other manufacturers, and is subject to significant variability in customer demand for our products.
We have operations in many countries, with some of our business activities concentrated in certain geographic areas. Our business is based on capital equipment investments by major semiconductor, display and other manufacturers, and is subject to significant variability in customer demand for our products.
Display and Adjacent Markets segment growth depends primarily on consumer demand for increasingly larger and more advanced TVs and high-resolution displays for mobile devices as well as new form factors, including thin, light, curved and flexible displays, and new applications such as augmented and virtual reality.
Display segment growth depends primarily on consumer demand for increasingly larger and more advanced TVs and high-resolution displays for mobile devices and information technology (IT) products, including laptops, monitors and tablets, as well as new form factors, including thin, light, curved and flexible displays, and new applications such as augmented and virtual reality.
In addition to instructor-led and web-based training, we offer state-of-the-art training modalities, such as AI-based simulations and Augmented and Virtual Reality learning capabilities, to help develop our new products, train our manufacturing and field support employees, and collaborate remotely.
In addition to instructor-led and web-based training, we offer state-of-the-art training modalities, such as AI-based simulations and Augmented and Virtual Reality learning capabilities, to further the development of our new products, train our manufacturing and field support employees, and facilitate remote collaboration.
We believe that many of our products have strong competitive positions. The competitive environment for each segment is described below. The semiconductor industry is driven by demand for advanced electronic products, including smartphones and other mobile devices, servers, personal computers, automotive electronics, storage, and other products.
The competitive environment for each segment is described below. The semiconductor industry is driven by demand for advanced electronic products, including smartphones and other mobile devices, servers, personal computers, automotive electronics, storage, and other products.
As of October 29, 2023, we employed approximately 34,000 regular full-time employees, of whom approximately 44%, 43% and 13% resided in the Asia-Pacific region, North America, and Europe, Middle East and Africa, respectively. Our team spans 24 countries, reflecting various cultures, backgrounds, race, color, national origin, religion, sex, sexual orientation, gender identity, ages, and disability, veteran and military status.
As of October 27, 2024, we employed approximately 35,700 regular full-time employees, of whom approximately 45%, 43% and 12% resided in the Asia-Pacific region, North America, and Europe/Middle East, respectively. Our team spans 24 countries, reflecting various cultures, back grounds, race, color, national origin, religion, sex, sexual orientation, gender identity, ages, and disability, veteran and military status.
The following companies accounted for at least 10 percent of our net sales in each fiscal year, which were for products and services in multiple reportable segments. 2023 2022 2021 Samsung Electronics Co., Ltd. 15% 12% 20% Taiwan Semiconductor Manufacturing Company Limited 19% 20% 15% Intel Corporation * 10% * ______________________________ * Less than 10% 9 Table of Contents Competition The industries in which we operate are highly competitive and characterized by rapid technological change.
The following companies accounted for at least 10 percent of our net revenue for the following fiscal years for products and services in multiple reportable segments. 2024 2023 Samsung Electronics Co., Ltd. 12% 15% Taiwan Semiconductor Manufacturing Company Limited 11% 19% 7 Table of Contents Competition The industries in which we operate are highly competitive and characterized by rapid technological change.
(Varian) from 2004 until its acquisition by us in November 2011. Prior to Varian, Mr. Dickerson served 18 years with KLA-Tencor Corporation (KLA-Tencor), a supplier of process control and yield management solutions for the semiconductor and related industries, where he held a variety of operations and product development roles, including President and Chief Operating Officer. Mr.
Dickerson served 18 years with KLA-Tencor Corporation (KLA-Tencor), a supplier of process control and yield management solutions for the semiconductor and related industries, where he held a variety of operations and product development roles, including President and Chief Operating Officer. Mr.
We work closely with our global customers and ecosystem partners to design systems and processes that meet planned technical and production requirements. Our product development and engineering organizations are located primarily in the United States, as well as in China, Europe, India, Israel, Korea, Singapore and Taiwan.
We work closely with our global customers and ecosystem partners to design systems and processes that meet planned technical and production requirements. Our product development and engineering, and process support are performed primarily in the United States, India and Israel.
We therefore strive to provide fair and equal opportunity for career development and advancement to all our employees and incorporate respect for diverse backgrounds and perspectives into our culture at every level – from strategy and policy down to everyday interactions.
Culture of Inclusion We value great talent and different perspectives, knowing that diversity is one of our greatest strengths. We therefore strive to provide fair and equal opportunity for career development and advancement to all our employees and incorporate respect for diverse backgrounds and perspectives into our culture at every level – from strategy and policy down to everyday interactions.
Our products must continuously evolve to satisfy customers’ requirements to compete effectively in the marketplace. We allocate resources among our numerous product offerings and therefore may decide not to invest in an individual product depending on market requirements. There are a number of competitors serving the semiconductor manufacturing equipment industry.
We must successfully anticipate technology inflections, and our products must continuously evolve to satisfy customers’ requirements to compete effectively in the marketplace. We allocate resources among our numerous product offerings and therefore may decide not to invest in an individual product depending on market requirements.
Backlog by reportable segment as of October 29, 2023 and October 30, 2022 was as follows: 2023 2022 (In millions, except percentages) Semiconductor Systems $ 11,127 65 % $ 12,691 67 % Applied Global Services 5,162 30 % 5,643 30 % Display and Adjacent Markets 833 5 % 581 3 % Corporate and Other 49 — % 96 — % Total $ 17,171 100 % $ 19,011 100 % Of the total backlog as of October 29, 2023, approximately 30% is not reasonably expected to be filled within the next 12 months.
Backlog by reportable segment as of October 27, 2024 and October 29, 2023 was as follows: 2024 2023 (In millions, except percentages) Semiconductor Systems $ 8,259 52 % $ 11,127 65 % Applied Global Services 6,767 43 % 5,162 30 % Display 827 5 % 833 5 % Corporate and Other 20 — % 49 — % Total $ 15,873 100 % $ 17,171 100 % Of the total backlog as of October 27, 2024, approximately 31% is not reasonably expected to be filled within the next 12 months.
In addition, certain outsourced RD&E activities, process support and customer demonstrations are performed in China, India, Singapore, Taiwan and the United States. 8 Table of Contents Marketing and Sales Because of the highly technical nature of our products, we market and sell products worldwide almost entirely through a direct sales force.
Our customer demonstrations are performed primarily in the United States, China, Taiwan, Israel and South Korea. 6 Table of Contents Marketing and Sales Because of the highly technical nature of our products, we market and sell products worldwide almost entirely through a direct sales force.
Competitors range from small companies that compete in a single region, which may benefit from policies and regulations that favor domestic companies, to global, diversified companies, which operate in more complex global economic and regulatory environments. Our ability to compete requires a high level of investment in RD&E, marketing and sales, and global customer support activities.
Competitors range from small companies that compete in a single region, which may benefit from policies and regulations that favor domestic companies, to global, diversified companies, which operate in more complex global economic and regulatory environments.
Read(7) Corporate Vice President, Business Units and Operations Chief Financial Officer (1) Mr. Dickerson, age 66, was named President of Applied in June 2012 and appointed Chief Executive Officer and a member of the Board of Directors in September 2013. Before joining Applied, he served as Chief Executive Officer and a director of Varian Semiconductor Equipment Associates, Inc.
Dickerson, age 67, was named President of Applied in June 2012 and appointed Chief Executive Officer and a member of the Board of Directors in September 2013. Before joining Applied, he served as Chief Executive Officer and a director of Varian Semiconductor Equipment Associates, Inc. (Varian) from 2004 until its acquisition by us in November 2011. Prior to Varian, Mr.
AKT Aristo and PiVot Systems 7 Table of Contents Backlog We manufacture systems to meet demand represented by order backlog and customer commitments. Backlog consisted of: (1) orders for which written authorizations have been accepted, or shipment has occurred but revenue has not been recognized; and (2) contractual service revenue and maintenance fees.
Backlog consisted of: (1) orders for which written authorizations have been accepted, or shipment has occurred but revenue has not been recognized; and (2) contractual service revenue and maintenance fees.
Some of these competitors offer a single product line and others offer multiple product lines, and range from serving a single region to global, diversified companies. Products and services within the Applied Global Services segment complement the Semiconductor Systems and Display and Adjacent Markets segments’ products in markets that are characterized by demanding worldwide service requirements.
Competitors serving the semiconductor equipment industry range from companies offering a single product line to others offering multiple product lines, and those that serve a single region to global, diversified companies. The products and services offered by the AGS segment enhance those of the Semiconductor Systems and Display segments, particularly in markets with demanding global service requirements.
These actionable insights are then integrated with the people strategy process and cadence within the Company. Additional information regarding our activities related to our people and sustainability, as well as our workforce diversity data, can be found in our latest Sustainability Report and Annex thereto, which are located on our website at https://www.appliedmaterials.com/us/en/corporate-responsibility.html.
Additional information regarding our activities related to our people and sustainability, as well as our workforce diversity data, can be found in our latest Sustainability Report, which is located on our website at https://www.appliedmaterials.com/us/en/corporate-responsibility.html. The Sustainability Report is updated annually. This website address is intended to be an inactive textual reference only.
Semiconductor Systems Our Semiconductor Systems segment develops, manufactures and sells a wide range of manufacturing equipment used to fabricate semiconductor chips, also referred to as integrated circuits (ICs).
Semiconductor Systems Our Semiconductor Systems segment designs, develops, manufactures and sells a wide range of primarily 300mm equipment used to fabricate semiconductor chips, also referred to as integrated circuits (ICs). The Semiconductor Systems segment consists of the semiconductor capital equipment industry’s most comprehensive portfolio of products used in the chip making process.
We expect that our commitment to strengthening our culture of inclusion will broaden the diversity of our workplace and help us build a culture that benefits everyone. In recent years, we continued to make progress in our culture of inclusion journey, including, among other things, increasing female representation in the U.S. and global workforce, and increasing U.S. underrepresented minority representation.
In recent years, we continued to make progress in our culture of inclusion journey, including, among other things, increasing female representation in the United States and global workforce, and increasing minority representation in the United States.
While similarities exist between the technologies utilized in semiconductor and display fabrication, the most significant differences are in the size and composition of the substrate. Substrates used to manufacture display panels and other devices are typically glass, although newer flexible materials are entering the market.
Substrates used to manufacture display panels and other devices are typically glass, although newer flexible materials are entering the market.
The Semiconductor Systems segment includes semiconductor capital equipment used for many steps of the chip making process including the transfer of patterns into device structures, transistor and interconnect fabrication, metrology, inspection and review, and packaging technologies for connecting finished IC die.
Our products address steps across materials engineering, process control and advanced packaging, including the conversion of patterns into device structures, transistor and interconnect fabrication, metrology, inspection and review, and packaging technologies for connecting finished IC die.
Talent Acquisition and Retention We believe that our future success is highly dependent upon our continued ability to attract, develop, retain and engage employees.
As of October 27, 2024, our global workforce was 79.2% male and 20.6% female, and 19.8% of our workforce in the United States was composed of underrepresented minorities. Talent Acquisition and Retention We believe that our future success is highly dependent upon our continued ability to attract, develop, retain and engage employees.
He joined Applied in 1995 and previously served in various senior management and field operations roles, including head of Field Operations and Business Management for the Semiconductor Products Group, Account General Manager and Region General Manager. (7) Mr. Read, age 57, has been Corporate Vice President, Business Units and Operations Chief Financial Officer since September 2022.
He joined Applied in 1995 and previously served in various senior management and field operations roles, including head of Field Operations and Business Management for the Semiconductor Products Group, Account General Manager and Region General Manager. 11 Table of Contents Available Information Our website is http://www.appliedmaterials.com.
Each fiscal year, employees are provided the opportunity to complete the required 40 hours of learning. 12 Table of Contents Employee Engagement We have historically measured employee engagement through surveys to gain insight into employees’ experiences, levels of workplace satisfaction, and key drivers for engagement, inclusion and overall well-being.
Employee Engagement We have historically measured employee engagement through surveys to gain insight into employees’ experiences, levels of workplace satisfaction, and key drivers for engagement, inclusion and overall well-being. We plan to conduct an all-employee survey anonymously in fiscal 2025 through an external partner to encourage maximal participation and elicit candid responses.
Customer demand for products and services is fulfilled through a global distribution system in more than 195 locations and trained service engineers located in close proximity to customer sites to support over 52,000 installed Applied semiconductor, display and other manufacturing systems worldwide. We offer the following general types of services and products under the Applied Global Services segment.
Customer demand is fulfilled through a global distribution system in more than 200 locations and trained field engineers located near customer sites to support our semiconductor, display and other equipment worldwide.
The survey results and the benchmarking data allowed us to better understand enterprise-wide trends, gauge effectiveness of interventions, and define targeted employee populations (e.g., early tenure employees). They also provided leaders and people managers with actionable insights tailored to their own groups that can further enhance employee engagement and inclusion.
We also plan to benchmark the survey results against a large and standardized data set involving large technology companies globally. We expect that the survey results and the benchmarking data will allow us to better understand enterprise-wide trends, gauge effectiveness of interventions, and define targeted employee populations (e.g., early tenure employees).
These customers may use what they manufacture in their own end products or sell the items to other companies for use in electronic products. Our fiscal year ends on the last Sunday in October. We operate in three reportable segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets.
Incorporated in 1967, we are a Delaware corporation. Our fiscal year ends on the last Sunday in October. We operate in three reportable segments: Semiconductor Systems, Applied Global Services® (AGS), and Display. The Semiconductor Systems segment represents the largest contributor to our net revenue.
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Item 1: Business Incorporated in 1967, Applied Materials, Inc. (Applied, we, us and our) is a Delaware corporation. A global company with a broad set of capabilities in materials engineering, we provide manufacturing equipment, services and software to the semiconductor, display and related industries.
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Item 1: Business Applied Materials, Inc. is the leader in the materials engineering solutions used to produce virtually every semiconductor and advanced display in the world. We are experts in the design, development, production, and servicing of the critical wafer fabrication and display fabrication tools our customers need to manufacture semiconductors and displays.
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With our diverse technology capabilities, we deliver products and services that improve device performance, power, yield and cost. Our customers include manufacturers of semiconductor chips, liquid crystal and organic light-emitting diode (OLED) displays, and other electronic devices.
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Our customers’ products are used in a wide variety of products such as personal computing devices, mobile phones, artificial intelligence (AI) and data center servers, automobiles, connected devices, industrial applications and consumer electronics. We have the semiconductor capital equipment industry’s most comprehensive portfolio of products.
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Our metrology, inspection and review systems’ imaging capabilities and algorithms employ optical and e-beam technologies to meet the most advanced technical demands in areas including self-aligned double and quad patterning, extreme ultraviolet layers, measurement-intensive optimal proximity correction mask qualification, and new 3D architectures.
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This breadth allows us the ability to connect and co-optimize technologies across our portfolio, enabling our customers to achieve superior results as manufacturing semiconductors and displays is becoming increasingly complex. Semiconductors provide the foundation for advances in technology that are reshaping the global economy, including artificial intelligence, internet of things, robotics, electric and autonomous vehicles, and clean energy.
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Our packaging technologies address challenges resulting from the increasing heterogeneous integration of multiple IC dies in a single package. We deliver leading-edge capabilities that enable chipmakers to establish accurate statistical process control, ramp up production runs rapidly, and achieve consistently high production yields.
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In addition to providing equipment for individual process steps, we have the ability to combine, co-optimize and integrate our technologies to develop highly differentiated solutions for our customers. Our equipment helps customers improve the power, performance, yield and costs of the semiconductor devices.
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We also provide manufacturing equipment that helps improve performance, power, yield and cost of semiconductor devices that use mature process technologies and serve specialty markets such as the Internet of Things, Communications, Automotive, Power and Sensors.
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Our process control systems employ optical and eBeam technologies that allow customers to inspect and review critical semiconductor architectures throughout the manufacturing process, helping improve chip yields. Our advanced packaging systems use our materials engineering expertise to allow customers to connect multiple chips together through heterogeneous integration, enabling them to advance the technology roadmap beyond a single chip.
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Our Semiconductor Systems equipment is sold to integrated device manufacturers and foundries worldwide. 4 Table of Contents Semiconductor Systems Technologies Product(s) Epitaxy Epitaxy (or epi) is a technique for growing silicon (e.g. silicon with another element) as a uniform crystalline structure on a wafer to form high quality material for the device circuity.
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Our Semiconductor Systems sales are to customers that serve the following markets: foundry, logic and other; DRAM; flash memory. Foundry, logic, and other is comprised of leading-edge and non-leading edge technology nodes. Leading-edge represents customers that are producing on the most advanced technology nodes.
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Epi technology is used in device transistors to enhance chip speed. Centura RP Epi Ion Implant Ion implantation is a key technology for forming transistors and is used many times during chip fabrication. During ion implantation, wafers are bombarded by a beam of electrically-charged ions, called dopants, which can change the electrical properties of the exposed semiconductor material.
