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What changed in Applied Materials's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Applied Materials's 2024 and 2025 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 2025 report.

+283 added−277 removedSource: 10-K (2025-12-12) vs 10-K (2024-12-13)

Top changes in Applied Materials's 2025 10-K

283 paragraphs added · 277 removed · 222 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

47 edited+5 added−14 removed38 unchanged
Biggest changeSemiconductor 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.
Biggest changeA discussion of factors that could affect operations is set forth under “Risk Factors” in Item 1A, which is incorporated herein by reference. Semiconductor Systems Our Semiconductor Systems segment designs, develops, manufactures and sells a wide range of equipment used to fabricate semiconductor chips, also referred to as integrated circuits (ICs).
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.
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 semiconductor devices.
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.
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 Timothy M. Deane(4) Senior Vice President, Applied Global Services Teri Little(5) Senior Vice President, Chief Legal Officer and Corporate Secretary Omkaram Nalamasu(6) Senior Vice President, Chief Technology Officer (1) Mr.
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
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. 10 Table of Contents
See “Risk Factors – 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” for further details.
See “Risk Factors – 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” for further details.
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.
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 and other manufacturers, and is subject to significant variability in customer demand for our products.
Customers’ expenditures depend on many factors, including: general economic conditions; anticipated market demand and pricing for semiconductors, display technologies and other electronic devices; the development of new technologies; customers’ factory utilization; capital resources and financing; trade policies and export regulations; and government incentives.
Customers’ expenditures depend on many factors, including: general economic conditions; anticipated market demand and pricing for semiconductors and other electronic devices; the development of new technologies; customers’ factory utilization; capital resources and financing; trade policies and export regulations; and government incentives.
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.
None of the information on, or accessible through, our website is part of this Form 10-K or is incorporated by reference herein. 9 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.
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.
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 and other equipment. These solutions are also used to optimize plant performance and productivity.
See also “Risk Factors – Risks Related to Legal, Compliance, and Other Risks – We are subject to risks associated with environmental, health and safety regulations” for further details. We are subject to income taxes in the United States and foreign jurisdictions.
See also “Risk Factors – Legal, Compliance and Other Risks – We are subject to risks associated with environmental, health and safety regulations” for further details. We are subject to income taxes in the United States and foreign jurisdictions.
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.
Dickerson, age 68, 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.
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.
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 59, 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.
Employee Learning & Development We seek to create growth and development opportunities to support an engaged and inclusive workforce. We promote holistic employee learning and development based on the 70/20/10 model--70% on-the-job learning, 20% social/collaborative and 10% formal training, with a focus on advancing technical skills as well as improving general business acumen to address increasing work complexity.
Employee Learning & Development We seek to create growth and development opportunities to support an engaged and connected workforce. We promote holistic employee learning and development based on the 70/20/10 model--70% on-the-job learning, 20% social/collaborative and 10% formal training, with a focus on advancing technical skills as well as improving general business acumen to address increasing work complexity.
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.
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 segment, particularly in markets with demanding global service requirements.
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.
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 63, has been President, Semiconductor Products Group since March 2023.
He previously served as Senior Vice President, Semiconductor Products Group of Applied from November 2017 to March 2023, and before that served in various senior management, product development and operational roles since joining Applied in 1995, including Group Vice President and General Manager of the Patterning and Packaging Group. (4) Ms.
He previously served as Senior Vice President, Semiconductor Products Group of Applied from November 2017 to March 2023, and before that served in various senior management, product development and operational roles since joining Applied in 1995, including Group Vice President and General Manager of the Patterning and Packaging Group. (4) 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 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.
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 13 of the Notes to the Consolidated Financial Statements. 8 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.
Our provision for income taxes, effective tax rate and financial results could be affected by numerous factors, including changes in applicable tax laws, interpretations of applicable tax laws, amount and composition of pre-tax income in jurisdictions with differing tax rates, and valuation of deferred tax assets.
Our provision for income taxes, effective tax rate and financial results can be and are affected by numerous factors, including changes in applicable tax laws, interpretations of applicable tax laws, amount and composition of pre-tax income in jurisdictions with differing tax rates, and valuation of deferred tax assets.
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.
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. (6) Dr. Nalamasu, age 67, 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.
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.
Our practice is to file patent applications in the United States and other countries for inventions that we consider significant. We have more than 23,500 active patents in the United States and other countries, and additional applications are pending for new inventions.
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.
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 addition of new orders, potential amendments or cancellations of existing orders, and changes in export rules and regulations. Customers may delay delivery of products or cancel orders prior to shipment, subject to possible cancellation penalties.
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.
Additional information regarding our activities related to our people and sustainability, can be found in our latest Impact Report, which is located on our website at https://www.appliedmaterials.com/us/en/corporate-responsibility.html. The Impact Report is updated annually. This website address is intended to be an inactive textual reference only.
Our supply chain strategy commits to adhere to ethical labor practices, responsible minerals sourcing, Responsible Business Alliance and SEMI guidelines, and the Applied Materials Standards of Business Conduct as defined in our Environmental, Social and Governance (ESG) commitment. Although we make reasonable efforts to assure that parts are available from multiple qualified suppliers, this is not always possible.
Our supply chain strategy commits to adhere to ethical labor practices, responsible minerals sourcing, Responsible Business Alliance and SEMI guidelines, and the Applied Materials Standards of Business Conduct. Although we make reasonable efforts to assure that parts are available from multiple qualified suppliers, this is not always possible.
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.
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.
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 artificial intelligence, the internet of things, robotics and smart vehicles are also creating the next wave of growth for the industry.
The survey results are also expected to provide leaders and people managers with actionable insights tailored to their own groups that can further enhance employee engagement and inclusion. These actionable insights will then be integrated with the people strategy process and cadence within the Company.
Employee survey results are also used to provide leaders and people managers with actionable insights tailored to their own groups that can further enhance employee engagement and collaboration. These actionable insights are then integrated with the people strategy process and cadence within Applied.
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.
Our Semiconductor Systems sales are to customers that serve the following markets: foundry, logic and other; dynamic random access memory (DRAM); and flash memory (NAND). 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, defined as 7 nanometers and smaller.
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.
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, belonging and overall well-being. During fiscal 2025, we conducted an all-employee survey, which was conducted anonymously through an external partner to encourage maximum participation and elicit candid responses.
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.
We invest in our employees by providing quality training and learning opportunities, a compelling career path, building a connected and highly engaged culture, and upholding a high standard of ethics and respect for human rights.
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.
Non-leading edge technology nodes serve markets such as internet of things, communications, automotive, power and sensors. 4 Table of Contents Applied Global Services Our AGS segment provides services, spares and factory automation software to customer fabrication plants globally.
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).
We also benchmarked the results of that survey against a large and standardized data set involving large technology companies globally. We use the results of employee surveys like the one we conducted in fiscal 2025 and the associated benchmarking data to help us better understand enterprise-wide trends, gauge effectiveness of interventions, and define targeted employee populations (e.g., early tenure employees).
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.