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Non-leading edge technology nodes serve markets such as internet of things, communications, automotive, power and sensors. 4 Table of Contents Applied Global Services The AGS segment provides services, spares and factory automation software to customer fabrication plants globally. The AGS segment also manufactures and sells 200mm and other equipment, which is shipped to customers globally that serve non-leading-edge markets.
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VIISta Systems Oxidation/Nitridation These systems provide critical oxidation steps - like memory gate oxide, shallow trench isolation and liner oxide - for advanced device scaling. Vantage, Radiance and Centura Systems Rapid Thermal Processing (RTP) RTP is used primarily for annealing, which modifies the properties of deposited films. Single-wafer RTP systems are also used for growing high-quality oxide and oxynitride films.
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AGS’s transactional and subscription service products, spares and factory automation software is purchased by customers to optimize the performance of our large, global installed base of semiconductor, display and other equipment. These solutions are also used to optimize plant performance and productivity.
Removed
Vantage Systems Physical Vapor Deposition (PVD) PVD is used to deposit high quality metal films. Applications include metal gate, silicides, contact liner/barrier, interconnect copper barrier seed and metal hard mask. Endura, Charger and Axcela Systems Chemical Vapor Deposition (CVD) CVD is used to deposit dielectric and metal films on a wafer.
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The expertise that we have in materials engineering on large glass substrates is synergistic with the advanced packaging business in the Semiconductor Products Group, as there is a trend in the industry to utilize various types of substrates, including glass. 5 Table of Contents Backlog We manufacture systems to meet demand represented by order backlog and customer commitments.
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During the CVD process, gases that contain atoms of the material to be deposited react on the wafer surface, forming a thin film of solid material.
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As a result of new export rules and regulations issued in December 2024, backlog as of October 27, 2024 is expected to be reduced by approximately $549 million. This reduction would have resulted in total backlog as of October 27, 2024 of $15.3 billion, of which approximately 31% would not have been reasonably expected to be filled within 12 months.
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Endura, Centura and Producer Systems Chemical Mechanical Planarization (CMP) CMP is used to planarize a wafer surface, a process that allows subsequent photolithography patterning and material deposition steps to occur with greater accuracy, resulting in more uniform film layers with minimal thickness variations.
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We could see increased competition from domestic equipment manufacturers in China resulting from local government incentives and funding as well as export controls established by the United States government to restrict the sale of certain technologies to customers in China.
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Reflexion and Mirra Systems Electrochemical Deposition (ECD) ECD is a process by which metal atoms from a chemical fluid (an electrolyte) are deposited on the surface of an immersed object. Raider and Nokota Platforms Atomic Layer Deposition (ALD) ALD technology enables ultra thin film growth of either a conducting or insulating material with uniform coverage in nanometer-sized structures.
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Export controls enacted by the United States government that restrict the sale of certain technologies to customers in China may also provide an advantage to our international competitors. Our ability to compete requires a high level of investment in RD&E, marketing and sales, and global customer support activities. We believe that many of our products have strong competitive positions.
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Olympia, Sprinter, Morpher and P-300BV Systems Etch Etching is used many times throughout the IC manufacturing process to selectively remove material from the surface of a wafer. We offer systems for etching dielectric, metal, and silicon films to meet the requirements of advanced processing.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

85 edited+24 added−4 removed63 unchanged
Biggest changeWe may experience supply chain disruptions, significant interruptions of our manufacturing operations, delays in our ability to deliver or install products or services, increased costs, customer order cancellations or reduced demand for our products as a result of: • global trade issues and changes in and uncertainties with respect to trade and export regulations, trade policies and sanctions, tariffs, international trade disputes, and new and changing regulations for exports of certain technologies to China, where a significant portion of our supply chain is located, and any retaliatory measures, that adversely impact us or our direct or sub-tier suppliers; • the failure or inability to accurately forecast demand and obtain quality parts on a cost-effective basis; • volatility in the availability and cost of parts, commodities, energy and shipping related to our products, including increased costs due to rising inflation or interest rates or other market conditions; • difficulties or delays in obtaining required import or export licenses and approvals; • shipment delays due to transportation interruptions or capacity constraints; • a worldwide shortage of semiconductor components as a result of sharp increases in demand for semiconductor products in general; • limited availability of feasible alternatives to per- and polyfluoroalkyl substances, which are found in parts, components, process chemicals and other materials supplied to us or used in the operations of our products; 19 Table of Contents • cybersecurity incidents or information technology or infrastructure failures, including those of a third-party supplier or service provider; and • natural disasters, the impacts of climate change, or other events beyond our control (such as earthquakes, utility interruptions, tsunamis, hurricanes, typhoons, floods, storms or extreme weather conditions, fires, regional economic downturns, regional or global health epidemics, geopolitical turmoil, increased trade restrictions between the U.S. and China and other countries, social unrest, political instability, terrorism, or acts of war) in locations where we or our customers or suppliers have manufacturing, research, engineering or other operations.
Biggest changeWe may further experience supply chain disruptions, significant interruptions of our manufacturing operations, delays in our ability to deliver or install products or services, increased costs, customer order cancellations or reduced demand for our products as a result of: • global trade issues and changes in and uncertainties with respect to trade and export regulations, trade policies and sanctions, tariffs, international trade disputes, particularly those relating to exports of certain technologies to China, where a significant portion of our supply chain is located, and any retaliatory measures, that adversely impact us or our direct or sub-tier suppliers; • political instability, social unrest, terrorism, acts of war or other geopolitical turmoil, such as the conflict in the Middle East, in locations where we or our customers or suppliers have manufacturing, research, engineering or other operations; 16 Table of Contents • the failure or inability to accurately forecast demand and obtain quality parts on a cost-effective basis; • volatility in the availability and cost of parts, commodities, energy and shipping related to our products, including increased costs due to rising inflation or interest rates or other market conditions; • difficulties or delays in obtaining required import or export licenses and approvals; • shipment delays due to transportation interruptions or capacity constraints; • a worldwide shortage of semiconductor components as a result of sharp increases in demand for semiconductor products in general; • limited availability of feasible alternatives to materials subject to existing or proposed regulations to limit their use (such as hydrofluorocarbons and per- and polyfluoroalkyl substances), which are found in parts, components, process chemicals and other materials supplied to us or used in the manufacturing or operations of our products; • information technology or infrastructure failures within our operations or those of a third-party supplier or service provider, including failures caused by cybersecurity incidents; impacts of natural disasters, extreme and chronic weather events (which may be exacerbated by climate change), or other events beyond our control (such as earthquakes, utility interruptions, tsunamis, hurricanes, typhoons, floods, storms or fires); and • regional or global health epidemics.
Economic and industry uncertainty may impair the ability of suppliers to deliver parts and negatively affect our ability to manage operations and deliver our products. These conditions may also lead to consolidation or strategic alliances among other equipment manufacturers, which could adversely affect our ability to compete effectively.
Economic and industry uncertainty may impair the ability of suppliers to deliver parts and negatively affect our ability to manage operations and deliver products. These conditions may also lead to consolidation or strategic alliances among other equipment manufacturers, which could adversely affect our ability to compete effectively.
Trade restrictions and export regulations, or increases in tariffs and additional taxes, including any retaliatory measures, can negatively impact end-user demand and customer investment in manufacturing equipment, increase our supply chain complexity and our manufacturing costs, decrease margins, reduce the competitiveness of our products, or restrict our ability to sell products, provide services or purchase necessary equipment and supplies, any or all of which could have a material and adverse effect on our business, results of operations, or financial condition.
Trade restrictions and export regulations, or increases in tariffs and additional taxes, including any retaliatory measures, can negatively impact end-user demand and customer investment in semiconductor equipment, increase our supply chain complexity and our manufacturing costs, decrease margins, reduce the competitiveness of our products, or restrict our ability to sell products, provide services or purchase necessary equipment and supplies, any or all of which could have a material and adverse effect on our business, results of operations, or financial condition.
From time to time we are, and in the future may be, involved in legal proceedings or claims regarding patent infringement, trade secret misappropriation, other intellectual property rights, trade compliance, including import, export and customs, antitrust, environmental regulations, privacy, data protection, securities, contracts, product performance, product liability, unfair competition, employment, workplace safety, and other matters.
From time to time we are, and in the future may be, involved in legal proceedings or claims regarding patent infringement, trade secret misappropriation, other intellectual property rights, trade compliance, including import, export and customs, antitrust, environmental regulations, cybersecurity, privacy, data protection, securities, contracts, product performance, product liability, unfair competition, employment, workplace safety, and other matters.
Our ability to successfully expand our business into new and related markets and industries may be adversely affected by a number of factors, including: • the need to devote additional resources to develop new products for, and operate in, new markets; • the need to develop new sales and technical marketing strategies, and to develop relationships with new customers; • differing rates of profitability and growth among multiple businesses; • our ability to anticipate demand, capitalize on opportunities, and avoid or minimize risks; • the complexity of managing multiple businesses with variations in production planning, execution, supply chain management and logistics; • the adoption of new business models, business processes and systems; • the complexity of entering into and effectively managing strategic alliances or partnering opportunities; • new materials, processes and technologies; • the need to attract, motivate and retain employees with skills and expertise in these new areas; • new and more diverse customers and suppliers, including some with limited operating histories, uncertain or limited funding, evolving business models or locations in regions where we do not have, or have limited, operations; • new or different competitors with potentially more financial or other resources, industry experience and established customer relationships; • entry into new industries and countries, with differing levels of government involvement, laws and regulations, and business, employment and safety practices and requirements; • third parties’ intellectual property rights; and • the need to comply with, or work to establish, industry standards and practices.
Our ability to successfully expand our business into new and related markets and industries may be adversely affected by a number of factors, including: • the need to devote additional resources to develop new products for, and operate in, new markets; • the need to develop new sales and technical marketing strategies, and to develop relationships with new customers; • differing rates of profitability and growth among multiple businesses; • our ability to anticipate demand, capitalize on opportunities, and avoid or minimize risks; • the complexity of managing multiple businesses with variations in production planning, execution, supply chain management and logistics; • the adoption of new business models, business processes and systems; • the complexity of entering into and effectively managing strategic alliances or partnering opportunities; • new materials, processes and technologies; • the need to attract, motivate and retain employees with skills and expertise in these new areas; • new and more diverse customers and suppliers, including some with limited operating histories, uncertain or limited funding, evolving business models or locations in regions where we do not have, or have limited, operations; • new or different competitors with potentially more financial or other resources, industry experience and established customer relationships; 20 Table of Contents • entry into new industries and countries, with differing levels of government involvement, laws and regulations, and business, employment and safety practices and requirements; • third parties’ intellectual property rights; and • the need to comply with, or work to establish, industry standards and practices.
We may be unable to anticipate, prevent, or remediate future attacks, vulnerabilities, breaches, or incidents, and in some instances we may be unaware of vulnerabilities or cybersecurity breaches or incidents or their magnitude and effects, particularly as attackers are becoming increasingly able to circumvent controls and remove forensic evidence.
We may be unable to anticipate, prevent, or remediate future attacks, vulnerabilities, breaches, or incidents, and in some instances we may be unaware of vulnerabilities or cybersecurity breaches or incidents or their magnitude and effects, particularly as attackers are increasingly able to circumvent controls and remove forensic evidence.
Volatility of demand for manufacturing equipment can also increase our and our suppliers’ capital, technical, operational and other risks, and may cause some suppliers to exit businesses, or scale back or cease operations, which could impact our ability to meet customer demand.
Volatility of demand for equipment can also increase our and our suppliers’ capital, technical, operational and other risks, and may cause some suppliers to exit businesses, or scale back or cease operations, which could impact our ability to meet customer demand.
Business combinations, acquisitions and investments involve numerous risks to our business, financial condition and operating results, including: • inability to complete proposed transactions timely or at all due to the failure to obtain regulatory or other approvals, litigation or other disputes, and any ensuing obligation to pay a termination fee; • diversion of management’s attention and disruption of ongoing businesses; • the failure to realize expected revenues, gross and operating margins, net income and other returns from acquired businesses; 24 Table of Contents • requirements imposed by government regulators in connection with their review of a transaction, which may include, among other things, divestitures and restrictions on the conduct of our existing business or the acquired business; • following completion of acquisitions, ineffective integration of businesses, operations, systems, digital and physical security, technologies, products, employees, compliance programs, changes in laws or regulations, including tax laws, or other factors, may impact the ability to realize anticipated synergies or other benefits; • failure to commercialize technologies from acquired businesses or developed through strategic investments; • dependence on unfamiliar supply chains or relatively small supply partners; • inability to capitalize on characteristics of new markets that may be significantly different from our existing markets and where competitors may have stronger market positions and customer relationships; • failure to retain and motivate key employees of acquired businesses; • the impact of the announcement or consummation of a proposed transaction on relationships with third parties; • changes in our credit rating, which could adversely impact our access to and cost of capital; • increases in debt obligations to finance activities associated with a transaction, which increase interest expense, and reductions in cash balances, which reduce the availability of cash flow for general corporate or other purposes, including share repurchases and dividends; • exposure to new operational risks, rules, regulations, worker expectations, customs and practices to the extent acquired businesses are located in regions where we have not historically conducted business; • challenges associated with managing new, more diverse and more widespread operations, projects and people; • inability to obtain and protect intellectual property rights in key technologies; • inadequacy or ineffectiveness of an acquired company’s internal financial controls, disclosure controls and procedures, cybersecurity, privacy policies and compliance programs, or environmental, health and safety, anti-corruption, human resource, or other policies or practices; • impairment of acquired intangible assets and goodwill as a result of changing business conditions, technological advancements or worse-than-expected performance of the segment; • the risk of litigation or claims associated with a proposed or completed transaction; • unknown, underestimated, undisclosed or undetected commitments or liabilities, including potential intellectual property infringement claims, or non-compliance with laws, regulations or policies; and • the inappropriate scale of acquired entities’ critical resources or facilities for business needs.
Business combinations, acquisitions and investments involve numerous risks to our business, financial condition and operating results, including: • inability to complete proposed transactions timely or at all due to the failure to obtain regulatory or other approvals, including through expanding global national security regimes that impose prohibitions on foreign investments in or acquisitions of local businesses; litigation or other disputes, and any ensuing obligation to pay a termination fee; • diversion of management’s attention and disruption of ongoing businesses; • the failure to realize expected revenues, gross and operating margins, net income and other returns from acquired businesses; • requirements imposed by government regulators in connection with their review of a transaction, which may include, among other things, divestitures and restrictions on the conduct of our existing business or the acquired business; • following completion of acquisitions, ineffective integration of businesses, operations, systems, digital and physical security, technologies, products, employees, compliance programs, changes in laws or regulations, including tax laws, or other factors, may impact the ability to realize anticipated synergies or other benefits; • failure to commercialize technologies from acquired businesses or developed through strategic investments; • dependence on unfamiliar supply chains or relatively small supply partners; • inability to capitalize on characteristics of new markets that may be significantly different from our existing markets and where competitors may have stronger market positions and customer relationships; 22 Table of Contents • failure to retain and motivate key employees of acquired businesses; • the impact of the announcement or consummation of a proposed transaction on relationships with third parties; • changes in our credit rating, which could adversely impact our access to and cost of capital; • increases in debt obligations to finance activities associated with a transaction, which increase interest expense, and reductions in cash balances, which reduce the availability of cash flow for general corporate or other purposes, including share repurchases and dividends; • exposure to new operational risks, rules, regulations, worker expectations, customs and practices to the extent acquired businesses are located in regions where we have not historically conducted business; • challenges associated with managing new, more diverse and more widespread operations, projects and people; • inability to obtain and protect intellectual property rights in key technologies; • inadequacy or ineffectiveness of an acquired company’s internal financial controls, disclosure controls and procedures, cybersecurity, privacy policies and compliance programs, or environmental, health and safety, anti-corruption, human resource, or other policies or practices; • impairment of acquired intangible assets and goodwill as a result of changing business conditions, technological advancements or worse-than-expected performance of the segment; • the risk of litigation or claims associated with a proposed or completed transaction; • unknown, underestimated, undisclosed or undetected commitments or liabilities, including potential intellectual property infringement claims, or non-compliance with laws, regulations or policies; and • the inappropriate scale of acquired entities’ critical resources or facilities for business needs.
If we do not accurately forecast and allocate appropriate resources and investment towards addressing key technology changes and inflections, successfully develop and commercialize products to meet demand for new technologies, and effectively address industry trends, our business and results of operations may be materially and adversely impacted. We are exposed to ongoing changes specific to the display industry.
If we do not accurately forecast and allocate appropriate resources and investment towards addressing key technology changes and inflections, successfully develop and commercialize products to meet demand for new technologies, and effectively address industry trends, our business and results of operations may be materially and adversely impacted. We are exposed to factors specific to the display industry.
We are subject to environmental, health and safety regulations in connection with our global business operations, including but not limited to: regulations related to the design, manufacture, sale, shipping and use of our products; use, handling, discharge, recycling, transportation and disposal of hazardous materials used in our products or in producing our products; the operation of our facilities; and the use of our real property, including in connection with construction of our infrastructure projects.
We are subject to environmental, health and safety regulations in connection with our global business operations, including but not limited to: regulations related to the design, manufacture, sale, shipping, import, export and use of our products; use, handling, discharge, recycling, transportation and disposal of hazardous materials used in our products or in producing our products; the operation of our facilities; and the use of our real property, including in connection with construction of our infrastructure projects.
Cybersecurity incidents may result in business disruption; delay in the development and delivery of our products; disruption of our manufacturing processes, internal communications, interactions with customers and suppliers and processing and reporting financial results; the theft or misappropriation of intellectual property; corruption, loss of, or inability to access (e.g., through ransomware or denial of service) confidential information and critical data (i.e., that of our company and our third-party providers and customers); reputational damage; private claims, demands, and litigation or regulatory investigations, enforcement actions, or other proceedings related to contractual or regulatory privacy, cybersecurity, data protection, or other confidentiality obligations; diminution in the value of our investment in research, development and engineering; and increased costs associated with the implementation of cybersecurity measures to detect, deter, protect against, and recover from such incidents.
Cybersecurity incidents, including cybersecurity incidents on third-party provider networks, may result in business disruption; delay in the development and delivery of our products; disruption of our manufacturing processes, internal communications, interactions with customers and suppliers and processing and reporting financial results; the theft or misappropriation of intellectual property; corruption, loss of, or inability to access (e.g., through ransomware or denial of service) confidential information and critical data (i.e., that of our company and our third-party providers and customers); reputational damage; private claims, demands, and litigation or regulatory investigations, enforcement actions, or other proceedings related to contractual or regulatory privacy, cybersecurity, data protection, or other confidentiality obligations; diminution in the value of our investment in research, development and engineering; and increased costs associated with the implementation of cybersecurity measures to detect, deter, protect against, and recover from such incidents.
The display industry is characterized by ongoing changes particular to this industry that impact demand for and the profitability of our display products and services, including: 21 Table of Contents • the importance of new types of display technologies, such as organic light-emitting diode (OLED), low temperature polysilicon (LTPS) and metal oxide transistor backplanes, flexible displays, and new touch panel films; • the increasing cost of research and development, and complexity of technology transitions and inflections, and our ability to timely and effectively anticipate and adapt to these changes; • the timing and extent of an expansion of manufacturing facilities in China, which may be affected by changes in economic conditions and governmental regulations, including trade policies and export regulations; • the importance of increasing market positions in products and technologies with growing demand; • the rate of transition to new display technologies for TVs, information technology products and mobile applications, and augmented and virtual reality applications, and the resulting effect on capital intensity in the industry and on our product differentiation, gross margin and return on investment; • the concentration of display manufacturer customers, and fluctuations in customer spending quarter over quarter and year over year for display manufacturing equipment; and • the dependence on a limited number of display manufacturer customers’ selection of new technologies, and their ability to successfully commercialize new products and technologies, and uncertainty with respect to future display technology end-use applications and growth drivers.
The display industry is characterized by factors particular to this industry that impact demand for and the profitability of our display products and services, including: • the importance of new types of display technologies, such as organic light-emitting diode (OLED), low temperature polysilicon (LTPS) and metal oxide transistor backplanes, flexible displays, and new touch panel films; • the increasing cost of research and development, and complexity of technology transitions and inflections, and our ability to timely and effectively anticipate and adapt to these changes; • the timing and extent of an expansion of manufacturing facilities in China, which may be affected by changes in economic conditions and governmental regulations, including trade policies and export regulations; • the importance of increasing market positions in products and technologies with growing demand; • the rate of transition to new display technologies for TVs, information technology products and mobile applications, and augmented and virtual reality applications, and the resulting effect on capital intensity in the industry and on our product differentiation, gross margin and return on investment; • the concentration of display manufacturer customers, and fluctuations in customer spending quarter over quarter and year over year for display fabrication equipment; and • the dependence on a limited number of display manufacturer customers’ selection of new technologies, and their ability to successfully commercialize new products and technologies, and uncertainty with respect to future display technology end-use applications and growth drivers.
The semiconductor industry is characterized by ongoing changes particular to this industry that impact demand for and the profitability of our semiconductor manufacturing equipment and service products, including: • the frequency and complexity of technology transitions and inflections, and our ability to timely and effectively anticipate and adapt to these changes; • the cost of research and development due to many factors, including shrinking geometries, the use of new materials, new and more complex device structures, more applications and process steps, increasing chip design costs, and the cost and complexity of integrated manufacturing processes; • the need to reduce product development time and meet technical challenges; • the number of types and varieties of semiconductors and number of applications; • the cost and complexity for semiconductor manufacturers to move more technically advanced capability and smaller geometries to volume manufacturing, and the impact on investment in capital equipment; • semiconductor manufacturers’ levels of capital expenditures and the allocation of capital investment to market segments that we do not serve, such as lithography, or segments where our products have lower relative market presence; • delays in installation of manufacturing equipment delivered to customers; • the importance of increasing market positions in segments with growing demand; • semiconductor manufacturers’ ability to reconfigure and re-use equipment, resulting in diminished need to purchase new equipment and services from us, and challenges in providing parts for reused equipment; • shorter cycle times between order placements by customers and product shipment require greater reliance on forecasting of customer investment, which may lead to inventory write-offs and manufacturing inefficiencies that decrease gross margin; • competitive factors that make it difficult to enhance position, including challenges in securing development-tool-of-record (DTOR) and production-tool-of-record (PTOR) positions with customers; • consolidation in the semiconductor industry, including among semiconductor manufacturers and among manufacturing equipment suppliers; • shifts in sourcing strategies by computer and electronics companies, and manufacturing processes for advanced circuit technologies, that impact the equipment requirements of our foundry customers; • the concentration of new wafer starts in Korea and Taiwan, where our service penetration and service-revenue-per-wafer-start have been lower than in other regions; • the increasing fragmentation of semiconductor markets, leading certain markets to become too small to support the cost of a new fabrication plant, while others require less technologically advanced products; and • the growing importance of specialty markets (such as Internet of Things, communications, automotive, power and sensors) that use mature process technologies and have a low barrier to entry.
The semiconductor industry is characterized by factors particular to this industry that impact demand for and the profitability of our semiconductor manufacturing equipment and service products, including: • the frequency and complexity of technology transitions and inflections, and our ability to timely and effectively anticipate and adapt to these changes; • the cost of research and development due to many factors, including shrinking geometries, the use of new materials, new and more complex device structures, more applications and process steps, increasing chip design costs, and the cost and complexity of integrated manufacturing processes; • the need to reduce product development time and meet technical challenges; • the number of types and varieties of semiconductors and number of applications; • the cost and complexity for semiconductor manufacturers to move more technically advanced capability and smaller geometries to volume manufacturing, and the impact on investment in capital equipment; • semiconductor manufacturers’ levels of capital expenditures and the allocation of capital investment to market segments that we do not serve, such as lithography, or segments where our products have lower relative market presence; • delays in installation of our equipment delivered to customers; • the importance of increasing market positions in segments with growing demand; • semiconductor manufacturers’ ability to reconfigure and re-use equipment, resulting in diminished need to purchase new equipment and services from us, and challenges in providing parts for reused equipment; • shorter cycle times between order placements by customers and product shipment require greater reliance on forecasting of customer investment, which may lead to inventory write-offs and manufacturing inefficiencies that decrease gross margin; • competitive factors that make it difficult to enhance position, including challenges in securing development-tool-of-record (DTOR) and production-tool-of-record (PTOR) positions with customers; • consolidation in the semiconductor industry, including among semiconductor manufacturers and among semiconductor equipment suppliers; • shifts in sourcing strategies by computer and electronics companies, and manufacturing processes for advanced circuit technologies, that impact the equipment requirements of our foundry customers; • the concentration of new wafer starts in Korea and Taiwan, where our service penetration and service-revenue-per-wafer-start have been lower than in other regions; • the increasing fragmentation of semiconductor markets, leading certain markets to become too small to support the cost of a new fabrication plant, while others require less technologically advanced products; the continuing importance of specialty markets (such as internet of things, communications, automotive, power and sensors) that use process technologies that have a low barrier to entry; and 18 Table of Contents • the importance of advanced packaging to artificial intelligence computing.
These rules and regulations require us to obtain additional export licenses to supply certain of our products or provide services to certain customers in China. Obtaining export licenses may be difficult, costly and time-consuming, and there is no assurance we will be issued licenses on a timely basis or at all.
These regulations require us to obtain additional export licenses to supply certain of our products or provide services to certain customers in China. Obtaining export licenses may be difficult and time-consuming, and there is no assurance we will be issued licenses on a timely basis or at all.
The display industry has experienced decreased levels of investment in manufacturing equipment. If we do not successfully develop and commercialize products to meet demand for new and emerging display technologies, or if industry demand for display manufacturing equipment and technologies does not grow, our business and our operating results may continue to be adversely impacted.
The display industry has experienced decreased levels of investment in display fabrication equipment. If we do not successfully develop and commercialize products to meet demand for new and emerging display technologies, or if industry demand for display fabrication equipment and technologies does not grow, our business and our operating results may continue to be adversely impacted.
Even during periods of economic uncertainty or lower demand, we must continue to invest in research and development and maintain a global business infrastructure to compete effectively and support our customers, which can have a negative impact on our operating results. We maintain an investment portfolio that is subject to general credit, liquidity, market and interest rate risks.
Even during periods of economic uncertainty or lower demand, we must continue to invest in research and development and maintain a global business infrastructure to compete effectively and support our customers, which can have a negative impact on our operating results. 13 Table of Contents We maintain an investment portfolio that is subject to general credit, liquidity, market and interest rate risks.
The implementation and interpretation of these complex rules and other regulatory actions taken by the U.S. government is uncertain and evolving, and may make it more challenging for us to manage our operations and forecast our operating results.
The implementation and interpretation of these complex rules and other regulatory actions taken by the U.S. government are uncertain and evolving and may make it more challenging for us to manage our operations and forecast our operating results.
Any failure or perceived failure to timely meet these sustainability requirements, expectations or targets, or a failure to realize the anticipated benefits of planned investments and technology innovations related to sustainability, could adversely impact the demand for our products and subject us to significant costs and liabilities and reputational risks that could in turn adversely affect our business, financial condition and results of operations.
Any failure or perceived failure to timely meet these 25 Table of Contents sustainability requirements, expectations or targets, or a failure to realize the anticipated benefits of planned investments and technology innovations related to sustainability, could adversely impact the demand for our products and subject us to significant costs and liabilities and reputational risks that could in turn adversely affect our business, financial condition and results of operations.
Ongoing supply chain constraints may continue to increase costs of logistics and parts for our products and may cause us to pass on increased costs to our customers, which may lead to reduced demand for our products and materially and adversely impact our operating results.
Supply chain constraints may increase costs of logistics and parts for our products and may cause us to pass on increased costs to our customers, which may lead to reduced demand for our products and materially and adversely impact our operating results.
Violations of law, rules and regulations, including, among others, those related to financial and other disclosures, trade, import and export regulations, antitrust, privacy, data protection, and anti-corruption, could result in fines, criminal penalties, restrictions on our business, and damage to our reputation, and could have an adverse impact on our business operations, financial condition and results of operations.
Violations of law, rules and regulations, including, among others, those related to financial and other disclosures, trade (including import and export regulations), antitrust, environment, health and safety, privacy, data protection, and anti-corruption, could result in fines, criminal penalties, restrictions on our business, and damage to our reputation, and could have an adverse impact on our business operations, financial condition and results of operations.
Our business depends on our timely supply of equipment, services and related products to meet the changing requirements of our customers, which depends in part on the timely delivery of parts, materials and services from suppliers and contract manufacturers.
Our business depends on our timely supply of products and services to meet the changing requirements of our customers, which depends in part on the timely delivery of parts, materials and services from suppliers and contract manufacturers.
The risks to our investment portfolio may be exacerbated if financial market conditions deteriorate due to rising inflation, rising interest rates, bank failures or economic recession and, as a result, the value and liquidity of the investment portfolio and returns on pension assets, could be negatively impacted and lead to impairment charges.
The risks to our investment portfolio may be exacerbated if financial market conditions deteriorate due to rising inflation, rising interest rates, bank failures or economic recession and the value and liquidity of the investment portfolio and returns on pension assets could be negatively impacted and lead to impairment charges.
As a result of the global nature of our operations, our business performance and results of operations may be adversely affected by a number of factors, including: • uncertain global economic, political and business conditions and demand; • global trade issues and changes in and uncertainties with respect to trade and export regulations, trade policies and sanctions, tariffs, and international trade disputes, including new and changing export regulations and their impact on our ability to export products and provide services to customers; • positions taken by governmental agencies regarding possible national, commercial or security issues posed by the development, sale or export of certain raw materials, products and technologies; • political instability, natural disasters, regional or global health epidemics, social unrest, terrorism, acts of war or other geopolitical turmoil, or cybersecurity incidents in locations where we have operations, suppliers or sales, or that may influence the value chain of the industries we serve; • political and social attitudes, laws, rules, regulations and policies within countries, including in China, the United States, and countries in Europe and Asia, that favor domestic companies over non-domestic companies, including efforts to promote the development and growth of local competitors and reduce dependence on foreign semiconductor equipment and manufacturing capabilities through policies and financial incentives; • efforts to influence us to conduct more or less of our operations and sourcing in a particular country; • different and changing local, regional, national or international laws and regulations, including contract, intellectual property, cybersecurity, data privacy, labor, tax, and import/export laws, and the interpretation and application of laws and regulations; • ineffective or inadequate legal protection of intellectual property rights in certain countries; • interruptions to our or our suppliers’ supply chain; • the availability of, and increases and volatility of, raw materials, commodity, energy and shipping costs; • delays or restrictions on personnel travel and in shipping materials or products; • geographically diverse operations and projects, and our ability to maintain appropriate business processes, procedures and internal controls, and comply with environmental, health and safety, anti-corruption and other regulatory requirements; • challenges in hiring and integrating workers in different countries, and in effectively managing a diverse workforce with different experience levels, languages, cultures, customs, business practices and worker expectations, and differing employment practices and labor issues; • the ability to develop relationships with local customers, suppliers and governments; • fluctuations in interest rates and currency exchange rates, including the relative strength or weakness of the U.S. dollar against the Japanese yen, Israeli shekel, euro, Taiwanese dollar, Singapore dollar, Chinese yuan or Korean won; • the need to provide technical support in different locations around the world; • performance of geographically diverse third-party providers, including certain engineering, software development, manufacturing, information technology and other functions; • service interruptions from utilities, transportation, data hosting or telecommunications providers; • impacts of climate change on our operations and those of our customers and suppliers; • the increasing need for a mobile workforce and travel to different regions; and • uncertainties with respect to economic growth rates in various countries, including for the manufacture and sale of semiconductors and displays in the developing economies of certain countries. 17 Table of Contents Global trade issues and changes in and uncertainties with respect to trade policies and export regulations, including import and export license requirements, trade sanctions, tariffs and international trade disputes, have adversely impacted and could further adversely impact our business and operations, and reduce the competitiveness of our products relative to local and global competitors.
As a result of the global nature of our operations, our business performance and results of operations may be adversely affected by a number of factors, including: • uncertain or adverse global economic, political and business conditions and demand; • global trade issues and changes in and uncertainties with respect to trade and export regulations, trade policies and sanctions, tariffs, and international trade disputes, including new and changing export regulations and their impact on our ability to export products and provide services to customers; • positions taken by governmental agencies regarding national, commercial or security issues posed by the development, sale or export of certain products, technologies and raw materials, including critical materials and critical minerals; • political instability, social unrest, terrorism, acts of war or other geopolitical turmoil, such as the conflict in the Middle East, in locations where we have operations, suppliers or sales, or that may influence the value chain of the industries we serve; • cybersecurity incidents; • political and social attitudes, laws, rules, regulations and policies within countries, including in China, the United States, and countries in Europe and Asia, that favor domestic companies over non-domestic companies, including efforts to promote the development and growth of local competitors and reduce dependence on foreign semiconductor equipment and manufacturing capabilities through policies and financial incentives; • efforts to influence us to conduct more or less of our operations and sourcing in a particular country; • different and changing local, regional, national or international laws and regulations, including contract, intellectual property, cybersecurity, data privacy, labor, tax, and import/export laws, and the interpretation and application of laws and regulations; • ineffective or inadequate legal protection of intellectual property rights in certain countries; • interruptions to our or our suppliers’ supply chain; • the availability of raw materials, including critical materials and critical minerals, and increases and volatility of commodity, energy and shipping costs; • delays or restrictions on personnel travel and in shipping materials or products; • geographically diverse operations and projects, and our ability to maintain appropriate business processes, procedures and internal controls, and comply with environmental, health and safety, anti-corruption and other regulatory requirements; • challenges in hiring and integrating workers in different countries, and in effectively managing a diverse workforce with different experience levels, languages, cultures, customs, business practices and worker expectations, and differing employment practices and labor issues; • the ability to develop relationships with local customers, suppliers and governments; • fluctuations in interest rates and currency exchange rates, including the relative strength or weakness of the U.S. dollar against the Japanese yen, Israeli shekel, euro, Taiwanese dollar, Singapore dollar, Chinese yuan or Korean won; • the need to provide technical support in different locations around the world; • performance of geographically diverse third-party providers, including certain engineering, software development, manufacturing, information technology and other functions; • service interruptions from utilities, transportation, data hosting or telecommunications providers; • impacts of natural disasters and extreme and chronic weather events on our operations and those of our customers and suppliers, which may be exacerbated by climate change; 14 Table of Contents • regional or global health epidemics; • the increasing need for a mobile workforce and travel to different regions; and • uncertainties with respect to economic growth rates in various countries, including for the manufacture and sale of semiconductors and displays in the developing economies of certain countries.