The Semiconductor Systems segment consists of the semiconductor capital equipment industry’s most comprehensive portfolio of products used in the chip making process. 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.
We make available free of charge, on or through our website, our annual, quarterly and current reports, and any amendments to those reports, as soon as reasonably practicable after electronically filing such reports with, or furnishing them to, the SEC.
Nalamasu served in several leadership roles at Bell Laboratories. Available Information Our website is http://www.appliedmaterials.com. We make available free of charge, on or through our website, our annual, quarterly and current reports, and any amendments to those reports, as soon as reasonably practicable after electronically filing such reports with, or furnishing them to, the SEC.
Our significant investments in research, development and engineering (RD&E) 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.
Our significant investments in RD&E 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 and ecosystem partners to design systems and processes that meet planned technical and production requirements.
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.
Customer demand is fulfilled through a global distribution system and trained field engineers located near customer sites to support our semiconductor and other equipment worldwide. Other We also manufacture products and serve customers in certain other industries, including manufacturing equipment for the display industry.
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.
Our fiscal year ends on the last Sunday in October. We operate in two reportable segments: Semiconductor Systems and Applied Global Services® (AGS). The Semiconductor Systems segment represents the largest contributor to our net revenue. A summary of financial information for each reportable segment is found in Note 15 of Notes to Consolidated Financial Statements.
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.
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, leading to performance and energy-efficiency improvements.
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.
Backlog by reportable segment as of October 26, 2025 was as follows: 2025 (In millions, except percentages) Semiconductor Systems $ 7,105 47 % Applied Global Services 7,141 48 % Corporate and Other 756 5 % Total 15,002 100 % Of the total backlog as of October 26, 2025, approximately 31% is not reasonably expected to be filled within the next 12 months.
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.
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. (5) Ms. Little, age 61, joined Applied as Senior Vice President, Chief Legal Officer and Corporate Secretary in June 2020.
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.
We are experts in the design, development, production, and servicing of the critical wafer fabrication tools our customers need to manufacture semiconductors. Our customers’ products are used across personal computing devices, mobile phones, artificial intelligence (AI) and data center servers, automobiles, connected devices, industrial applications and consumer electronics.
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.
Information on net revenue to unaffiliated customers and long-lived assets attributable to our geographic regions is included in Note 15 of Notes to Consolidated Financial Statements. During fiscal 2025, two customers accounted for approximately 19% and 15%, respectively, of our net revenue. Competition The industries in which we operate are highly competitive and characterized by rapid technological change.
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.
Our product development and engineering, and process support are performed primarily in the United States, India and Israel.
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.
Deane, age 60, has been Senior Vice President, Applied Global Services since December 2024 and previously served as Group Vice President, Applied Global Services since September 2022.
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.
Item 1: Business Applied Materials, Inc. is the leader in the materials engineering solutions used to produce virtually every semiconductor in the world. Semiconductors provide the foundation for advances in technology that are reshaping the global economy, including artificial intelligence, the internet of things, robotics, electric and autonomous vehicles, and clean energy.
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.
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. 7 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.
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.
The financial results of our businesses that are not included in our Semiconductor Systems segment or our AGS segment, such as our display business, are reported in the Corporate and Other category. 5 Table of Contents Backlog We manufacture systems to meet demand represented by order backlog and customer commitments.
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.
We seek to cultivate a culture that reflects our values – being the Most Valued Partner, being part of a Winning Team, operating with Responsibility & Integrity, and achieving World Class Performance. Talent Acquisition and Retention We believe that our future success is highly dependent upon our continued ability to attract, develop, retain and engage employees.
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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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We are well positioned to address the increasing complexity in manufacturing semiconductors, by leveraging the semiconductor capital equipment industry’s most comprehensive portfolio of products to connect and co-optimize our technologies. This enables our customers to evolve their semiconductor technology roadmaps and achieve superior results in their products. Incorporated in 1967, we are a Delaware corporation.
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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.
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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.
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Display 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.
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Through October 26, 2025, our AGS segment also manufactured and sold 200 millimeter (200mm) and other equipment to customers globally that serve non-leading-edge markets. Effective the first quarter of fiscal 2026, our 200mm equipment business will be moved to our Semiconductor Systems segment.
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Substrates used to manufacture display panels and other devices are typically glass, although newer flexible materials are entering the market.
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As of October 26, 2025, we employed approximately 36,500 regular full-time employees spanning 25 countries, of whom approximately 46%, 42% and 12% resided in the Asia-Pacific region, North America, and Europe/Middle East, respectively. Connected and Collaborative Culture We value great talent and having employees with a broad mix of perspectives, skills and experiences.
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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.
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We therefore strive to provide fair and equal opportunity for career development and advancement to all our employees and to build a connected and highly engaged culture where all of our employees feel they belong.
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In addition to display applications, the segment’s Chemical Vapor Deposition (CVD) technology is used to manufacture solar energy cells.
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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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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.
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We hold established market positions with our technically-differentiated LCD and OLED manufacturing solutions for PECVD, color filter PVD, PVD array, PVD touch panel, and TFT array testing, although our market position could change quickly due to customers’ evolving requirements.
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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.
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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.
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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.
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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.
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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.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThe 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.
Biggest changeThe industries in which we operate, including the semiconductor industry, are characterized by factors particular to these industries that impact demand for and the profitability of our products and services, including: • 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; • the frequency and complexity of technology transitions and inflections, and our ability to timely and effectively anticipate and adapt to these changes; 14 Table of Contents • 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; • capital requirements for building and operating new fabrication plants and customers’ ability to raise the necessary capital; • trade, regulatory, tax or government incentives impacting customers’ investment in new or expanded fabrication plants and semiconductor research and development; • the cost and complexity for customers to move from product design 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; • changes in growth rates among the semiconductor and other industries in which we operate; • the importance of increasing market positions in segments with growing demand; • 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; • the availability of spare parts to maximize the time that customers’ systems are available for production; • system reliability and productivity and the effect on demand for fabrication systems as a result of their increasing productivity, device yield and reliability; • 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 total cost of manufacturing system ownership and other 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 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 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; • the increasing role for and complexity of software in our products; • 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; and • the importance of advanced packaging to AI computing.
From time to time we enter into agreements with government entities for grants, tax benefits and other incentives, or other funding related to our investment, research and development and production activities, or for sale of our products to government entities or government-funded programs.
From time to time, we enter into agreements with government entities for grants, tax benefits and other incentives, other funding related to our investment, research and development and production activities or for sale of our products to government entities or government-funded programs.
Significant changes in our credit rating, disruptions in the global financial markets, or incurrence of new or refinancing of existing indebtedness at higher interest rates could have a material and adverse impact on our access to and cost of capital for future financings, and financial condition.
Significant changes in our credit rating, disruptions in the global financial markets, or incurrence of new or refinancing of existing indebtedness at higher interest rates could have a material and adverse impact on our access to and cost of capital for future financings and our financial condition.
We may receive, and have received, inquiries, warrants, subpoenas, and other requests for information in connection with government investigations of potential or suspected violations of law or regulations by our company and/or our employees.