Factors that could lead to impairment of goodwill and intangible assets include adverse industry or economic trends, reduced estimates of future cash flows, declines in the market price of our common stock, changes in our strategies or product portfolio, and restructuring activities.
Factors that could lead to impairment of goodwill and intangible assets include adverse industry or 24 Table of Contents economic trends, reduced estimates of future cash flows, declines in the market price of our common stock, changes in our strategies or product portfolio, and restructuring activities.
Changes in intellectual property laws or their interpretation may impact our ability to protect and assert our intellectual property rights, increase costs and uncertainties in the prosecution of 23 Table of Contents patent applications or related enforcement actions, and diminish the value and competitive advantage conferred by our intellectual property assets.
Changes in intellectual property laws or their interpretation may impact our ability to protect and assert our intellectual property rights, increase costs and uncertainties in the prosecution of patent applications or related enforcement actions, and diminish the value and competitive advantage conferred by our intellectual property assets.
Department of Commerce has promulgated rules and regulations expanding export license requirements for U.S. companies that sell certain products to entities in China whose actions or functions are intended to support military end uses, eliminated certain export license exceptions that applied to exports of certain items to China, added certain Chinese companies to its “Entity List” and “Unverified List,” making those companies subject to additional licensing requirements, and expanded licensing requirements for exports to China of items for use in the development or production of integrated circuits and certain technologies.
Department of Commerce has promulgated regulations expanding export license requirements for U.S. companies that sell certain products or provide certain services to entities in China whose actions or functions are intended to support military end uses, eliminated certain export license exceptions that applied to exports of certain items to China, added certain Chinese companies to its “Entity List,” making those companies subject to additional licensing requirements, and expanded licensing requirements for exports to China of items for use in the development or production of integrated circuits and certain technologies.
As a result, the actions of even a single customer or export regulations that apply to customers in certain countries, such as those in China, have exposed and can further expose 18 Table of Contents our business and operating results to greater volatility.
As a result, the actions of even a single customer or export regulations that apply to customers in certain countries, such as those in China, have exposed and can further expose our business and operating results to greater volatility.
We are a supplier to the global semiconductor and display and related industries, which historically have been cyclical and are subject to volatility and sudden changes in customer demand.
We are a supplier to the global semiconductor and display and related industries, which historically have been cyclical and are subject to volatility in customer demand.
If we purchase or commit to purchase inventory in anticipation of customer demand that does not materialize, or such inventory is rendered obsolete by the rapid pace of technological change, or if customers reduce, delay or cancel orders, we may incur excess or obsolete inventory charges. We are exposed to ongoing changes in the various industries in which we operate.
If we purchase or commit to purchase inventory in anticipation of customer demand that does not materialize, or such inventory is rendered obsolete by the rapid pace of technological change, or if customers reduce, delay or cancel orders, we may incur excess or obsolete inventory charges. We are exposed to various factors that impact the industries in which we operate.
Although we are not aware of any cybersecurity incidents impacting us directly that have been material to us to date, we continue to devote significant resources to network security, data encryption, and other measures to protect our systems and data from unauthorized access or misuse, and we may be required to expend greater resources in the future, especially in the face of evolving and increasingly sophisticated cybersecurity threats and laws, regulations, and other actual and asserted obligations to which we are or may become subject relating to privacy, data protection, and cybersecurity.
Although we are not aware of any cybersecurity incidents impacting our information systems that have been determined to have a material impact on us to date, we continue to devote significant resources to network security, data encryption, and other measures to protect our systems and data from unauthorized access or misuse, and we may be required to expend greater resources in the future, especially in the face of evolving and increasingly sophisticated cybersecurity threats and laws, regulations, and other actual and asserted obligations to which we are or may become subject relating to privacy, data protection, and cybersecurity.
We also maintain cash balances in various bank 16 Table of Contents accounts globally in order to fund normal operations. If any of these financial institutions become insolvent, it could limit our ability to access cash in the affected accounts, which could affect our ability to manage our operations. We are exposed to the risks of operating a global business.
We also maintain cash balances in various bank accounts globally to fund normal operations. If any of these financial institutions become insolvent, it could limit our ability to access cash in the affected accounts, which could affect our ability to manage our operations. We are exposed to the risks of operating a global business.
The U.S. and other government agencies may promulgate new or additional export licensing or other requirements that have the effect of further limiting our ability to provide certain products and services to customers outside the U.S., including China.
The U.S. and other governments may promulgate new or additional export licensing or other requirements that have the effect of further limiting our ability to provide certain products and services to customers outside the U.S., including China.
Sudden increases in demand for electronic products have caused, and may in the future cause, a shortage of parts and materials needed to manufacture our products. Such shortages, and shipment delays due to transportation capacity and interruptions, have adversely impacted, and may in the future adversely impact, our suppliers’ ability to meet our requirements.
Increases in demand for semiconductor chips and electronic devices have caused, and may in the future cause, a shortage of parts and materials needed to manufacture our products. Such shortages, and shipment delays due to transportation capacity and interruptions, have adversely impacted, and may in the future adversely impact, our suppliers’ ability to meet our requirements.
The global semiconductor, display and related industries are characterized by ongoing changes that impact demand for and the profitability of our products and services and our operating results, including: • the nature, timing and degree of visibility of changes in end-user demand for electronic products, including those related to fluctuations in consumer buying patterns tied to general economic conditions, seasonality or the introduction of new products, and the effects of these changes on customers’ businesses and on demand for our products; • increasing capital requirements for building and operating new fabrication plants and customers’ ability to raise the necessary capital; • trade, regulatory, tax or government incentives impacting the timing of customers’ investment in new or expanded fabrication plants; • differences in growth rates among the semiconductor, display and other industries in which we operate; • the importance of establishing, improving and maintaining strong relationships with customers; • the cost and complexity for customers to move from product design to volume manufacturing, which may slow the adoption rate of new manufacturing technology; • the importance of reducing the total cost of manufacturing system ownership; • the importance to customers of system reliability and productivity and the effect on demand for fabrication systems as a result of their increasing productivity, device yield and reliability; • manufacturers’ ability to reconfigure and re-use fabrication systems which can reduce demand for new equipment; • the importance of developing products with sufficient differentiation to influence customers’ purchasing decisions; • requirements for shorter cycle times for the development, manufacture and installation of manufacturing equipment; • price and performance trends for semiconductor devices and displays, and the impact on demand for such products; • the importance of the availability of spare parts to maximize the time that customers’ systems are available for production; • government incentives for local suppliers and domestic semiconductor research, development and manufacturing capabilities; • the increasing role for and complexity of software in our products; • the increasing role of machine learning and artificial intelligence with respect to semiconductor equipment and related services; and 20 Table of Contents • the focus on reducing energy usage and improving the environmental impact and sustainability associated with manufacturing operations.
The global semiconductor, display and related industries are characterized by factors that impact demand for and the profitability of our products and services and our operating results, including: • the nature, timing and degree of visibility of changes in demand for semiconductor chips and electronic devices, including those related to fluctuations in consumer buying patterns tied to general economic or geopolitical conditions, seasonality or the introduction of new products, and the effects of these changes on customers’ businesses and on demand for our products; • increasing capital requirements for building and operating new fabrication plants and customers’ ability to raise the necessary capital; • trade, regulatory, tax or government incentives impacting the timing of customers’ investment in new or expanded fabrication plants; • differences in growth rates among the semiconductor, display and other industries in which we operate; • the importance of establishing, improving and maintaining strong relationships with customers; • the cost and complexity for customers to move from product design to volume manufacturing, which may slow the adoption rate of new manufacturing technology; • the importance of reducing the total cost of manufacturing system ownership; • the importance to customers of system reliability and productivity and the effect on demand for fabrication systems as a result of their increasing productivity, device yield and reliability; • manufacturers’ ability to reconfigure and re-use fabrication systems which can reduce demand for new equipment; • the importance of developing products with sufficient differentiation to influence customers’ purchasing decisions; 17 Table of Contents • requirements for shorter cycle times for the development, manufacture and installation of our equipment; • price and performance trends for semiconductor devices and displays, and the impact on demand for such products; • the importance of the availability of spare parts to maximize the time that customers’ systems are available for production; • government incentives for local suppliers and domestic semiconductor research and development, and increased investment in manufacturing capabilities; • the increasing role for and complexity of software in our products; and • the focus on reducing energy usage and improving the environmental impact and sustainability associated with manufacturing operations, and the availability of adequate and reliable sources of energy.
We also have in place a $1.5 billion revolving credit facility. While no amounts were outstanding under this credit facility as of October 29, 2023, we may borrow amounts in the future under this credit facility or enter into new financing arrangements.
We also have in place a $1.5 billion revolving credit facility. While no amounts were outstanding under this credit facility as of October 27, 2024, we may borrow amounts in the future under this credit facility or enter into new financing arrangements.
We are subject to the laws of the United States and multiple foreign jurisdictions and the rules and regulations of various governing bodies, which may differ among jurisdictions, including those related to financial and other disclosures, accounting standards, corporate governance, intellectual property, tax, trade (including import, export and customs), antitrust, environment, health and safety (including those relating to climate change), employment, immigration and travel regulations, human rights, privacy, data protection and localization, and anti-corruption.
We are subject to the laws of the United States and multiple foreign jurisdictions and the rules and regulations of various governing bodies, which may differ among jurisdictions, including those related to financial and other disclosures, accounting standards, securities, corporate governance, public procurement and public funding, intellectual property, tax, trade (including import, export and customs), antitrust, cybersecurity, environment (including those relating to sustainability and climate), health and safety, employment, immigration and travel regulations, human rights, privacy, data protection and localization, and anti-corruption.
Supply chain disruptions have caused and may continue to cause delays in our equipment production and delivery schedules, which can lead to our business performance becoming significantly dependent on quarter-end production and delivery schedules, and could have an adverse impact on our operating and financial results.
Supply chain disruptions have in the past caused, and may from time to time cause, delays in our equipment production and delivery schedules, which can lead to our business performance becoming significantly dependent on quarter-end production and delivery schedules, and could have an adverse impact on our operating and financial results.
To compete successfully, we must: • identify and address technology inflections, market changes, competitor innovations, new applications, customer requirements and end-use demand in a timely and effective manner; • develop new products and disruptive technologies, improve and develop new applications for existing products, and adapt products for use by customers in different applications and markets with varying technical requirements; • complete major infrastructure projects on schedule and on budget, and realize the anticipated benefits of those projects; • differentiate our products from those of competitors, meet customers’ performance specifications (including those related to energy consumption and environmental impact more broadly), appropriately price products, and achieve market acceptance; • effectively and timely implement artificial intelligence strategies for our product and service offerings, which may be costly or ineffective, introduce errors, cause loss of intellectual property, and raise complex regulatory compliance, intellectual property and other issues; • maintain operating flexibility to enable responses to changing markets, applications and customer requirements; • enhance our worldwide operations across our businesses to reduce cycle time, enable continuous quality improvement, reduce costs, and enhance design for manufacturability and serviceability; • focus on product development and sales and marketing strategies that address customers’ high value problems and strengthen customer relationships; • effectively allocate resources between our existing products and markets, the development of new products, and expanding into new and adjacent markets; • improve the productivity of capital invested in R&D activities; • accurately forecast demand, work with suppliers and meet production schedules for our products; • improve our manufacturing processes and achieve cost efficiencies across product offerings; 22 Table of Contents • adapt to changes in value offered by companies in different parts of the supply chain; • qualify products for evaluation and volume manufacturing with our customers; and • implement changes in our design engineering methodology to reduce material costs and cycle time, increase commonality of platforms and types of parts used in different systems, and improve product life cycle management.
To compete successfully, we must: • identify and address technology inflections, market changes, competitor innovations, new applications, customer requirements and end-use demand in a timely and effective manner; • develop new products and disruptive technologies, improve and develop new applications for existing products, and adapt products for use by customers in different applications and markets with varying technical requirements; • complete major infrastructure projects on schedule and on budget, and realize the anticipated benefits of those projects; • differentiate our products from those of competitors, meet customers’ performance specifications (including those related to energy consumption and environmental impact more broadly), appropriately price products, and achieve market acceptance; • maintain operating flexibility to enable responses to changing markets, applications and customer requirements; 19 Table of Contents • enhance our worldwide operations across our businesses to reduce cycle time, enable continuous quality improvement, reduce costs, and enhance design for manufacturability and serviceability; • focus on product development and sales and marketing strategies that address customers’ high value problems and strengthen customer relationships; • effectively allocate resources between our existing products and markets, the development of new products, and expanding into new and adjacent markets; • improve the productivity of capital invested in R&D activities; • accurately forecast demand, work with suppliers and meet production schedules for our products; • improve our manufacturing processes and achieve cost efficiencies across product offerings; • adapt to changes in value offered by companies in different parts of the supply chain; • qualify products for evaluation and volume manufacturing with our customers; and • implement changes in our design engineering methodology to reduce material costs and cycle time, increase commonality of platforms and types of parts used in different systems, and improve product life cycle management.
The global display industry has experienced considerable volatility in capital equipment investment levels, due in part to the limited number of display manufacturers, the concentrated nature of end-use applications, production capacity relative to end-use demand, and panel manufacturer profitability.
The global display industry has experienced considerable volatility in capital equipment investment levels, due in part to the limited number of display manufacturers, the concentrated nature of end-use applications, production capacity relative to end-use demand, the speed of adopting new technologies into production, and panel manufacturer profitability.
We are subject to examination by the U.S. Internal Revenue Service and other tax authorities, and from time to time amend previously filed tax returns. We regularly assess the likelihood of favorable or unfavorable outcomes resulting from these examinations and amendments to determine the adequacy of our provision for income taxes, which requires estimates and judgments.
Internal Revenue Service and other tax authorities, and from time to time amend previously filed tax returns. We regularly assess the likelihood of favorable or unfavorable outcomes resulting from these examinations and amendments to determine the adequacy of our provision for income taxes, which requires estimates and judgments.
As part of our growth strategy, we seek to continue to expand into related or new markets and industries, either with our existing products or with new products developed internally, or those developed in collaboration with third parties, or obtained through acquisitions.
We are exposed to risks associated with expanding into new and related markets and industries. As part of our growth strategy, we seek to continue to expand into related or new markets and industries, either with our existing products or with new products developed internally, or those developed in collaboration with third parties, or obtained through acquisitions.
If we do not appropriately manage our business operations in response to changing economic and industry conditions, it could have a material and adverse impact on our business performance and financial condition. We may be required to implement additional cost reduction efforts, including restructuring activities, which may adversely impact our ability to capitalize on opportunities.
If we do not appropriately manage our business operations it could have a material and adverse impact on our business performance and financial condition. We may be required to implement additional cost reduction efforts, including restructuring activities, which may adversely impact our ability to capitalize on opportunities.
There is inherent risk, based on the complex relationships among the United States and the countries in which we conduct our business, that political, diplomatic, and national security factors can lead to global trade restrictions and changes in trade policies and export regulations, in particular, with respect to those affecting the semiconductor industry.
There is inherent risk, based on the complex relationships among the United States and the countries in which we conduct our business, that political, diplomatic, and national security factors can lead to global trade restrictions and changes in trade policies and export regulations that affect the semiconductor industry.
The U.S. government may also continue to add customers to its “Entity List” and “Unverified List,” or take measures that could disrupt our product shipments to certain customers. These and other potential future regulatory changes could materially and adversely affect our business, results of operations or financial condition.
The U.S. government may also continue to add customers to its “Entity List” or promulgate additional restrictions, or take measures that could disrupt our product shipments or the provision of services to certain customers. These and other potential future regulatory changes could materially and adversely affect our business, results of operations or financial condition.
In addition, standards and processes for measuring and reporting carbon emissions and other sustainability metrics may change over time, and may result in inconsistent data, or could result in significant revisions to our strategies and targets, or our ability to achieve them.