We may receive, and have received, inquiries, warrants, subpoenas, and other requests for information in connection with government investigations of potential or suspected violations of law or regulations by our company or our employees.
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.
Cybersecurity incidents, including 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 these incidents.
Threat actors may also attempt to influence employees, suppliers and other third-party providers, or customers to disclose sensitive information in order to gain access to our, our customers’ or business partners’ data. Cybersecurity attacks are increasing in number and the attackers are increasingly organized and well-financed, or at times supported by state actors.
Threat actors may also attempt to influence employees, suppliers and other third-party providers, or customers to disclose sensitive information to gain access to our, our customers’ or business partners’ data. Cybersecurity attacks are increasing in number and the attackers are increasingly organized and well-financed, or at times supported by state actors.
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.
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. 12 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.
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.
A majority of our products and services are delivered to customers in jurisdictions outside of the United States, including China, Taiwan and Korea. We also purchase a significant portion of equipment and supplies from suppliers outside of the United States.
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.
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 or impose new tariffs on a broad array of goods.
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.
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; • 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.
The failure or inability to comply with existing or future environmental, health and safety regulations could result in: significant remediation or other legal liabilities; the imposition of penalties and fines; restrictions on the development, manufacture, sale, shipping or use of certain of our products; limitations on the operation of our facilities or ability to use our real property; and a decrease in the value of our real property.
The failure or inability to comply with existing or future environmental, health and safety regulations could result in: significant remediation or other legal liabilities; the imposition of penalties and fines; restrictions on the development, manufacture, sale, shipping, import, export or use of certain of our products; limitations on the operation of our facilities or ability to use our real property; and a decrease in the value of our real property.
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.
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, including post-closing investigations of non-notified transactions, 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, trade control processes or 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, government enforcement actions 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.
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.
Trade restrictions and export regulations, or increased or new 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.
Any such incidents and claims could severely harm our business and reputation, result in significant expenses, harm our competitive position, and prevent us from selling certain products, all of which could have a material and adverse impact on our business and results of operations. We are exposed to cybersecurity threats and incidents.
Any of these incidents and claims could severely harm our business and reputation, result in significant expenses, harm our competitive position, and prevent us from selling certain products, all of which could have a material and adverse impact on our business and results of operations. We are exposed to cybersecurity threats and incidents.
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.
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 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.
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.
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. 22 Table of Contents Item 1B: Unresolved Staff Comments None.
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.
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.
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.
The U.S. government may also continue to add customers to its “Entity List,” 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.
Failures of information systems we use could disrupt our operations, impede our ability to timely and accurately process and report financial results, and adversely impact our business, financial condition and results of operations. We periodically implement new or enhanced information systems.
Failures of these systems could disrupt our operations, impede our ability to timely and accurately process and report financial results, and adversely impact our business, financial condition and results of operations. We periodically implement new or enhanced information systems.
If we are unable to enforce and protect intellectual property rights, or if they are circumvented, rendered obsolete, invalidated by the rapid pace of technological change, or stolen or misappropriated by employees or third parties, it could have an adverse impact on our competitive position and business.
If we are unable to enforce and protect intellectual property rights, or if they are circumvented, rendered obsolete, invalidated by the rapid pace of technological change, or stolen or misappropriated by employees or third parties, it 17 Table of Contents could have an adverse impact on our competitive position and business.
Achieving this objective may be difficult due to many factors, including fluctuations in global economic and industry conditions, management or organizational changes, ongoing competition for talent, the availability of qualified employees, the ability to obtain necessary authorizations for workers to provide services outside their home countries, the attractiveness of our compensation and benefit programs, our career growth and development opportunities, and our employment policies.
Achieving this objective may be difficult due to many factors, including fluctuations in global economic and industry conditions, management or organizational changes, ongoing competition for talent, the availability of qualified employees, the ability to obtain necessary authorizations for workers to provide services outside their home countries, challenges in hiring and integrating workers in different countries, the attractiveness of our compensation and benefit programs, our career growth and development opportunities and our employment policies.
We are exposed to risks related to the use of artificial intelligence by us and our competitors. We are increasingly incorporating artificial intelligence capabilities into the development of technologies and our business operations, and into our products and services. Artificial intelligence technology is complex and rapidly evolving, and may subject us to significant competitive, legal, regulatory, operational and other risks.
We are exposed to risks related to the use of AI by us and our competitors. We are increasingly incorporating AI capabilities into the development of technologies, our business operations and our products and services. AI technology is complex and rapidly evolving and may subject us to significant competitive, legal, regulatory, operational and other risks.
Under the indenture governing the senior unsecured notes, we may be required to offer to repurchase the notes at a price equal to 101% of the principal amount, plus accrued and unpaid interest, if we experience a change of control and a contemporaneous downgrade of the notes below investment grade.
Under the indenture governing the senior unsecured notes, we may be required to offer to repurchase the notes at a price equal to 20 Table of Contents 101% of the principal amount, plus accrued and unpaid interest, if we experience a change of control and a contemporaneous downgrade of the notes below investment grade.
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.
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.
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, including reporting requirements.
We could be required to alter our product design, manufacturing and operations and incur substantial expense to comply with environmental, health and safety regulations, including reporting requirements.
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.
Divestitures involve additional risks and uncertainties, such as our ability to sell these businesses at a price and on terms that are satisfactory and in a 19 Table of Contents 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 these divestitures and other adverse financial impacts.
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.
Department of Commerce expanded 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 for 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.
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.
The largest proportion of our net revenue and profitability is derived from our Semiconductor Systems segment’s sale of a wide range of equipment used to fabricate semiconductor chips, and a majority of the revenue of Applied Global Services is from sales to semiconductor manufacturers.
Artificial intelligence and deepfake technologies could be used to attack information systems by creating more effective phishing emails or social engineering and by exploiting vulnerabilities in electronic security programs utilizing false image or voice recognition.
AI and deepfake technologies could be used to attack information systems by creating more effective phishing emails or social engineering and by exploiting vulnerabilities in electronic security programs utilizing false image or voice recognition.
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.
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 2025, approximately 89% of our net revenue was to customers in regions outside the United States.
The development, introduction and support of products in a geographically diverse and competitive environment requires collaboration with customers and other industry participants, which has grown more complex and expensive over time. New or improved products may entail higher costs, longer development cycles, lower profits and may have unforeseen product design or manufacturing defects.
The development, introduction and 15 Table of Contents support of products in a geographically diverse and competitive environment requires collaboration with customers and other industry participants, which has grown more complex and expensive over time. New or improved products may entail higher costs and longer development cycles, and may have unforeseen product design or manufacturing defects.
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.
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, anti-corruption, compliance with government contracting requirements, environmental regulations, cybersecurity, privacy, data protection, securities, contracts, product performance, product liability, unfair competition, employment, workplace safety and other matters.
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.
We are subject to the laws of the United States and multiple foreign jurisdictions and the rules and regulations of various governing bodies, 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 regulations), antitrust, cybersecurity, environment, health and safety, employment, immigration and travel regulations, human rights, privacy, data protection and localization and anti-corruption.