In addition, standards and processes for measuring and reporting greenhouse gas emissions and other sustainability metrics may change over time, and may result in inconsistent data, increase our costs, result in significant revisions to our strategies and targets, or impact our ability to achieve them.
Divestitures involve additional risks and uncertainties, such as ability to sell such businesses on satisfactory price and terms and in a timely manner, or at all, disruption to other parts of the businesses and distraction of management, allocation of internal resources that would otherwise be devoted to completing strategic acquisitions, loss of key employees or customers, exposure to unanticipated liabilities or ongoing obligations to support the businesses following such divestitures, and other adverse financial impacts.
Divestitures involve additional risks and uncertainties, such as ability to sell such businesses on satisfactory price and terms and in a timely manner, or at all, disruption to other parts of the businesses and distraction of management, allocation of internal resources that would otherwise be devoted to completing strategic acquisitions or other strategic projects or initiatives, loss of key employees or customers, loss of access by retained business units to critical intellectual property or other assets transferred with the divested business, exposure to unanticipated liabilities or ongoing obligations to support the businesses following such divestitures, and other adverse financial impacts.
The geographic concentration of our customer base could shift over time as a result of government policy and incentives to develop regional semiconductor industries.
The geographic concentration of our customer base could shift over time as a result of changes in technology and competitive landscape, as well as government policy and incentives to develop regional semiconductor industries.
We have product development, engineering, manufacturing, sales and other operations in many countries, and some of our business activities are concentrated in certain geographic areas. In fiscal 2023, approximately 85% of our net sales were to customers in regions outside the United States.
We have product development, engineering, manufacturing, sales and other operations distributed throughout many countries, and some of our business activities are concentrated in certain geographic areas. In fiscal 2024, approximately 86% of our net revenue was to customers in regions outside the United States.
Cybersecurity incidents may range from employee or contractor error or misuse or unauthorized use of information technology systems or confidential information, to individual attempts to gain unauthorized access to these information systems, to sophisticated cybersecurity attacks, known as advanced persistent threats, any of which may target us directly or indirectly through our third-party providers and global supply chain.
Cybersecurity incidents may range from physical attacks on our computer system or network infrastructure, to employee or contractor error or misuse or unauthorized use of information 21 Table of Contents technology systems or confidential information, to individual attempts to gain unauthorized access to these information systems, to sophisticated cybersecurity attacks, or advanced persistent threats, any of which may target or impact us directly or indirectly through our third-party providers and global supply chain.
Increases in demand for our products and worldwide demand for electronic products can impact our suppliers’ ability to meet our demand requirements, and have resulted in, and may continue to result in, a shortage of parts, materials and services needed to manufacture our products.
Increases in demand for our products and worldwide demand for semiconductor chips and electronic devices can impact our suppliers’ ability to meet our demand requirements, and have in the past resulted in, and may from time to time result in, a shortage of parts, materials and services needed to manufacture our products.
If we do not effectively manage these challenges, our business performance and operating results may be adversely impacted. Even with effective allocation of resources and management of costs, our gross and operating margins, cash flows and earnings may be adversely impacted during periods of changing demand. We are exposed to risks associated with an uncertain global economy.
Even with effective allocation of resources and management of costs, our gross and operating margins, cash flows and earnings may be adversely impacted during periods of changing demand. We are exposed to risks associated with an uncertain global economy.
If a supplier fails to meet our requirements concerning quality, cost, intellectual property protection, socially-responsible business practices, or other performance factors, we may transfer our business to alternative sources.
If a supplier fails to meet our requirements concerning quality, cost, intellectual property protection, socially-responsible and sustainable business practices, or other performance factors, or does not meet regulatory requirements applicable to our supply chain, we may transfer our business to alternative sources.
The United States and other countries have imposed and may continue to impose new trade restrictions and export regulations, and have levied tariffs and taxes on certain goods.
The United States and other countries have imposed and may continue to impose new trade restrictions and export regulations, have levied tariffs and taxes on certain goods, and could significantly increase tariffs on a broad array of goods.
Our inability to obtain such licenses could limit our markets in China, may cause us to be displaced by foreign businesses and competitors and adversely affect our results of operations.
Our inability to obtain such licenses could limit our sales in China, may cause us to be displaced by foreign and Chinese domestic companies and adversely affect our results of operations.
We sell a significant majority of our products into jurisdictions outside of the United States, including China, Taiwan, Korea and Japan. We also purchase a significant portion of equipment and supplies from suppliers outside of the United States.
A majority of our products and services are delivered to customers in jurisdictions outside of the United States, including China, Taiwan, Korea and Japan. We also purchase a significant portion of equipment and supplies from suppliers outside of the United States.
In the past two years, the U.S. government announced new export regulations for U.S. semiconductor technology sold in China, including wafer fabrication equipment and related parts and services, which have limited the market for certain of our products, adversely impacted our revenues, and increased our exposure to foreign competition. The U.S.
Over the past several years, the U.S. government announced additional export regulations for U.S. semiconductor technology sold in China, including wafer fabrication equipment and related parts and services, with disparate impact on companies in different jurisdictions, which have limited the market for certain of our products and services, adversely impacted our revenues, and increased our exposure to foreign and Chinese domestic competition.
If we do not successfully anticipate technology inflections, develop and commercialize new products and technologies, and respond to changes in customer requirements and market trends, our business performance and operating results may be materially and adversely impacted. We are exposed to risks associated with expanding into new and related markets and industries.
If we do not successfully anticipate technology inflections, develop and commercialize new products and technologies, and respond to changes in customer requirements and market trends, our business performance and operating results may be materially and adversely impacted. We are exposed to risks related to government incentives and other agreements that may involve government entities.
Any scrutiny of our carbon emissions or other sustainability disclosures, our failure to achieve related strategies and targets, or our failure to disclose our sustainability measures consistent with applicable laws and regulations or to the satisfaction of our stakeholders could negatively impact our reputation or performance. We are subject to risks associated with environmental, health and safety regulations.
Any scrutiny of our greenhouse gas emissions or other sustainability disclosures, our failure to achieve related strategies and targets, or our failure to disclose our sustainability measures consistent with applicable laws and regulations or to the satisfaction of regulators or our stakeholders could negatively impact our reputation or performance.
In some foreign jurisdictions, we must meet certain requirements to continue to qualify for tax incentives. There is no assurance we will be able to meet such requirements in the future to fully realize benefits from these incentives. Furthermore, the proposed plans to implement global minimum tax regimes could reduce or eliminate the benefits of our tax incentives.
There is no assurance we will be able to meet such requirements in the future to fully realize benefits from these incentives. Furthermore, the proposed plans to implement global minimum tax regimes could reduce or eliminate the benefits of our tax incentives. We are subject to examination by the U.S.
Uncertain or adverse economic and business conditions, including uncertainties and volatility in the financial markets, national debt, fiscal or monetary concerns, rising inflation and interest rates, bank failures, and economic recession, could materially and adversely impact our operating results. Markets for semiconductors and displays depend largely on business and consumer spending and demand for electronic products.
Uncertain or adverse economic and business conditions, including uncertainties and volatility in the financial markets, national debt, fiscal or monetary concerns, inflation and changes in interest rates, bank failures, and economic recession, could materially and adversely impact our operating results.
Our environmental, social and governance strategies and targets could result in additional costs, and our inability to achieve them could have an adverse impact on our reputation and performance. We periodically communicate our strategies and targets related to sustainability, carbon emissions, diversity and inclusion, human rights, and other environmental, social and governance matters.
Implementation and reporting on our sustainability strategies and targets could result in additional costs, and our inability to achieve them could have an adverse impact on our reputation and performance. We periodically communicate our strategies and targets related to sustainability matters, including greenhouse gas emissions, the sustainability of our products, diversity and inclusion, and human rights.
All information technology systems are subject to disruptions, outages, failures, and security breaches or incidents. We and our third-party providers have experienced, and expect to continue to experience, cybersecurity incidents.
All information technology systems are subject to disruptions, outages, failures, and security breaches or incidents, which may be caused by a variety of internal and external factors. We and our third-party providers have experienced, and expect to continue to experience, cybersecurity incidents.
We have a significant amount of goodwill and other acquired intangible assets related to acquisitions.
We may incur impairment charges related to goodwill or long-lived assets. We have a significant amount of goodwill and other acquired intangible assets related to acquisitions.
Factors that impact demand for our products and services include technology inflections and advances in fabrication processes, new and emerging technologies and market drivers, production capacity relative to demand for chips and display technologies, end-user demand, customers’ capacity utilization, production volumes, access to affordable capital, business and consumer buying patterns and general economic and political conditions.
Factors that impact demand for our products and services include technology inflections and advances in fabrication processes, new and emerging technologies and market drivers, such as demand for high-bandwidth memory and other forms of advanced packaging and technologies related to artificial intelligence and data center computing, production capacity relative to demand for semiconductor chips and electronic devices, end-user demand, customers’ capacity utilization, production volumes, access to affordable capital, business and consumer buying patterns and general economic and political conditions.
Cybersecurity incidents affecting our suppliers could impact our supply chain and may also cause difficulties and delays in our ability to obtain parts, materials and services needed to manufacture our products and provide services, and may adversely impact our manufacturing operations, our ability to meet customer demand, and our operating results.
Such incidents have caused, and may from time to time cause, difficulties and delays in our ability to obtain parts, materials and services needed to manufacture our products and provide services, and have adversely impacted, and may from time to time adversely impact, our manufacturing operations, our ability to meet customer demand, and our operating results.
As of October 29, 2023, we had $5.5 billion in aggregate principal amount of senior unsecured notes outstanding.
As of October 27, 2024, we had $6.2 billion in aggregate principal amount of senior unsecured notes outstanding.
As a global business with customers, suppliers and operations in many countries around the world, from time to time we may receive inquiries from government authorities about transactions between us and certain foreign entities. In August 2022, we received a subpoena from the U.S. Attorney’s Office for the District of Massachusetts requesting information relating to certain China customer shipments.
As a global business with customers, suppliers and operations in many countries around the world, from time to time we may receive inquiries from government authorities about transactions between us and certain foreign entities.
Furthermore, government authorities may take retaliatory actions, impose conditions that require the use of local suppliers or partnerships with local companies, require the license or other transfer of sensitive data or intellectual property, or engage in other efforts to promote local businesses and local competitors, which could have a material and adverse impact on our business.
Any violation or alleged violation of law or regulations could result in significant legal costs or in legal proceedings in which we or our employees could be subjected to fines and penalties and could result in restrictions on our business and damage to our global brand and reputation, and could have a material and adverse impact on our business operations, financial condition and results of operations. 15 Table of Contents Furthermore, government authorities may take retaliatory actions, impose conditions that require the use of local suppliers or partnerships with local companies, require the license or other transfer of sensitive data or intellectual property, or engage in other efforts to promote local businesses and local competitors, which could have a material and adverse impact on our business.
The loss of knowledgeable and experienced employees may result in unexpected costs, reduced productivity, or difficulties with respect to internal processes and controls. We operate in jurisdictions with complex and changing tax laws. We are subject to income taxes in the United States and foreign jurisdictions. Significant judgment is required to determine and estimate worldwide tax liabilities.
We operate in jurisdictions with complex and changing tax laws. We are subject to income taxes in the United States and foreign jurisdictions. Significant judgment is required to determine and estimate worldwide tax liabilities.
If we are unable to attract, retain and motivate qualified employees and leaders, we may be unable to fully capitalize on current and new market opportunities, which could 25 Table of Contents adversely impact our business and results of operations.
If we are unable to attract, retain and motivate qualified employees and leaders, we may be unable to fully capitalize on current and new market opportunities, which could adversely impact our business and results of operations. The loss of knowledgeable and experienced employees may result in unexpected costs, reduced productivity, or difficulties with respect to internal processes and controls.
We are exposed to ongoing changes specific to the semiconductor industry. The largest proportion of our consolidated net sales and profitability is derived from sales of manufacturing equipment in the Semiconductor Systems segment to the global semiconductor industry, and a majority of the revenues of Applied Global Services is from sales to semiconductor manufacturers.
The largest proportion of our consolidated net revenue and profitability is derived from our Semiconductor Systems segment’s sale of a wide range of equipment used to fabricate semiconductor chips to the global semiconductor industry, and a majority of the revenues of Applied Global Services is from sales to semiconductor manufacturers.
If we do not successfully implement enterprise resource planning and related information systems improvements, or if there are delays or difficulties in implementing these systems, we may not realize anticipated productivity improvements or cost efficiencies, and may experience interruptions in service and operational difficulties, which could result in quality issues, reputational harm, lost market and revenue opportunities, and otherwise adversely affect our business, financial condition and results of operations. 26 Table of Contents We may incur impairment charges related to goodwill or long-lived assets.
If the implementation or improvement of information systems is delayed or unsuccessful, , we may not realize anticipated productivity improvements or cost efficiencies, and may experience interruptions in service and operational difficulties, which could result in quality issues, reputational harm, lost market and revenue opportunities, and otherwise adversely affect our business, financial condition and results of operations.
There have been a number of proposed changes in the tax laws that, if enacted, would increase our tax liability. While it is too early to predict the outcome of these proposals, if enacted, they could have a material impact on our provision for income taxes and effective tax rate.
There have been a number of proposed changes in the tax laws that could have a material impact on our provision for 23 Table of Contents income taxes and effective tax rate.
We also on occasion receive notifications from customers who believe we owe them indemnification, product warranty or have other obligations related to claims made against such customers by third parties.
For example, we have received subpoenas from government authorities requesting information relating to China customer shipments, export controls compliance, certain federal award applications and information submitted to the federal government. We also on occasion receive notifications from customers who believe we owe them indemnification, product warranty or have other obligations related to claims made against such customers by third parties.
We could be required to alter our product design, manufacturing, and operations, and incur substantial expense in order to comply with environmental, health and safety regulations. Any failure to comply with these regulations could subject us to significant costs and liabilities that could materially and adversely affect our business, financial condition and results of operations. 28 Table of Contents
Any failure to comply with these regulations could subject us to significant costs and liabilities that could materially and adversely affect our business, financial condition and results of operations. 26 Table of Contents Item 1B: Unresolved Staff Comments None.
If implemented, these global minimum tax regimes would change various aspects of the existing framework under which our global tax obligations are determined, which would unfavorably impact our existing tax incentives and effective tax rate.
This will change various aspects of the existing framework under which our global tax obligations are determined, and will unfavorably impact our existing tax incentives and effective tax rate, beginning in fiscal 2025. The OECD continues to release additional guidance on this new global minimum tax framework.
An increase in our provision for income taxes and effective tax rate could, in turn, have a material and adverse impact on our results of operations and financial condition.
An increase in our provision for income taxes and effective tax rate could, in turn, have a material and adverse impact on our results of operations and financial condition. For example, several countries where we do business have enacted global minimum tax regimes based on the Organization for Economic Cooperation and Development (“OECD”) Base Erosion and Profit Shifting Project.
Cybersecurity attacks are increasing in number and the attackers are increasingly organized and well-financed, or at times supported by state actors. Geopolitical tensions or conflicts, such as Russia’s invasion of Ukraine or increasing tension with China, may create a heightened risk of cybersecurity attacks.
Geopolitical tensions or conflicts, such as Russia’s invasion of Ukraine and increasing tension with China, may create a heightened risk of cybersecurity attacks. To the extent artificial intelligence capabilities improve and are increasingly adopted by threat actors, they may be used to identify vulnerabilities and craft increasingly sophisticated cybersecurity attacks.
Uncertain or adverse economic and business conditions could result in decreases in consumer spending and demand.
Markets for our semiconductor and display equipment and services depend largely on business and consumer spending and demand for semiconductor chips and electronic devices. Uncertain or adverse economic and business conditions could result in decreases in business and consumer spending and demand.
These strategies and targets, and their 27 Table of Contents underlying assumptions and projections, reflect our current plans and aspirations, and we may be unable to achieve them. Changing customer and shareholder sustainability expectations and regulatory requirements, as well as our sustainability targets, could cause us to incur substantial expense and alter our manufacturing, operations or equipment designs and processes.
Changing customer and shareholder sustainability expectations, including increasing customer demand for sustainable products, and regulatory requirements, as well as actions taken to achieve our sustainability targets, could cause us to incur substantial expense and alter our manufacturing, operations or equipment designs and processes.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also own and lease facilities throughout the world for use as offices, plants and warehouses, and research and development centers, primarily in the United States, Taiwan, China, Israel and Singapore. We also own a total of approximately 279 acres of buildable land in the United States, Israel, Italy and India that could accommodate additional building space.
Biggest changeItem 2: Properties We own and lease facilities throughout the world for use as offices, manufacturing facilities, warehouses, and research and development centers, primarily in the United States, Taiwan, Singapore, China, Israel and India. As of October 27, 2024, we owned and leased approximately 9.0 million square feet and 4.9 million square feet of space, respectively.
We consider the properties that we own or lease as adequate to meet our current and future requirements. We regularly assess the size, capability and location of our global infrastructure and periodically make adjustments based on these assessments. 30 Table of Contents
We regularly assess the size, capability and location of our global infrastructure and periodically make adjustments based on these assessments. 28 Table of Contents
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Item 2: Properties Information concerning our properties is set forth below: (Square feet in thousands) United States Other Countries Total Owned 5,627 2,931 8,558 Leased 2,733 1,909 4,642 Total 8,360 4,840 13,200 Because of the interrelation of our operations, properties within a country may be shared by the segments operating within that country.
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Our headquarters are in Santa Clara, California. Our products are manufactured primarily in the United States, Singapore, Israel and Taiwan. Because of the interrelation of our operations, properties within a country may be shared by the segments operating within that country.
Removed
Our headquarters offices are in Santa Clara, California. Products in Semiconductor Systems are manufactured primarily in Singapore; Austin, Texas; Gloucester, Massachusetts; and Rehovot, Israel. Remanufactured equipment products in the Applied Global Services segment are produced primarily in Austin, Texas. Products in the Display and Adjacent Markets segment are manufactured primarily in Tainan, Taiwan.
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We also own a total of approximately 279 acres of buildable land primarily in the United States that could accommodate additional facilities. We consider the properties that we own or lease as adequate to meet our current and future requirements.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3: Legal Proceedings The information set forth under “Legal Matters” in Note 15 of Notes to Consolidated Financial Statements is incorporated herein by reference. See also “Risk Factors – Risks Related to Legal, Compliance, and Other Risks – We are exposed to risks related to legal proceedings, claims and investigations.”
Biggest changeItem 3: Legal Proceedings The information set forth under “Legal Matters” in Note 13 of Notes to Consolidated Financial Statements is incorporated herein by reference. See also “Risk Factors – Risks Related to Legal, Compliance, and Other Risks – We are exposed to risks related to legal proceedings, claims and investigations.”

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changePeriod Total Number of Shares Purchased Average Price Paid per Share * Aggregate Price Paid * Total Number of Shares Purchased as Part of Publicly Announced Programs Maximum Dollar Value of Shares That May Yet be Purchased Under the Programs * (In millions, except per share amounts) Month #1 (July 31, 2023 to August 27, 2023) 0.3 $ 147.17 $ 50 0.3 $ 13,375 Month #2 (August 28, 2023 to September 24, 2023) 1.6 $ 144.00 226 1.6 $ 13,149 Month #3 (September 25, 2023 to October 29, 2023) 3.2 $ 136.43 429 3.2 $ 12,720 Total 5.1 $ 139.50 $ 705 5.1 *Effective January 1, 2023, amounts include the 1% surcharge on stock repurchases under the Inflation Reduction Act’s excise tax.
Biggest changePeriod Total Number of Shares Purchased Average Price Paid per Share * Aggregate Price Paid * Total Number of Shares Purchased as Part of Publicly Announced Programs Maximum Dollar Value of Shares That May Yet be Purchased Under the Programs * (In millions, except per share amounts) Month #1 (July 29, 2024 to August 25, 2024) 1.5 $ 195.93 $ 292 1.5 $ 10,030 Month #2 (August 26, 2024 to September 22, 2024) 2.6 $ 187.33 492 2.6 $ 9,538 Month #3 (September 23, 2024 to October 27, 2024) 3.5 $ 191.41 669 3.5 $ 8,869 Total 7.6 $ 190.89 $ 1,453 7.6 *Amounts include the 1% surcharge on stock repurchases under the Inflation Reduction Act’s excise tax.
Information regarding quarterly cash dividends declared on our common stock during fiscal 2023, 2022 and 2021 may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Financial Condition, Liquidity and Capital Resources”.
Information regarding quarterly cash dividends declared on our common stock during fiscal 2024, 2023 and 2022 may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Financial Condition, Liquidity and Capital Resources”.
The comparison assumes $100 was invested on October 28, 2018 in our common stock and in each of the foregoing indices and assumes reinvestment of dividends, if any. Dollar amounts in the graph are rounded to the nearest whole dollar. The performance shown in the graph represents past performance and should not be considered an indication of future performance.
The comparison assumes $100 was invested on October 27, 2019 in our common stock and in each of the foregoing indices and assumes reinvestment of dividends, if any. Dollar amounts in the graph are rounded to the nearest whole dollar. The performance shown in the graph represents past performance and should not be considered an indication of future performance.
Item 5: Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the NASDAQ Global Select Market under the symbol AMAT. As of December 8, 2023, there were 2,755 registered holders of our common stock.
Item 5: Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Market Information Our common stock is traded on the Nasdaq Global Select Market under the symbol AMAT. As of December 6, 2024, there were 2,692 registered holders of our common stock.
The graph below assumes that the value of the investment in our common stock and in each of the indexes was $100 at October 28, 2018, and that all dividends were reinvested. Copyright© 2023 Standard & Poor’s, a division of S&P global.
The graph below assumes that the value of the investment in our common stock and in each of the indexes was $100 at October 27, 2019, and that all dividends were reinvested. Copyright© 2024 Standard & Poor’s, a division of S&P global.
Performance Graph The performance graph below shows the five-year cumulative total stockholder return on our common stock during the period from October 28, 2018 through October 29, 2023. This is compared with the cumulative total return of the Standard & Poor’s 500 Stock Index and the PHLX Semiconductor Index over the same period.
Performance Graph The performance graph below shows the five-year cumulative total stockholder return on our common stock during the period from October 27, 2019 through October 27, 2024. This is compared with the cumulative total return of the Standard & Poor’s 500 Stock Index and the PHLX Semiconductor Index over the same period.
At October 29, 2023, approximately $12.7 billion remained available for future stock repurchases under the repurchase program. The following table provides information as of October 29, 2023 with respect to the shares of common stock repurchased by us during the fourth quarter of fiscal 2023 pursuant to the foregoing Board authorization.
At October 27, 2024, approximately $8.9 billion remained available for future stock repurchases under the repurchase program. The following table provides information as of October 27, 2024 with respect to the shares of common stock repurchased by us during the fourth quarter of fiscal 2024 pursuant to the foregoing Board authorization.
All rights reserved. 10/28/2018 10/27/2019 10/25/2020 10/31/2021 10/30/2022 10/29/2023 Applied Materials 100.00 175.74 194.93 440.65 291.76 431.02 S&P 500 Index 100.00 116.03 135.57 182.86 157.30 168.81 PHLX Semiconductor Index 100.00 145.93 212.58 314.91 225.17 302.44 32 Table of Contents Issuer Purchases of Equity Securities In March 2023, our Board of Directors approved a common stock repurchase program authorizing $10.0 billion in repurchases, which supplemented the previously existing $6.0 billion authorization approved in March 2022.
All rights reserved. 10/27/2019 10/25/2020 10/31/2021 10/30/2022 10/29/2023 10/27/2024 Applied Materials 100.00 110.92 250.74 166.02 245.26 351.03 S&P 500 Index 100.00 116.84 157.60 135.57 145.49 208.23 PHLX Semiconductor Index 100.00 145.68 215.80 154.30 207.26 338.18 30 Table of Contents Issuer Purchases of Equity Securities In March 2023, our Board of Directors approved a common stock repurchase program authorizing $10.0 billion in repurchases, which supplemented the previously existing $6.0 billion authorization approved in March 2022.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeThe following table presents certain significant measurements for the past three fiscal years: Change 2023 2022 2021 2023 over 2022 2022 over 2021 (In millions, except per share amounts and percentages) Net sales $ 26,517 $ 25,785 $ 23,063 $ 732 $ 2,722 Gross margin 46.7 % 46.5 % 47.3 % 0.2 points (0.8) points Operating income $ 7,654 $ 7,788 $ 6,889 $ (134) $ 899 Operating margin 28.9 % 30.2 % 29.9 % (1.3) points 0.3 points Net income $ 6,856 $ 6,525 $ 5,888 $ 331 $ 637 Earnings per diluted share $ 8.11 $ 7.44 $ 6.40 $ 0.67 $ 1.04 Fiscal 2023 and fiscal 2022 each contained 52 weeks, while fiscal 2021 contained 53 weeks.
Biggest changeThe following table presents certain significant measurements for the periods indicated: Change 2024 2023 2024 over 2023 (In millions, except per share amounts and percentages) Net revenue $ 27,176 $ 26,517 $ 659 Gross margin 47.5 % 46.7 % 0.8 points Operating income $ 7,867 $ 7,654 $ 213 Operating margin 28.9 % 28.9 % — points Net income $ 7,177 $ 6,856 $ 321 Earnings per diluted share $ 8.61 $ 8.11 $ 0.50 Net revenue by segment for the periods presented were as follows: Change 2024 2023 2024 over 2023 (In millions, except percentages) Semiconductor Systems $ 19,911 73% $ 19,698 74% 1 % Applied Global Services 6,225 23% 5,732 22% 9 % Display 885 3% 868 3% 2 % Corporate and Other 155 1% 219 1% (29) % Total $ 27,176 100% $ 26,517 100% 2 % Net revenue for Semiconductor Systems by market for the periods presented were as follows: 2024 2023 Foundry, logic and other 68 % 77 % Dynamic random-access memory (DRAM) 28 % 17 % Flash memory 4 % 6 % 100 % 100 % Net revenue in fiscal 2024 increased as compared to the prior year.
The timing of customer investment in manufacturing equipment is also affected by the timing of next-generation process development and the timing of capacity expansion to meet end-market demand.
The timing of customer investment in manufacturing equipment is also affected by the timing of next-generation process development and of capacity expansion to meet end-market demand.
Financing Activities We used $3.0 billion of cash in financing activities in fiscal 2023, consisting primarily of repurchases of common stock of $2.2 billion, cash dividends to stockholders of $975 million and tax withholding payments for vested equity awards of $179 million, offset by proceeds received from common stock issuances of $227 million and net proceeds from issuances of commercial paper of $91 million.
We used $3.0 billion of cash in financing activities in fiscal 2023, consisting primarily of repurchases of common stock of $2.2 billion, cash dividends to stockholders of $975 million and tax withholding payments for vested equity awards of $179 million, offset by proceeds received from common stock issuances of $227 million and net proceeds from issuances of commercial paper of $91 million.
Each of our segments is subject to variable industry conditions, as demand for manufacturing equipment and services can change depending on supply and demand for chips, display technologies, and other electronic devices, as well as other factors, such as global economic, political and market conditions, and the nature and timing of technological advances in fabrication processes.
Each of our segments is subject to variable industry conditions, as demand for equipment and services can change depending on supply and demand for chips, display technologies and other electronic devices, as well as other factors, such as global economic, political and market conditions, and the nature and timing of technological advances in fabrication processes.
For details on standby letters of credit, guarantee instruments and other agreements with banks, see Off-Balance Sheet Arrangements below. 46 Table of Contents Contractual Obligations and Off-Balance Sheet Arrangements We have certain on-balance sheet and off-balance sheet obligation arrangements to make future payments under various contracts.
For details on standby letters of credit, guarantee instruments and other agreements with banks, see Off-Balance Sheet Arrangements below. 41 Table of Contents Contractual Obligations and Off-Balance Sheet Arrangements We have certain on-balance sheet and off-balance sheet obligation arrangements to make future payments under various contracts.
We also have agreements with various banks to facilitate subsidiary banking operations worldwide, including overdraft arrangements, issuance of bank guarantees, and letters of credit.
These include agreements with various banks to facilitate subsidiary banking operations worldwide, including overdraft arrangements. We also have agreements with various banks to facilitate subsidiary banking operations worldwide, including overdraft arrangements, issuance of bank guarantees, and letters of credit.
Future interest payments associated with these unsecured notes were $2.8 billion, of which $205 million is due within 12 months and the remaining interest payments are due beyond 12 months. See Note 10 , Borrowing Facilities and Debt, of the Notes to the Consolidated Financial Statements for further discussion related to our borrowing facilities and debt obligations.
Future interest payments associated with these unsecured notes were $2.8 billion, of which $239 million is due within 12 months and the remaining interest payments are due beyond 12 months. See Note 9 , Borrowing Facilities and Debt, of the Notes to the Consolidated Financial Statements for further discussion related to our borrowing facilities and debt obligations.
The proceeds from the issuances of commercial paper are used for general corporate purposes. At October 29, 2023, we had $100 million of commercial paper notes outstanding. The commercial paper program is backstopped by the Revolving Credit Agreement and borrowings under the Revolving Credit Agreement reduce the amount of commercial paper notes we can issue.
The proceeds from the issuances of commercial paper are used for general corporate purposes. At October 27, 2024, we had $100 million of commercial paper notes outstanding. The commercial paper program is backstopped by the Revolving Credit Agreement and borrowings under the Revolving Credit Agreement reduce the amount of commercial paper notes we can issue.
See Note 15, Warranty, Guarantees, Commitments and Contingencies, of the Notes to the Consolidated Financial Statements for further discussion relating to these arrangements. 47 Table of Contents Critical Accounting Policies and Estimates The preparation of consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect the amounts reported.
See Note 13, Guarantees, Commitments and Contingencies, of the Notes to the Consolidated Financial Statements for further discussion relating to these arrangements. 42 Table of Contents Critical Accounting Estimates The preparation of consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, assumptions and estimates that affect the amounts reported.
In March 2023, our Board of Directors approved a common stock repurchase program authorizing $10.0 billion in repurchases, which supplemented the previously existing $6.0 billion authorization approved in March 2022. At October 29, 2023, approximately $12.7 billion remained available for future stock repurchases under the repurchase program.
In March 2023, our Board of Directors approved a common stock repurchase program authorizing $10.0 billion in repurchases, which supplemented the previously existing $6.0 billion authorization approved in March 2022. At October 27, 2024, approximately $8.9 billion remained available for future stock repurchases under the repurchase program.
The growth of data and emerging end-market drivers such as artificial intelligence, the Internet of Things, 5G networks, smart vehicles and augmented and virtual reality are also creating the next wave of growth for the industry.
The growth of data and emerging end-market drivers such as AI, the internet of things, 5G networks, electric and autonomous vehicles and augmented and virtual reality are also creating the next wave of growth for the industry.
The Corporate and Other category includes revenues from products, as well as costs of products sold, for fabricating solar photovoltaic cells and modules and certain operating expenses that are not allocated to our reportable segments and are managed separately at the corporate level.
The Corporate and Other category includes revenues and costs of product sold from other products, as well as certain operating expenses that are not allocated to our reportable segments and are managed separately at the corporate level.
Our significant investments in research, development and engineering must generally enable us to deliver new products and technologies before the emergence of strong demand, thus allowing customers to incorporate these products into their manufacturing plans during early-stage technology selection. We work closely with our global customers to design systems and processes that meet their planned technical and production requirements.
Our significant investments in research, development and engineering (RD&E) are intended to enable us to deliver new products and technologies before the emergence of strong demand, allowing customers to incorporate these products into their manufacturing plans during early-stage technology selection. We collaborate closely with our global customers to design systems and processes to meet their technical and production requirements.
Deemed Repatriation Tax Payable As of October 29, 2023, we had $612 million of transition tax liability, of which $153 million is payable within 12 months and the remaining amount is payable beyond 12 months. This transition tax liability is associated with the deemed repatriation of accumulated foreign earnings as a result of the enactment of the Tax Act.
Deemed Repatriation Tax Payable As of October 27, 2024, we had $459 million of transition tax liability, of which $204 million is payable within 12 months and the remaining amount is payable beyond 12 months. This transition tax liability is associated with the deemed repatriation of accumulated foreign earnings as a result of the enactment of the Tax Act.
Others On December 22, 2017, the U.S. government enacted the Tax Act, which requires a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries. The transition tax expense is payable in installments over eight years, with eight percent due in each of the first five years starting with fiscal 2018.
The Tax Act requires a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries. The transition tax expense is payable in installments over eight years, with eight percent due in each of the first five years starting with fiscal 2018.
We have credit facilities for unsecured borrowings in various currencies of up to $1.6 billion, of which $1.5 billion is comprised of a committed revolving credit agreement (Revolving Credit Agreement) with a group of banks.
We have credit facilities for unsecured borrowings in various currencies of up to $1.6 billion, of which $1.5 billion is comprised of a committed revolving credit agreement (Revolving Credit Agreement) with a group of banks. The Revolving Credit Agreement is scheduled to expire in February 2026, unless extended as permitted under the Revolving Credit Agreement.
Industry conditions that affect Applied Global Services’ sales of spares and services are primarily characterized by changes in semiconductor manufacturers’ wafer starts and higher utilization rates, growth of the installed base of equipment, growing service intensity of newer tools, and our ability to sell more comprehensive service agreements.
Industry conditions that affect AGS’ sales of spares and services are primarily characterized by changes in semiconductor manufacturers’ wafer starts and utilization rates, growth of the installed base of equipment and growing service intensity of newer tools.
As a result, products within the Semiconductor Systems segment are subject to significant changes in customer requirements, including transitions to smaller dimensions, increasingly complex chip architectures, new materials and an increasing number of applications.