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.
We may be unable to anticipate, prevent or remediate future incidents, and in some instances, we may be unaware of incidents or their magnitude and effects, particularly as attackers are increasingly able to circumvent controls and remove forensic evidence.
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.
We also maintain cash balances in various bank accounts globally and if any of these financial institutions become insolvent, it could limit our ability to access our cash and affect our ability to manage our operations. We are exposed to the risks of operating a global business.
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.
If we do not effectively address these factors, 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 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.
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.
Changing, inconsistent or conflicting laws, rules and regulations, and ambiguities in their interpretation and application create uncertainty and challenges, and compliance with laws, rules and regulations may be onerous and expensive, divert management time and attention from revenue-generating activities, and otherwise adversely impact our business operations.
Changing, inconsistent or conflicting laws, rules and regulations, and ambiguities in their interpretation and application create uncertainty and challenges, and compliance may be onerous and expensive, divert management time and attention and otherwise adversely impact our business operations.
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 a supplier to the global display industry, which 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 and panel manufacturer profitability.
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.
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.
We operate in a highly competitive environment in which innovation is critical, and our future success depends on many factors, including the development of new technologies and effective commercialization and customer acceptance of our equipment, services and related products, and our ability to increase our position in our current markets, expand into adjacent and new markets, and optimize operational performance.
We operate in a highly competitive environment in which innovation is critical, and our future success depends on many factors, including the development of new technologies, commercialization of our products and services, and our ability to increase our position in our current markets and expand into adjacent and new markets.
Such shortages, as well as delays in and unpredictability of shipments due to transportation interruptions, have adversely impacted, and may continue to adversely impact, our manufacturing operations and our ability to meet customer demand.
These shortages, as well as delays in and unpredictability of shipments due to transportation interruptions, may adversely impact our manufacturing operations and our ability to meet customer demand.
Consistent with the international nature of our business, we conduct certain manufacturing, supply chain, and other operations in Asia, bringing these activities closer to customers and reducing operating costs. In some foreign jurisdictions, we must meet certain requirements to continue to qualify for tax incentives.
There is risk our conditional reduced tax rates may not be renewed. Consistent with the international nature of our business, we conduct certain manufacturing, supply chain and other operations in Asia, bringing these activities closer to customers and reducing operating costs. In some foreign jurisdictions, we must meet certain requirements to continue to qualify for tax incentives.
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.
If we purchase or commit to purchase inventory in anticipation of customer demand that does not materialize, or the 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.
Our valuation methodology for assessing impairment requires management to make judgments and assumptions based on historical experience and projections of future operating performance. We may be required to record future charges to earnings during the period in which an impairment of goodwill or intangible assets is determined to exist.
Our valuation methodology for assessing impairment requires management to make judgments and assumptions based on historical experience and projections of future operating performance. We have recorded charges to earnings, and may in the future be required to record charges to earnings, when impairments of goodwill or intangible assets have been determined to exist.
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.
Volatility 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 has in the past resulted in a shortage of parts, materials and services needed to manufacture our products.
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 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.
We 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.
We 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 in locations where we or our customers or suppliers have operations; • the failure or inability to accurately forecast demand and obtain quality parts on a cost-effective basis; • cybersecurity incidents affecting our supply chain; • 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, as well as uncertainties arising from the imposition of tariffs and any retaliatory measures; • 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 critical materials and minerals, including due to Chinese government restrictions on the export of certain rare earth minerals implemented in 2025, which could be expanded in the future, and limited 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; and • impacts of natural disasters, extreme and chronic weather events, regional or global health epidemics, or other events beyond our control.
Infringement or misappropriation of our intellectual property rights, such as the manufacture or sale of equipment or spare parts that use our technology without authorization, could result in uncompensated lost market and revenue opportunities.
Our success depends on the protection of our technology using patents, trade secrets, copyrights and other intellectual property rights. Infringement or misappropriation of our intellectual property rights, such as the manufacture or sale of equipment or spare parts that use our technology without authorization, could result in uncompensated lost market and revenue opportunities.
Customers and third-party providers increasingly demand rigorous contractual provisions regarding privacy, cybersecurity, data protection, confidentiality, and intellectual property, which may increase our overall compliance burden. We are exposed to risks associated with business combinations, acquisitions, strategic investments and divestitures. We may engage in acquisitions of or investments in companies, technologies or products in existing, related or new markets.
Customers and third-party providers increasingly demand rigorous contractual provisions regarding privacy, cybersecurity, data protection, confidentiality and intellectual property, which may increase our overall compliance burden. 18 Table of Contents We are exposed to risks associated with business combinations, acquisitions, strategic investments and divestitures.
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.
To compete successfully, we must: • identify and address technology inflections, market changes, competitor innovations, new applications, customer requirements and end-use demand; • 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 our new Equipment and Process Innovation and Commercialization Center and other 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, and successfully commercialize our products and achieve market acceptance; • 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 research and development 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; and • implement changes in our design engineering methodology to reduce material costs and cycle time and improve product life cycle management.
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.
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.
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.
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 13 Table of Contents performance becoming significantly dependent on quarter-end production and delivery schedules.
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.
Our investment portfolio is subject to general credit, liquidity, market and interest rate risks, which may be exacerbated by rising inflation, rising interest rates, bank failures or economic recession and the value and liquidity of our portfolio and returns on pension assets could be negatively impacted and lead to impairment charges.
Decreases in spending and demand have caused, and may in the future cause, our customers to push out, cancel or refrain from purchasing our equipment or services, which could negatively impact demand for our products and services, reduce our backlog, increase our inventory, and materially and adversely impact our operating results.
These conditions have caused, and may in the future cause, our customers to delay, cancel or refrain from purchasing our equipment or services, which could negatively impact demand for our products and services, reduce our backlog and increase our inventory.
Monitoring and detecting any unauthorized access, use or disclosure of our intellectual property is difficult and costly and we cannot be certain that the protective measures we have implemented will completely prevent misuse. Our ability to enforce our intellectual property rights is subject to litigation risks and uncertainty as to the protection and enforceability of those rights in some countries.
Detecting and preventing misuse of our intellectual property is difficult and costly, and we cannot be certain that our protective measures will be successful. Our ability to enforce our intellectual property rights is subject to litigation risks and uncertainty as to the protection and enforceability of those rights in some countries.
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.
The industries in which we operate, including the global semiconductor industry, have historically been cyclical and are subject to volatility in customer demand.
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.
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.
We also are or may become subject to new climate and sustainability laws and regulations, such as the State of California’s new climate change disclosure rules, the European Union’s Corporate Sustainability Reporting Directive and the United States Securities and Exchange Commission’s rules on climate-related risks.
We also are or may become subject to new climate and sustainability laws and regulations, such as the State of California’s climate change disclosure rules, the European Union’s Corporate Sustainability Reporting Directive and International Sustainability Standards Board standards.
As of October 27, 2024, we had $6.2 billion in aggregate principal amount of senior unsecured notes outstanding.
As of October 26, 2025, we had $6.5 billion in aggregate principal amount of senior unsecured notes outstanding.
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.
There have been a number of enacted and proposed changes in the tax laws that could have a material impact on our provision for income taxes and effective tax rate. 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.
This may give rise to legal liability, damage our reputation, and materially harm our business. The use of artificial intelligence in the development of our products and services could also cause loss of intellectual property, as well as subject us to risks related to intellectual property infringement or misappropriation, data privacy and cybersecurity.
The use of AI in the development of our products and services could also cause loss of intellectual property, as well as subject us to risks related to intellectual property infringement or misappropriation, data privacy and cybersecurity.
If we seek to enforce our intellectual property rights, we may be subject to claims that those rights are invalid or unenforceable, and others may seek counterclaims against us, which could have a negative impact on our business.
Enforcement efforts may be subject to claims that our rights are invalid or unenforceable and may result in counterclaims against us, which could have a negative impact on our business.
The implementation of artificial intelligence can be costly, and there is no guarantee that our use of artificial intelligence will enhance our technologies, benefit our business operations, or produce products and services that are preferred by our customers.
The implementation of AI can be costly, and there is no guarantee that our use of AI will enhance our technologies, benefit our business operations, or produce products and services that are preferred by our customers. Our competitors may be more successful in their AI strategy and develop superior products and services with the aid of AI technology.
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.
As a result, the actions of even a single customer have exposed and can further expose our business and operating results to greater volatility.
If customers do not place orders, or they substantially reduce, delay or cancel orders (including as a result of uncertain or adverse economic conditions, our inability to fulfill orders due to export regulations, shortage of parts, transportation capacity/interruptions or any other reason), we may not be able to replace the business, which may have a material and adverse impact on our results of operations and financial condition.
If customers do not place orders, or they substantially reduce, delay or cancel orders, we may not be able to replace the business, which may have a material and adverse impact on our results of operations and financial condition.
The mix and type of customers, and sales to any single customer, including as a result of changes in government policy, have varied and may vary significantly from quarter to quarter and from year to year, and have had, and may continue to have, a significant impact on our operating results.
The mix and type of customers and sales to any single customer, including as a result of changes in government policy, have varied and may vary significantly over time and may continue to have a significant impact on our operating results. Our products are configured to customer specifications, and changing, rescheduling or canceling orders may result in significant, non-recoverable costs.
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 business and the industries in which we operate can be impacted by 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, tariffs and trade policies and economic recession.
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.
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 be adversely impacted. 16 Table of Contents We are exposed to risks associated with expanding into new and related markets and industries.
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.
Demand for our products and services is impacted by technology inflections and advances in fabrication processes, new and emerging technologies and market drivers, production capacity relative to demand for semiconductor chips and electronic devices, end-user demand, the timing of customers’ investment in new or expanded fabrication plants, customers’ capacity utilization, production volumes, access to affordable capital, business and consumer buying patterns and general economic and political conditions.
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 also have in place revolving credit facilities that allow us to borrow up to an aggregate amount of approximately $4.1 billion. While no amounts were outstanding under these credit facilities as of October 26, 2025, we may borrow amounts in the future under these credit facilities or enter into new financing arrangements.
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.
Violations of these law, rules and regulations 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.
Transferring business to alternative suppliers could result in manufacturing delays, additional costs or other difficulties, and may impair our ability to protect, enforce and extract the full value of our intellectual property rights, and the intellectual property rights of our customers and other third parties.
If a supplier fails to meet our requirements concerning quality, cost, intellectual property protection or other performance factors, or does not meet regulatory requirements applicable to our supply chain, we may transfer our business to alternative sources, which could result in manufacturing delays, additional costs or other difficulties, and impair our ability to protect, enforce and extract the full value of our intellectual property rights and the intellectual property rights of our customers and other 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 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.
Vulnerabilities, technical errors and other risks may be introduced through the use of artificial intelligence by us, our customers, suppliers and other business partners and third-party providers, or through the use of third-party hardware and software.
Vulnerabilities, technical errors and other risks may be introduced through the use of AI by us, our customers, suppliers and other business partners and third-party providers, or through the use of third-party hardware and software. Advances in quantum computing have the potential to undermine current encryption standards and may allow threat actors to circumvent existing protective measures.
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.
Geopolitical tensions or conflicts, such as Russia’s invasion of Ukraine, tension with China and conflict in the Middle East may create a heightened risk of cybersecurity attacks. The techniques used by threat actors to identify vulnerabilities and craft cybersecurity attacks change frequently and may increasingly involve the use of new technologies, including AI and quantum computing.
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.
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. The consequences of these conditions could have an adverse effect on our business, financial condition and results of operations.
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.
These conditions make it more difficult to accurately forecast operating and financial results and make business and investment decisions. We may be required to implement additional cost reduction efforts, including restructuring activities, which may adversely impact our ability to capitalize on opportunities.
Such laws and regulations could cause us to incur greater compliance costs and limit the use of artificial intelligence in the development of our products and services. Any failure or perceived failure by us to comply with such regulatory requirements could subject us to legal liabilities, damage our reputation, or otherwise have a material and adverse impact on our business.
Any failure or perceived failure by us to comply with these regulatory requirements could subject us to legal liabilities, damage our reputation, or otherwise have a material and adverse impact on our business. Operational and Financial Risks We are exposed to risks related to protection and enforcement of intellectual property rights.
The amount and mix of our customers’ capital equipment spending between different products and technologies can also significantly impact our operating results. To meet rapidly changing demand, we must accurately forecast demand and effectively manage our resources, investments, production capacity, supply chain, workforce, inventory, and other components of our business.
To meet rapidly changing demand, we must accurately forecast demand and effectively manage our resources, investments, production capacity, supply chain, workforce, inventory and other components of our business. We may incur unexpected or additional costs to align our business operations with changes in demand.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe CISO reports to our Chief Information Officer (“CIO”), who has more than 30 years of experience in information technology and is responsible for administering secure and scalable security infrastructure. The CIO reports to our Chief Digital Officer, who has more than 37 years of experience in information technology.
Biggest changeThe CISO reports to our Chief Information Officer, who is responsible for administering secure and scalable security infrastructure and reports to our Chief Digital Officer, each of whom has extensive experience in information technology.
Our management team’s efforts to prevent, detect, mitigate and remediate cybersecurity risks and incidents are informed by reviews with our information technology security teams, receipt of threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us, periodic assessments against the NIST Framework and through alerts and reports produced by security tools deployed in our information technology environment. 27 Table of Contents
Our management team’s efforts to prevent, detect, mitigate and remediate cybersecurity risks and incidents are informed by reviews with our information technology security teams, receipt of threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us, periodic assessments against the NIST Framework and through alerts and reports produced by security tools deployed in our information technology environment. 23 Table of Contents
Our cybersecurity risk management program is integrated with our enterprise risk management (“ERM”) program, and information about cybersecurity risks and our cybersecurity risk management program is reviewed as part of our ERM program, sharing common risk governance and reporting processes that apply across our ERM program.