As a result, products within the Semiconductor Systems segment are subject to significant changes in customer requirements, including transitions to smaller dimensions, increasingly complex chip architectures, new materials and an increasing number of applications. Spending can also depend on customer facility readiness and timeline for installation of capital equipment at customer sites.
A discussion of factors that could affect our operations is set forth under “Risk Factors” in Part I, Item 1A, which is incorporated herein by reference. Product development and manufacturing activities occur primarily in the United States, Europe, Israel, and Asia.
A discussion of factors that could affect our operations is set forth under “Risk Factors” in Part I, Item 1A, which is incorporated herein by reference.
We operate in three reportable segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. A summary of financial information for each reportable segment is found in Note 16 of Notes to Consolidated Financial Statements.
We have and continue to invest in RD&E in order to continue to offer new products and technologies. We operate in three reportable segments: Semiconductor Systems, Applied Global Services® (AGS), and Display. A summary of financial information for each reportable segment is found in Note 14 of Notes to Consolidated Financial Statements.
Capital expenditures in fiscal 2023, 2022 and 2021 were $1,106 million, $787 million and $668 million, respectively. Capital expenditures were primarily for investments in real property acquisitions and improvements, demonstration and testing equipment, manufacturing and network equipment. Net cash paid for acquisitions in fiscal 2023, 2022 and 2021 were $25 million, $441 million and $12 million, respectively.
Capital expenditures were primarily for investments in real property acquisitions and improvements, demonstration and testing equipment, manufacturing and network equipment. Purchases of investments, net of proceeds from sales and maturities of investments, for 2024 and 2023 was $1.1 billion and $404 million, respectively. Net cash paid for acquisitions in fiscal 2023 was $25 million.
Spending by semiconductor customers, which include companies that operate in the foundry, logic, memory, and other semiconductor chip markets, is driven by demand for electronic products, including smartphones and other mobile devices, servers, personal computers, automotive devices, storage, and other products.
Spending by semiconductor customers, which include companies that operate in the foundry, logic, memory, and other semiconductor chip markets, is driven by demand for products such as smartphones, mobile devices, personal computers, servers for artificial intelligence (AI) and data centers, automobiles, clean energy, storage, and other products, and the nature and timing of technological advances in fabrication processes.
Significant non-cash charges included depreciation, amortization, share-based compensation and deferred income taxes. Cash provided by operating activities in fiscal 2023 increased compared to fiscal 2022 primarily due to better inventory management, better accounts receivable collections and lower income tax payments, partially offset by higher payments to vendors and lower year over year change in deferred revenue.
Significant non-cash charges included depreciation, amortization, share-based compensation and deferred income taxes. Cash provided by operating activities in fiscal 2024 remained relatively flat primarily due to lower collections of customer receivable balances, partially offset by lower payments to vendors and higher net income.
Operating margin for fiscal 2022 increased compared to fiscal 2021 primarily due to reduction in headcount related costs as headcount moved to open positions within Semiconductor Systems and Applied Global Services segments, offset by higher material costs. 42 Table of Contents Recent Accounting Pronouncements For a description of recent accounting pronouncements, including the expected dates of adoption and estimated effects, if any, on our consolidated financial statements, see Note 1, “Summary of Significant Accounting Policies,” of the Notes to Consolidated Financial Statements. 43 Table of Contents Financial Condition, Liquidity and Capital Resources Our cash, cash equivalents and investments consist of the following: October 29, 2023 October 30, 2022 (In millions) Cash and cash equivalents $ 6,132 $ 1,995 Short-term investments 737 586 Long-term investments 2,281 1,980 Total cash, cash-equivalents and investments $ 9,150 $ 4,561 Sources and Uses of Cash A summary of cash provided by (used in) operating, investing, and financing activities is as follows: 2023 2022 2021 (In millions) Cash provided by operating activities $ 8,700 $ 5,399 $ 5,442 Cash used in investing activities $ (1,535) $ (1,357) $ (1,216) Cash used in financing activities $ (3,032) $ (7,043) $ (4,591) Operating Activities Cash from operating activities for fiscal 2023 was $8.7 billion, which reflects net income adjusted for the effect of non-cash charges and changes in working capital components.
Accounting Standards Adopted For a description of recently adopted accounting standards, including the date of adoption and the effect, if any, on our consolidated financial statements, see Note 1, “Summary of Significant Accounting Policies,” of the Notes to Consolidated Financial Statements. 38 Table of Contents Financial Condition, Liquidity and Capital Resources Our cash, cash equivalents and investments consist of the following: October 27, 2024 October 29, 2023 (In millions) Cash and cash equivalents $ 8,022 $ 6,132 Short-term investments 1,449 737 Long-term investments 2,787 2,281 Total cash, cash-equivalents and investments $ 12,258 $ 9,150 Sources and Uses of Cash A summary of cash provided by (used in) operating, investing, and financing activities is as follows: 2024 2023 (In millions) Cash provided by operating activities $ 8,677 $ 8,700 Cash used in investing activities $ (2,327) $ (1,535) Cash used in financing activities $ (4,470) $ (3,032) Operating Activities Cash from operating activities for fiscal 2024 was $8.7 billion, which reflects net income adjusted for the effect of non-cash charges and changes in working capital components.
We sell our accounts receivable generally without recourse. From time to time, we also discount letters of credit issued by customers through various financial institutions. The discounting of letters of credit depends on many factors, including the willingness of financial institutions to discount the letters of credit and the cost of such arrangements.
We have agreements with various financial institutions to sell accounts receivable and discount promissory notes from selected customers. We sell our accounts receivable generally without recourse. From time to time, we also discount letters of credit issued by customers through various financial institutions.
The Revolving Credit Agreement includes financial and other covenants with which we were in compliance as of October 29, 2023. Remaining credit facilities in the amount of approximately $53 million are with Japanese banks.
The Revolving Credit Agreement includes financial and other covenants with which we were in compliance as of October 27, 2024. No amounts were outstanding under the Revolving Credit Agreement as of October 27, 2024 and October 29, 2023.
Interest and other income (expense), net in fiscal 2022 decreased compared to fiscal 2021, primarily driven by higher net loss from equity investments, partially offset by higher interest income during fiscal 2022 compared to fiscal 2021. 38 Table of Contents Income Taxes Provision for income taxes and effective tax rates for the periods indicated were as follows: Change 2023 2022 2021 2023 over 2022 2022 over 2021 (In millions, except percentages) Provision for income taxes $ 860 $ 1,074 $ 883 $ (214) $ 191 Effective income tax rate 11.1 % 14.1 % 13.0 % (3.0) points 1.1 points Our provision for income taxes and effective tax rate are affected by the geographical composition of pre-tax income which includes jurisdictions with differing tax rates, conditional reduced tax rates and other income tax incentives.
Income Taxes Provision for income taxes and effective tax rates for the periods indicated were as follows: Change 2024 2023 2024 over 2023 (In millions, except percentages) Provision for income taxes $ 975 $ 860 $ 115 Effective income tax rate 12.0 % 11.1 % 0.9 points Our provision for income taxes and effective tax rate are affected by the geographical composition of pre-tax income which includes jurisdictions with differing tax rates, conditional reduced tax rates and other income tax incentives.
Our broad range of equipment and service products are highly technical and are sold primarily through a direct sales force. Our results are driven primarily by customer spending on capital equipment and services to support key technology transitions or to increase production volume in response to worldwide demand for semiconductors and displays.
Our results are driven primarily by customer spending on capital equipment and services to support key technology transitions or to increase production volume in response to worldwide demand for semiconductors and displays. 32 Table of Contents The Semiconductor Systems segment is comprised primarily of capital equipment used to fabricate semiconductor chips.
Off-Balance Sheet Arrangements In the ordinary course of business, we provide standby letters of credit or other guarantee instruments to third parties as required for certain transactions initiated by either us or our subsidiaries. These include agreements with various banks to facilitate subsidiary banking operations worldwide, including overdraft arrangements.
At this time, we are unable to reliably estimate the timing of payments due to uncertainties in the timing of tax audit outcomes. Off-Balance Sheet Arrangements In the ordinary course of business, we provide standby letters of credit or other guarantee instruments to third parties as required for certain transactions initiated by either us or our subsidiaries.
Areas of investment include etch, deposition, metrology and inspection, patterning, packaging and other technologies to improve chip performance, power, area, cost and time-to-market. In Display and Adjacent Markets, RD&E investments were focused on expanding our market opportunity with new display technologies.
We continued to prioritize existing RD&E investments in technical capabilities and critical RD&E programs in current and new markets, with a focus on the development of new unit process systems and integrated materials solutions. Areas of investment in Semiconductor Systems include etch, deposition, metrology and inspection, patterning, packaging and other technologies to improve chip performance, power, area, cost and time-to-market.
Purchases of investments, net of proceeds from sales and maturities of investments, for 2023, 2022 and 2021 was $404 million, $129 million and $536 million, respectively. Investing activities also included investments in technology to allow us to access new market opportunities or emerging technologies. Our investment portfolio consists principally of investment grade money market mutual funds, U.S.
Investing activities also included investments in technology to allow us to access new market opportunities or emerging technologies. Our investment portfolio consists principally of investment grade money market mutual funds, U.S. Treasury and agency securities, municipal bonds, corporate bonds and mortgage-backed and asset-backed securities, as well as equity securities.
Resolution of these uncertainties in a manner inconsistent with our expectations could have a material impact on our results of operations and financial condition. 49 Table of Contents
The calculation of our provision for income taxes and effective tax rate involves significant judgment in estimating the impact of uncertainties in the application of complex and evolving tax laws. Resolution of these uncertainties in a manner inconsistent with our expectations could have a material impact on our results of operations and financial condition.
See Note 11, Leases, of the Notes to the Consolidated Financial Statements for further discussion relating to these lease obligations. Purchase Obligations As of October 29, 2023, we had $5.5 billion of purchase obligations for goods and services, of which $5.1 billion is payable within 12 months and the remaining amount is payable beyond 12 months.
Purchase Obligations As of October 27, 2024, we had $8.1 billion of purchase obligations for goods and services, of which $4.2 billion is payable within 12 months and the remaining amount is payable beyond 12 months.
Our long-term growth strategy requires continued development of new materials engineering capabilities, including products and platforms that enable expansion into new and adjacent markets.
Our strategic priorities include developing products that help solve customers’ challenges at technology inflections; expanding our served market opportunities in the semiconductor and display industries; and growing our service business. Our long-term growth strategy requires continued development of new materials engineering capabilities, including products and platforms that enable expansion into new and adjacent markets.
We had senior unsecured notes in the aggregate principal amount of $5.5 billion outstanding as of October 29, 2023. See Note 10 of the Notes to the Consolidated Financial Statements for additional discussion of existing debt. We may seek to refinance our existing debt and may incur additional indebtedness depending on our capital requirements and the availability of financing.
See Note 9 of the Notes to the Consolidated Financial Statements for additional discussion of existing debt. We may seek to refinance our existing debt and may incur additional indebtedness depending on our capital requirements and the availability of financing. Others On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (Tax Act).
On August 16, 2022, the U.S. government enacted the Inflation Reduction Act. The Inflation Reduction Act introduces a new 15% corporate minimum tax, based on adjusted financial statement income of certain large corporations. Applicable corporations would be allowed to claim a credit for the minimum tax paid against regular tax in future years.
Investments related to the 25% investment tax credit reduced our income taxes payable by $170 million as of October 27, 2024. On August 16, 2022, the U.S. government enacted the Inflation Reduction Act. The Inflation Reduction Act introduced a new 15% corporate minimum tax, based on adjusted financial statement income of certain large corporations.
In certain instances, we acquire technologies, either in existing or new product areas, to complement our existing technology capabilities and to reduce time to market. We believe that it is critical to continue to make substantial investments in RD&E to assure the availability of innovative technology that meets the current and projected requirements of our customers’ most advanced designs.
Our portfolio of equipment and service products are highly technical and are sold primarily through a direct sales force. We believe that it is critical to make substantial investments in RD&E to assure the availability of innovative technology that meets the current and projected requirements of our customers’ most advanced designs.
Interest and other income (expense), net in fiscal 2023 increased compared to fiscal 2022, primarily driven by higher interest income as a result of an increase in market rates of interest and higher net gain on equity investments, partially offset by higher impairment losses on equity investments, compared to the prior year.
Interest expense in fiscal 2024 increased slightly as a result of the issuance of senior unsecured notes in June 2024. Interest and other income (expense), net in fiscal 2024 increased primarily driven by higher interest income due to higher cash balances and lower impairment on equity investment, partially offset by higher net loss on equity investment.
Net sales by geographic region, determined by the location of customers’ facilities to which products were shipped, were as follows: Change 2023 2022 2021 2023 over 2022 2022 over 2021 (In millions, except percentages) China $ 7,247 27% $ 7,254 28% $ 7,535 33% — % (4) % Korea 4,609 18% 4,395 17% 5,012 22% 5 % (12) % Taiwan 5,670 21% 6,262 24% 4,742 20% (9) % 32 % Japan 2,075 8% 2,012 8% 1,962 8% 3 % 3 % Southeast Asia 758 3% 1,084 4% 677 3% (30) % 60 % Asia Pacific 20,359 77% 21,007 81% 19,928 86% (3) % 5 % United States 4,006 15% 3,104 12% 2,038 9% 29 % 52 % Europe 2,152 8% 1,674 7% 1,097 5% 29 % 53 % Total $ 26,517 100% $ 25,785 100% $ 23,063 100% 3 % 12 % The increases in net sales to customers in the U.S. and Europe for fiscal 2023 compared to fiscal 2022 primarily reflected increased investment by customers in semiconductor equipment and increased customer spending on legacy systems and comprehensive service agreements.
Net revenue by geographic region, determined by the location of customers’ facilities to which products were shipped and services were performed, was as follows: Change 2024 2023 2024 over 2023 (In millions, except percentages) China $ 10,117 37% $ 7,247 27% 40 % Korea 4,493 17% 4,609 18% (3) % Taiwan 4,010 15% 5,670 21% (29) % Japan 2,154 8% 2,075 8% 4 % Southeast Asia 1,141 4% 758 3% 51 % Asia Pacific 21,915 81% 20,359 77% 8 % United States 3,818 14% 4,006 15% (5) % Europe 1,443 5% 2,152 8% (33) % Total $ 27,176 100% $ 26,517 100% 2 % Net revenue increased from customers in China in fiscal 2024 primarily due to investments in semiconductor equipment and spending on spares and services, partially offset by a decrease in investments in 200mm equipment.
We sold $0.7 billion, $1.0 billion and $1.3 billion of accounts receivable during fiscal 2023, 2022 and 2021, respectively. We did not discount letters of credit issued by customers in fiscal 2023, 2022 and 2021. There was no discounting of promissory notes in each of fiscal 2023, 2022 and 2021.
The discounting of letters of credit depends on many factors, including the willingness of financial institutions to discount the letters of credit and the cost of such arrangements. We sold $0.4 billion and $0.7 billion of accounts receivable during fiscal 2024 and 2023, respectively. We did not discount letters of credit issued by customers in fiscal 2024 and 2023.
This capitalization requirement increases our effective tax rates, deferred tax assets and cash tax liabilities beginning in fiscal 2023. On August 9, 2022, the U.S. government enacted the U.S. CHIPS and Science Act (“CHIPS Act”). The CHIPS Act creates a 25% investment tax credit for certain investments in domestic semiconductor manufacturing.
As of October 27, 2024, we had $459 million of total payments remaining, payable in installments in the next two years. On August 9, 2022, the U.S. government enacted the U.S. CHIPS and Science Act (“CHIPS Act”). The CHIPS Act creates a 25% investment tax credit for certain investments in domestic semiconductor manufacturing.
Interest and penalties related to uncertain tax positions that were not expected to result in payment of cash within one year of October 29, 2023 was $136 million. At this time, we are unable to reliably estimate the timing of payments due to uncertainties in the timing of tax audit outcomes.
As of October 27, 2024, the gross liability for unrecognized tax benefits that was not expected to result in payment of cash within one year was $521 million. Interest and penalties related to uncertain tax positions that were not expected to result in payment of cash within one year of October 27, 2024 was $181 million.
Our customers include manufacturers of semiconductor wafers and chips, liquid crystal and organic light-emitting diode (OLED) displays, and other electronic devices. These customers may use what they manufacture in their own end products or sell the items to other companies for use in electronic products.
Overview We provide equipment, services and software to the semiconductor, display, and related industries. Our customers include manufacturers of semiconductor wafers and chips, liquid crystal and organic light-emitting diode (OLED) displays, and other electronic devices.
Certain contractual arrangements which are recorded on our balance sheet include borrowing facilities and debts and lease obligations. Borrowing Facilities and Debt Obligations As of October 29, 2023, we had $5.5 billion in aggregate principal amount of senior unsecured notes with varying maturities.
Certain contractual arrangements which are recorded on our balance sheet include borrowing facilities and debts and lease obligations.