Our cybersecurity risk management program is integrated with our enterprise risk management (ERM) program, and information about cybersecurity risks and our cybersecurity risk management program is reviewed as part of our ERM program, sharing common risk governance and reporting processes that apply across our ERM program.
We conduct assessments based on the National Institute of Standards and Technology Cybersecurity (“NIST”) Framework to evaluate our program, and we engage third-parties for assistance and to independently assess, proactively monitor, and provide an external view of our cybersecurity program.
We conduct assessments based on the National Institute of Standards and Technology Cybersecurity (NIST) Framework to evaluate our program, and we engage third-parties for assistance and to independently assess, proactively monitor and provide an external view of our cybersecurity program.
Our Chief Information Security Officer (“CISO”), who has more than 20 years of experience in information security management, is primarily responsible for managing our cybersecurity risk management program, cybersecurity incident response plan and escalation protocols, and reports at least quarterly to the Audit Committee and at least annually to the full Board on our cybersecurity, data and intellectual property security programs, policies, risks and controls.
Our Chief Information Security Officer (CISO), who has extensive experience in cybersecurity and information security management, is primarily responsible for managing our cybersecurity risk management program, cybersecurity incident response plan and escalation protocols, and reports at least quarterly to the Audit Committee and at least annually to the full Board on our cybersecurity, data and intellectual property security programs, policies, risks and controls.

Item 2. Properties

Properties — owned and leased real estate

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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.
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, Singapore, Taiwan, Israel, China, and India. As of October 26, 2025, we owned and leased approximately 9.1 million square feet and 5.3 million square feet of space, respectively.
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.
Our headquarters are in Santa Clara, California. Our products are manufactured primarily in the United States, Singapore, Taiwan and Israel. Because of the interrelation of our operations, properties within a country may be shared by the segments operating within that country.
We regularly assess the size, capability and location of our global infrastructure and periodically make adjustments based on these assessments. 28 Table of Contents
We regularly assess the size, capability and location of our global infrastructure and periodically make adjustments based on these assessments. 24 Table of Contents

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 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.”
Biggest changeItem 3: Legal Proceedings The information set forth under “Legal Matters” in Note 14 of Notes to Consolidated Financial Statements is incorporated herein by reference. See also “Risk Factors – 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 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.
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 28, 2025 to August 24, 2025) 3.0 $ 170.20 $ 503 3.0 $ 14,329 Month #2 (August 25, 2025 to September 21, 2025) 1.6 $ 163.59 254 1.6 $ 14,075 Month #3 (September 22, 2025 to October 26, 2025) 0.4 $ 217.41 99 0.4 $ 13,976 Total 5.0 $ 172.46 $ 856 5.0 *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 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”.
Information regarding quarterly cash dividends declared on our common stock during fiscal 2025, 2024 and 2023 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 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.
The comparison assumes $100 was invested on October 25, 2020 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 6, 2024, there were 2,692 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 5, 2025, there were 2,626 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 27, 2019, and that all dividends were reinvested. Copyright© 2024 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 25, 2020, and that all dividends were reinvested. Copyright© 2025 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 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.
Performance Graph The performance graph below shows the five-year cumulative total stockholder return on our common stock during the period from October 25, 2020 through October 26, 2025. 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 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.
At October 26, 2025, approximately $14.0 billion remained available for future stock repurchases under the repurchase program. The following table provides information as of October 26, 2025 with respect to the shares of common stock repurchased by us during the fourth quarter of fiscal 2025 pursuant to the foregoing Board authorization.
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.
All rights reserved. 10/25/2020 10/31/2021 10/30/2022 10/29/2023 10/27/2024 10/26/2025 Applied Materials 100.00 226.06 149.67 221.11 316.48 392.09 S&P 500 Index 100.00 134.88 116.04 124.53 178.22 211.12 PHLX Semiconductor Index 100.00 148.13 105.92 142.27 232.14 313.53 26 Table of Contents Issuer Purchases of Equity Securities In March 2025, our Board of Directors approved a common stock repurchase program authorizing $10.0 billion in repurchases, which supplemented the previous $10.0 billion authorization approved in March 2023.

Item 7. Management's Discussion & Analysis

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

66 edited+30 added−20 removed23 unchanged
Biggest changeOur effective tax rate for fiscal 2024 was higher than the prior fiscal year primarily due to lower tax credits in fiscal 2024, partially offset by higher proportion of pre-tax income in lower tax jurisdictions in fiscal 2024. 36 Table of Contents Segment Operating Income Operating income by segment for the periods presented were as follows: Change 2024 2023 2024 over 2023 (In millions, except percentages and ratios) Operating income (loss) Semiconductor Systems $ 6,981 $ 6,879 $ 102 1 % Applied Global Services 1,812 1,529 283 19 % Display 51 114 (63) (55) % Corporate and Other (977) (868) (109) 13 % Total $ 7,867 $ 7,654 $ 213 3 % Operating margin Semiconductor Systems 35.1 % 34.9 % 0.2 points Applied Global Services 29.1 % 26.7 % 2.4 points Display 5.8 % 13.1 % (7.3) points Semiconductor Systems’ operating margin for fiscal 2024 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 increased RD&E expenses.
Biggest changeSegment Operating Income (Loss) Operating income (loss) by segment for the periods presented were as follows: Change 2025 2024 2025 over 2024 (In millions, except percentages and ratios) Operating income (loss) Semiconductor Systems $ 7,379 $ 6,981 $ 398 6 % Applied Global Services 1,792 1,812 (20) (1) % Corporate and Other (882) (926) 44 5 % Total $ 8,289 $ 7,867 $ 422 5 % Operating margin Semiconductor Systems 35.5 % 35.1 % 0.4 points Applied Global Services 28.1 % 29.1 % (1.0) points Semiconductor Systems’ operating margin for fiscal 2025 increased compared to the same period in the prior year primarily driven by higher net revenue, favorable changes in customer and product mix, lower material and manufacturing costs, and an increase in average selling prices, partially offset by increased RD&E expenses.
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.
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 (PC), 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.
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.
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 and other equipment.
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.
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 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. 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.
For details on standby letters of credit, guarantee instruments and other agreements with banks, see Off-Balance Sheet Arrangements below. 36 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.
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.
Our strategic priorities include developing products that help solve customers’ challenges at technology inflections, growing our service business, and expanding our served market opportunities in the semiconductor industry. 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 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.
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. 28 Table of Contents The Semiconductor Systems segment is comprised primarily of capital equipment used to fabricate semiconductor chips.
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.
Future interest payments associated with these unsecured notes were $2.9 billion, of which $246 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.
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.
See Note 14, Guarantees, Commitments and Contingencies, of the Notes to the Consolidated Financial Statements for further discussion relating to these arrangements. 37 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.
The following section generally discusses 2024 and 2023 items and year-to-year comparisons between 2024 and 2023.
The following section generally discusses 2025 and 2024 items and year-to-year comparisons between 2025 and 2024.
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.
For a description of these risks, see the risk factors 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 ” and “ Business and Industry Risks - We are exposed to risks and uncertainty related to changes in trade policies, and increased tariffs and trade disputes ” in Part I, Item 1A, “Risk Factors.” 29 Table of Contents Results of Operations Our fiscal 2025 and 2024 each contained 52 weeks.
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.
These operating expenses include costs for certain management, finance, legal, human resources, 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 charges associated with restructuring actions, such as employee severance costs and asset impairment charges, unless the restructuring actions pertain to a specific reportable segment.
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.
The Corporate and Other category includes revenues and costs of product not included in our reportable segments, as well as certain operating expenses that are not allocated to our reportable segments and are managed separately at the corporate level.
This authoritative guidance will be effective for us beginning with our annual reporting for fiscal year 2026, with early adoption permitted. We are evaluating the effect of this guidance on our consolidated financial statements and related disclosures. Improvements to Reportable Segment Disclosures .
This authoritative guidance will be effective for us beginning with our annual reporting for fiscal year 2026. We are evaluating the effect of this guidance on our consolidated financial statements and related disclosures.
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.
Discussions of 2024 items and year-to-year comparisons between 2024 and 2023 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 27, 2024, filed on December 13, 2024.
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.
Income Taxes Provision for income taxes and effective tax rates for the periods indicated were as follows: Change 2025 2024 2025 over 2024 (In millions, except percentages) Provision for income taxes $ 2,273 $ 975 $ 1,298 Effective income tax rate 24.5 % 12.0 % 12.5 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.
As of October 27, 2024, the total of our future expected benefit payments for the pension plans and the postretirement plan over the next ten fiscal years were $214 million, of which $14 million is payable within 12 months and the remaining amount is payable beyond 12 months.
As of October 26, 2025, the total of our future expected benefit payments for the pension plans and the postretirement plan over the next ten fiscal years were $250 million, of which $19 million is payable within 12 months and the remaining amount is payable beyond 12 months.
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.
As of October 26, 2025, the gross liability for unrecognized tax benefits that was not expected to result in payment of cash within one year was $452 million. Interest and penalties related to uncertain tax positions that were not expected to result in payment of cash within one year of October 26, 2025 was $118 million.
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.
See Note 9, Borrowing Facilities and Debt, of the Notes to the Consolidated Financial Statements for further discussion related to our credit facilities. We have a short-term commercial paper program under which we may issue unsecured commercial paper notes up to a total of $4.0 billion.
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.
Lease Obligations As of October 26, 2025, our operating lease obligation was $565 million related to various operating lease arrangements for certain facilities, of which $104 million is payable within 12 months and the remaining amount is payable beyond 12 months.
During each of fiscal 2024 and 2023 we paid four quarterly cash dividends, totaling $1.2 billion and $975 million, respectively.
During each of fiscal 2025 and 2024, we paid four quarterly cash dividends, totaling $1.4 billion and $1.2 billion, respectively.
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.
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. 33 Table of Contents Financial Condition, Liquidity and Capital Resources Our cash, cash equivalents and investments consisted of the following: October 26, 2025 October 27, 2024 (In millions) Cash and cash equivalents $ 7,241 $ 8,022 Short-term investments 1,332 1,449 Long-term investments 4,327 2,787 Total cash, cash-equivalents and investments $ 12,900 $ 12,258 Sources and Uses of Cash A summary of cash provided by (used in) operating, investing, and financing activities was as follows: 2025 2024 (In millions) Cash provided by operating activities $ 7,958 $ 8,677 Cash used in investing activities $ (2,782) $ (2,327) Cash used in financing activities $ (5,977) $ (4,470) Operating Activities Cash from operating activities for fiscal 2025 was $8.0 billion, which reflects net income adjusted for the effect of non-cash charges and changes in working capital components.
Over the longer term, we believe secular drivers such as AI, data center computing, the internet of things, 5G networks, electric and autonomous vehicles and augmented and virtual reality will create the next wave of growth for semiconductors and expand our served market opportunities.
Over the longer term, we believe secular drivers such as data center AI, edge AI and the internet of things, robotics and electric and autonomous vehicles will continue to create the next wave of growth for semiconductors and expand our served market opportunities.
In November 2024, the Financial Accounting Standards Board (FASB) issued an accounting standard update to improve income statement expenses disclosures (Subtopic 220-40).
Disaggregation of Income Statements Expenses . In November 2024, the FASB issued an accounting standard update to improve income statement expenses disclosures (Subtopic 220-40).
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.
Capital expenditures were primarily for investments in real property and improvements, demonstration and testing equipment, manufacturing and network equipment. Purchases of investments, net of proceeds from sales and maturities of investments, for 2025 and 2024 were $526 million and $1.1 billion, respectively.
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.
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. Also, the United States has announced changes to its trade policy, including increased tariffs on imports.
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.
In March 2025, our Board of Directors approved a common stock repurchase program authorizing $10.0 billion in repurchases, which supplemented the previous $10.0 billion authorization approved in March 2023. At October 26, 2025, approximately $14.0 billion remained available for future stock repurchases under the repurchase program.
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 growth of data and emerging end-market drivers such as AI, the internet of things, robotics and smart vehicles are also creating the next wave of growth for the industry.
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.
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. 34 Table of Contents Financing Activities We used $6.0 billion of cash in financing activities in fiscal 2025, consisting primarily of repurchases of common stock of $4.9 billion, cash dividends to stockholders of $1.4 billion, repayment of $700 million senior notes and tax withholding payments for vested equity awards of $248 million, partially offset by net proceeds received from the issuance of senior unsecured notes of $991 million and proceeds received from common stock issuances under our employee stock purchase plan of $261 million.
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.
Interest expense in fiscal 2025 increased slightly as a result of the issuance of senior unsecured notes in June 2024. 31 Table of Contents Interest and other income (expense), net in fiscal 2025 increased primarily driven by higher net gain on equity investments, partially offset by lower interest income driven by lower cash balances and a decrease in market interest rates.
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).
We may seek to refinance our existing debt and may incur additional indebtedness depending on our capital requirements, general corporate purposes and the availability of financing. 35 Table of Contents Others On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (Tax Act).
The 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 following table presents certain significant measurements for the periods presented: Change 2025 2024 2025 over 2024 (In millions, except per share amounts and percentages) Net revenue $ 28,368 $ 27,176 $ 1,192 Gross margin 48.7 % 47.5 % 1.2 points Operating income $ 8,289 $ 7,867 $ 422 Operating margin 29.2 % 28.9 % 0.3 points Net income $ 6,998 $ 7,177 $ (179) Earnings per diluted share $ 8.66 $ 8.61 $ 0.05 Net revenue by segment for the periods presented were as follows: Change 2025 2024 2025 over 2024 (In millions, except percentages) Semiconductor Systems $ 20,798 73% $ 19,911 73% 4 % Applied Global Services 6,385 23% 6,225 23% 3 % Corporate and Other 1,185 4% 1,040 4% 14 % Total $ 28,368 100% $ 27,176 100% 4 % Net revenue for Semiconductor Systems by market for the periods presented were as follows: 2025 2024 Foundry, logic and other 67 % 68 % Dynamic random-access memory (DRAM) 26 % 28 % Flash memory (NAND) 7 % 4 % 100 % 100 % Net revenue in fiscal 2025 increased as compared to the prior year.