These operating expenses include costs for share-based compensation; certain management, finance, legal, human resource, and RD&E functions provided at the corporate level; and unabsorbed information technology and occupancy.
These operating expenses include costs for certain management, finance, legal, human resource, and RD&E functions performed at the corporate level; and unabsorbed information technology and occupancy. In addition, we do not allocate to our reportable segments severance, asset impairment and any associated charges related to restructuring actions, unless these actions pertain to a specific reportable segment.
Interest Expense and Interest and Other Income (expense), net Interest expense and interest and other income (expense), net for the periods indicated were as follows: Change 2023 2022 2021 2023 over 2022 2022 over 2021 (In millions) Interest expense $ 238 $ 228 $ 236 $ 10 $ (8) Interest and other income (expense), net $ 300 $ 39 $ 118 $ 261 $ (79) Interest expense incurred was primarily associated with issued senior unsecured notes.
General and administrative expenses in fiscal 2024 increased primarily due to the increases in share-based compensation expense and professional fees. 35 Table of Contents Interest Expense and Interest and Other Income (expense), net Interest expense and interest and other income (expense), net for the periods presented were as follows: Change 2024 2023 2024 over 2023 (In millions) Interest expense $ 247 $ 238 $ 9 Interest and other income (expense), net $ 532 $ 300 $ 232 Interest expense incurred was primarily associated with issued senior unsecured notes.
Demand for Applied Global Services’ solutions are driven by our large and growing installed base of manufacturing systems, and customers’ needs to shorten ramp times, improve device performance and yield, and optimize factory output and operating costs.
The AGS segment also includes 200mm and other equipment, which is shipped to many customers globally that serve the non-leading-edge end markets. Demand for AGS’ service and spares is driven by our large and growing installed base of manufacturing systems, and customers’ needs to shorten ramp times, improve system performance, and optimize factory output and operating costs.
Development cycles range from 12 to 36 months depending on whether the product is an enhancement of an existing product, which typically has a shorter development cycle, or a new product, which typically has a longer development cycle. Most of our existing products resulted from internal development activities and innovations involving new technologies, materials and processes.
Our future operating results depend to a considerable extent on our ability to maintain a competitive advantage in the equipment and service products we provide. Development cycles depend on whether the product is an enhancement of an existing product, which typically has a shorter development cycle, or a new product, which typically has a longer development cycle.
Our Applied Global Services net sales in fiscal 2023 increased compared to fiscal 2022 primarily due to an increase in sales associated with long-term service agreements and higher customer spending on legacy systems, partially offset by a decrease in net sales due to additional export regulations issued by the United States government in 2022 and lower customer utilization rates.
The Semiconductor Systems segment continued to represent the largest contributor of net revenue. Our AGS net revenue in fiscal 2024 increased primarily due to an increase in net revenue associated with long-term service agreements and customer spending on spares, partially offset by lower customer spending on 200mm equipment.
For a description of risks associated with global trade, see the risk factor entitled “Business and Industry Risks - Global trade issues and changes in and uncertainties with respect to trade policies and export regulations, including import and export license requirements, trade sanctions, tariffs and international trade disputes, have adversely impacted and could further adversely impact our business and operations, and reduce the competitiveness of our products relative to local and global competitors” in Part I, Item 1A, “Risk Factors. ” 35 Table of Contents Results of Operations Net Sales Net sales for the periods indicated were as follows: Change 2023 2022 2021 2023 over 2022 2022 over 2021 (In millions, except percentages) Semiconductor Systems $ 19,698 74% $ 18,797 73% $ 16,286 71% 5 % 15 % Applied Global Services 5,732 22% 5,543 22% 5,013 22% 3 % 11 % Display and Adjacent Markets 868 3% 1,331 5% 1,634 7% (35) % (19) % Corporate and Other 219 1% 114 —% 130 —% 92 % (12) % Total $ 26,517 100% $ 25,785 100% $ 23,063 100% 3 % 12 % The Semiconductor Systems segment continued to represent the largest contributor of net sales.
For a description of these risks, see the risk factor entitled “ Business and Industry Risks - Global trade issues and changes in and uncertainties with respect to trade policies and export regulations, including import and export license requirements, trade sanctions, tariffs and international trade disputes, have adversely impacted and could further adversely impact our business and operations, and reduce the competitiveness of our products and services relative to local and global competitors ” in Part I, Item 1A, “Risk Factors.” 33 Table of Contents Results of Operations Our fiscal 2024 and 2023 each contained 52 weeks.
In the past two years, the United States government announced additional export regulations for U.S. semiconductor technology sold in China.
The United States government has implemented export regulations for U.S. semiconductor technology sold or provided to customers in China, which have limited our ability to provide certain products and services to customers in China, over the past several years.
Semiconductor equipment customers continued to make strategic investments in new capacity and new technology transitions during fiscal 2023. Foundry and logic spending increased in fiscal 2023 compared to fiscal 2022 driven by customer investments in mature manufacturing nodes to serve demand across a wide range of products.
Semiconductor Systems net revenue increased in fiscal 2024 as compared to the prior year as customers continued to make strategic investments in new capacity and new technology transitions. Foundry and logic customers’ spending decreased driven primarily by lower customer investments in leading-edge manufacturing technologies, partially offset by increased customer investments in non-leading edge manufacturing technologies.
We used $4.6 billion of cash in financing activities in fiscal 2021, consisting primarily of repurchases of common stock of $3.8 billion, cash dividends to stockholders of $838 million and tax withholding payments for vested equity awards of $178 million, offset by proceeds received from common stock issuances of $175 million.
We regularly monitor the credit risk in our investment portfolio and take appropriate measures, which may include the sale of certain securities, to manage such risks prudently in accordance with our investment policies. 39 Table of Contents Financing Activities We used $4.5 billion of cash in financing activities in fiscal 2024, consisting primarily of repurchases of common stock of $3.8 billion, cash dividends to stockholders of $1.2 billion, tax withholding payments for vested equity awards of $291 million, and net payments of principal on financing leases of $102 million, partially offset by net proceeds received from the issuance of senior unsecured notes of $694 million and proceeds received from common stock issuances of $243 million.
Our ability to borrow under these facilities is subject to bank approval at the time of the borrowing request, and any advances will be at rates indexed to the banks’ prime reference rate denominated in Japanese yen. 45 Table of Contents We have a short-term commercial paper program under which we may from time to time issue unsecured commercial paper notes of up to a total amount of $1.5 billion.
See Note 9 , Borrowing Facilities and Debt, of the Notes to the Consolidated Financial Statements for further discussion related to our Revolving Credit Agreement and other credit facilities. We have a short-term commercial paper program under which we may from time to time issue unsecured commercial paper notes of up to a total amount of $1.5 billion.
The increase in days sales outstanding at the end of fiscal 2022 was primarily due to higher accounts receivable balance as a result of the timing of customer payments and lower sales of accounts receivables compared to the end of fiscal 2021. 44 Table of Contents Investing Activities We used $1.5 billion, $1.4 billion and $1.2 billion of cash in investing activities in fiscal 2023, 2022 and 2021, respectively.
Days sales outstanding varies due to the timing of shipments and payment terms. The decrease in days sales outstanding was primarily due to favorable revenue linearity. Investing Activities We used $2.3 billion and $1.5 billion of cash in investing activities in fiscal 2024 and 2023, respectively. Capital expenditures in fiscal 2024 and 2023 were $1.2 billion and $1.1 billion, respectively.
Operating margin for fiscal 2023 decreased compared to fiscal 2022, primarily driven by increased RD&E expenses, higher inventory charges, the impact of export regulations, partially offset by favorable changes in customer and product mix, an increase in average selling prices and lower freight and logistics costs.
Gross margin increased primarily driven by lower material, freight, logistics, and manufacturing costs, favorable changes in customer and product mix and lower depreciation expense as a result of changes in certain assets’ useful lives effective as of the beginning of fiscal 2024, partially offset by an increase in labor costs.
It is also affected by events that are not consistent from period to period, such as changes to income tax laws and the resolution of prior years’ income tax filings. We recognize a current tax liability for the estimated amount of income tax payable on tax returns for the current fiscal year.
We recognize a current tax liability for the estimated amount of income taxes payable on tax returns for the current fiscal year. Deferred tax assets and liabilities are recognized for the estimated future tax effects of events that have been recognized in our financial statements or tax returns.
Lease Obligations As of October 29, 2023, our operating lease obligation was $370 million related to various operating lease arrangements for certain facilities and equipme nt and our finance lease obligation was $106 million related to lease arrangements that contain a purchase option which we are reasonably certain to exercise at the end of the lease term .
Lease Obligations As of October 27, 2024, our operating lease obligation was $384 million related to various operating lease arrangements for certain facilities, of which $96 million is payable within 12 months and the remaining amount is payable beyond 12 months.
The changes in net sales in all other regions for fiscal 2023 compared to fiscal 2022 primarily reflected changes in semiconductor manufacturing equipment spending. 36 Table of Contents The increases in net sales in all regions other than China and Korea in fiscal 2022 compared to fiscal 2021 primarily reflected changes in semiconductor equipment spending and customer spending on comprehensive service agreements.
The changes in net revenue from customers in all other regions for fiscal 2024 primarily reflected changes in investment and spending on semiconductor equipment and services.
The segment is focused on expanding its presence through technologically-differentiated equipment for manufacturing large-scale LCD TVs, OLEDs, low temperature polysilicon (LTPS), metal oxide, and touch panel sectors; and development of products that provide customers with improved performance and yields.
The Display segment encompasses products for manufacturing liquid crystal and OLED displays, and other display technologies for TVs, monitors, laptops, personal computers (PC), tablets, smart phones, other consumer-oriented devices, equipment upgrades and solar energy cells. The segment is focused on expanding its presence through technologically-differentiated equipment and products that provide customers with improved performance and yields.
Demand for display manufacturing equipment spending depends primarily on consumer demand for increasingly larger and more advanced TVs as well as larger and higher resolution displays for next-generation mobile devices, and investments in new types of display technologies.
Display segment growth depends primarily on consumer demand for increasingly larger and more advanced TVs and high-resolution displays for mobile devices and information technology (IT) products, including laptops, monitors and tablets, as well as new form factors, including thin, light, curved and flexible displays, and new applications such as augmented and virtual reality.
Deferred tax assets and liabilities are adjusted for the effect of a change in tax rates, laws, or status when the change is enacted.
These estimates consider future operational results including realizability of our deferred tax assets. Deferred tax assets and liabilities are adjusted to reflect the effects of enacted changes in tax rates, laws and status, including changes in tax incentives. 43 Table of Contents
Days sales outstanding of our accounts receivable at the end of fiscal 2023, 2022 and 2021 was 70 days, 82 days, and 74 days, respectively. Days sales outstanding varies due to the timing of shipments and payment terms.
There was no discounting of promissory notes in each of fiscal 2024 and 2023. Our working capital was $12.8 billion at October 27, 2024 and $11.8 billion at October 29, 2023. Days sales outstanding of our accounts receivable at the end of fiscal 2024 and 2023 was 68 days and 70 days, respectively.
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MD&A consists of the following sections: • Overview: a summary of our business and measurements • Results of Operations: a discussion of operating results • Segment Information: a discussion of segment operating results • Recent Accounting Pronouncements: a discussion of new accounting pronouncements and its impact to our consolidated financial statements • Financial Condition, Liquidity and Capital Resources: an analysis of cash flows, sources and uses of cash • Contractual Obligations and Off-Balance Sheet Arrangements • Critical Accounting Policies and Estimates: a discussion of critical accounting policies that require the exercise of judgments and estimates Overview We provide manufacturing equipment, services and software to the semiconductor, display, and related industries.
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The following section generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
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In light of these conditions, our results can vary significantly year-over-year, as well as quarter-over-quarter. 34 Table of Contents Our strategic priorities include developing products that help solve customers’ challenges at technology inflections; expanding our served market opportunities in the semiconductor and display industries; and growing our services business.
Added
Discussions of 2023 items and year-to-year comparisons between 2023 and 2022 that are not included in this Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended October 29, 2023, filed on December 15, 2023.
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Memory customers’ spending in fiscal 2023 was lower as compared to fiscal 2022 due to deferred capacity additions primarily as a result of weakness in demand for consumer electronic products.
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Our customers’ products are used in a wide variety of products such as personal computing devices, mobile phones, artificial intelligence (AI) and data center servers, automobiles, connected devices, industrial applications and consumer electronics.
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Our Display and Adjacent Markets net sales decreased in fiscal 2023 compared to fiscal 2022 primarily due to lower customer investments in display manufacturing equipment for TVs as a result of weakness in demand for consumer electronic products.
Added
Most of our existing products resulted from internal development activities and innovations involving new technologies, materials and processes. In certain instances, we acquire technologies, either in existing or new product areas, to complement our existing technology capabilities and to reduce time to market. Product development and manufacturing activities occur primarily in the United States, Europe, Israel, and Asia.
Removed
We experienced supply chain and logistics constraints in fiscal 2022, and although there have been significant improvements in supply chain performance in fiscal 2023, we expect some shortages to persist, and managing these supply chain constraints to increase shipments to customers remains a top priority.
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Development efforts are focused on solving customers’ key technical challenges in patterning, transistor, interconnect, process control, and packaging performance. The AGS segment provides services, spares and factory automation software to customer fabrication plants globally to help customers optimize performance of our large, global installed base of semiconductor, display and other equipment.
Removed
In fiscal 2024, we expect advanced foundry and logic demand to be stronger as compared to fiscal 2023 due to increased customer spending in PC, cloud and Artificial Intelligence (AI) data centers as well as customers’ continued investments in new technology.
Added
Our strategy is to continue to shift the AGS’ service and spares business to a subscription agreement model, improving customer factory performance and optimizing operating costs, and providing us a more predictable revenue stream.
Removed
Demand for mature manufacturing nodes is expected to be lower as compared to fiscal 2023, primarily due to decreased customer spending in the industrial automation and automotive markets. We expect memory customers’ spending to be higher as compared to fiscal 2023 as customers continue to invest in new technology.
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Effective in the first quarter of fiscal 2024, management began including share-based compensation expense in the evaluation of reportable segments' performance. Prior-year numbers have been recast to conform to the current-year presentation.
Removed
Net sales in fiscal 2023 compared to fiscal 2022 and fiscal 2022 compared to fiscal 2021 increased primarily due to continued customer investment in semiconductor equipment, partially offset by the reduction in customer investment in display manufacturing equipment.
Added
The U.S. government continues to issue new export licensing requirements, and additional updates and other requirements that have had the effect of further limiting our ability to provide certain products and services to customers outside the U.S., including in China.
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The increase in net sales in fiscal 2023 compared to fiscal 2022 was also due to improvements in our supply chain performance enabling us to better fulfill demand.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−0 removed4 unchanged
Biggest changeAn immediate hypothetical 100 basis point increase in interest rates would result in a decrease in the fair value of investments as of October 29, 2023 of approximately $27 million. Debt. At October 29, 2023, the aggregate principal of long-term senior unsecured notes issued by us was $5.5 billion with an estimated fair value of $4.7 billion.
Biggest changeAn immediate hypothetical 100 basis point increase in interest rates would result in a decrease in the fair value of investments as of October 27, 2024 of approximately $36 million. Debt - At October 27, 2024, the aggregate principal of long-term senior unsecured notes issued by us was $5.5 billion with an estimated fair value of $5.1 billion.
Item 7A: Quantitative and Qualitative Disclosures About Market Risk We are exposed to financial market risks, including fluctuations in interest rate and foreign currency exchange rates. Interest Rate Risk Available-for-sale Debt Securities. The market value of our investments in available-for-sale securities was approximately $2.1 billion at October 29, 2023.
Item 7A: Quantitative and Qualitative Disclosures About Market Risk We are exposed to financial market risks, including fluctuations in interest rate and foreign currency exchange rates. Interest Rate Risk Available-for-sale Debt Securities - The market value of our investments in available-for-sale securities was approximately $3.2 billion at October 27, 2024.
Gains and losses on these hedging contracts generally mitigate the effect of currency movements on our net sales, cost of products sold, and operating expenses. A hypothetical 10% adverse change in foreign currency exchange rates relative to the U.S. Dollar would result in a decrease in the fair value of these hedging contracts of $163 million at October 29, 2023.
Gains and losses on these hedging contracts generally mitigate the effect of currency movements on our net revenue, cost of products sold, and operating expenses. A hypothetical 10% adverse change in foreign currency exchange rates relative to the U.S. Dollar would result in a decrease in the fair value of these hedging contracts of $141 million at October 27, 2024.
A hypothetical decrease in interest rates of 100 basis points would result in an increase in the fair value of our long-term senior notes issuances of approximately $398 million at October 29, 2023.
A hypothetical decrease in interest rates of 100 basis points would result in an increase in the fair value of our long-term senior notes issuances of approximately $428 million at October 27, 2024.

Other AMAT 10-K year-over-year comparisons