Demand for services is expected to grow as our installed base of systems and chambers increases and customers renew long-term service agreements. 34 Table of Contents Our Display net revenue increased in fiscal 2024 compared to the prior year primarily due to higher customer investments in display fabrication equipment for IT products including laptops, monitors and tablets, partially offset by lower customer investments in display fabrication equipment for TVs.
Our AGS net revenue in fiscal 2025 increased compared to the prior year primarily due to higher customer spending on long-term service agreements and spares, partially offset by lower customer spending on 200mm equipment. Demand for services is expected to grow as our installed base of systems and chambers increases and customers renew long-term service agreements.
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.
The slight increase in days sales outstanding was primarily due to unfavorable revenue linearity. Investing Activities We used $2.8 billion and $2.3 billion of cash in investing activities in fiscal 2025 and 2024, respectively. Capital expenditures in fiscal 2025 and 2024 were $2.3 billion and $1.2 billion, respectively.
Memory customers’ spending in fiscal 2024 was higher due to increased investments in DRAM technology transitions. Investments by semiconductor equipment customers are expected to remain strong with growth in the adoption of high-bandwidth memory and other forms of advanced packaging, continued demand for AI and data center computing, and for non-leading edge nodes.
Investments by semiconductor equipment customers are expected to remain strong with growth in the adoption of high-bandwidth memory and other forms of advanced packaging, continued demand for AI and data center computing, and for non-leading edge nodes. The Semiconductor Systems segment continued to represent the largest contributor of net revenue.
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.
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 temporary differences between the book and tax bases of assets and liabilities.
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.
A summary of financial information for each reportable segment is found in Note 15 of Notes to Consolidated Financial Statements. 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.
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.
The Five-Year Credit Agreement and the 364-Day Credit Agreement each includes financial and other covenants with which we were in compliance as of October 26, 2025. No amounts were outstanding under any of these credit facilities as of October 26, 2025 and October 27, 2024.
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.
Overview We provide equipment, services and software to the semiconductor and related industries. Our customers include manufacturers of semiconductor wafers and chips and other electronic devices. 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.
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.
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.
Operating Expenses Operating expenses for the periods presented were as follows: Change 2024 2023 2024 over 2023 (In millions) Research, development and engineering (RD&E) $ 3,233 $ 3,102 $ 131 Marketing and selling $ 836 $ 776 $ 60 General and administrative $ 961 $ 852 $ 109 The year-over-year change in RD&E expenses was primarily due to additional headcount to support our ongoing investments in product development initiatives, consistent with our growth strategy, offset by lower depreciation expense as a result of changes in certain assets’ useful lives effective as of the beginning of fiscal 2024.
Operating Expenses Operating expenses for the periods presented were as follows: Change 2025 2024 2025 over 2024 (In millions) Research, development and engineering (RD&E) $ 3,570 $ 3,233 $ 337 Marketing and selling $ 858 $ 836 $ 22 General and administrative (G&A) $ 910 $ 961 $ (51) Restructuring charges $ 181 $ — $ 181 The year-over-year change in RD&E expenses was primarily due to additional headcount to support our ongoing investments in product development initiatives and higher depreciation expenses, consistent with our growth strategy.
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.
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.
Borrowing Facilities and Debt Obligations As of October 27, 2024, we had $6.2 billion in aggregate principal amount of senior unsecured notes with varying maturities, of which $700 million is due within 12 months and the remaining notes are due beyond 12 months.
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 26, 2025, we had $6.5 billion in aggregate principal amount of senior unsecured notes with varying maturities, which are due beyond 12 months.
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.
Net proceeds from asset sale were $33 million, and net cash paid for acquisition was $29 million in fiscal 2025. 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.
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 $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 and 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 under our employee stock purchase plan of $243 million.
The credit is provided for qualifying property, which is placed in service after December 31, 2022, for which construction begins before January 1, 2027, and is treated as a government grant. We recognize this investment tax credit when there is reasonable assurance that we will qualify for the credit and the benefit will be received.
The credit is provided for qualifying property, which is placed in service after December 31, 2022, for which construction begins before January 1, 2027, and is treated as a government grant recognized against property, plant and equipment and a reduction of income taxes payable.
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.
We have and continue to invest in RD&E in order to continue to offer new products and technologies. We operate in two reportable segments: Semiconductor Systems and Applied Global Services® (AGS). As of October 26, 2025, management no longer considers Display a significant operating segment for separate reporting purposes.
Other Long-term Liabilities We also have the obligation to fund our pension, postretirement and deferred compensation plans. We evaluate the need to make contributions to our pension and postretirement benefit plans after considering the funded status of the plans, movements in the discount rate, performance of the plan assets and related tax consequences.
We evaluate the need to make contributions to our pension and postretirement benefit plans after considering the funded status of the plans, movements in the discount rate, performance of the plan assets and related tax consequences. Payments to the plans would be dependent on these factors and could vary across a wide range of amounts and time periods.
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.
Gross margin increased primarily driven by higher net revenue, favorable changes in customer and product mix, an increase in average selling prices, and lower material and manufacturing costs. Semiconductor Systems net revenue increased in fiscal 2025 as compared to the prior year as customers continued to make strategic investments in new capacity and new technology transitions.
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 believe device refresh cycles, such as those for PCs and smartphones, will also contribute to the next wave of growth. 30 Table of Contents 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 2025 2024 2025 over 2024 (In millions, except percentages) China $ 8,529 30% $ 10,117 37% (16) % Korea 5,608 20% 4,493 17% 25 % Taiwan 6,857 24% 4,010 15% 71 % Japan 2,273 8% 2,154 8% 6 % Southeast Asia 1,076 4% 1,141 4% (6) % Asia Pacific 24,343 86% 21,915 81% 11 % United States 3,063 11% 3,818 14% (20) % Europe 962 3% 1,443 5% (33) % Total $ 28,368 100% $ 27,176 100% 4 % The changes in net revenue from customers in all regions for fiscal 2025 primarily reflected changes in investments in semiconductor equipment.
Payments to the plans would be dependent on these factors and could vary across a wide range of amounts and time periods. Payments for deferred compensation plans are dependent on activity by participants, making the timing of payments uncertain.
Payments for deferred compensation plans are dependent on activity by participants, making the timing of payments uncertain.
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
Deferred tax assets are also recognized for net operating loss and tax credit carryovers. 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.
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.
Our working capital was $12.9 billion at October 26, 2025 and $12.8 billion at October 27, 2024. Days sales outstanding of our accounts receivable at the end of fiscal 2025 and 2024 was 69 days and 68 days, respectively. Days sales outstanding varies due to the timing of shipments and payment terms.
In June 2024, we issued $700 million aggregate principal amount of 4.800% senior unsecured notes due 2029 in a registered public offering. The proceeds from the issuance of the senior unsecured notes are intended for general corporate purposes. We had senior unsecured notes in the aggregate principal amount of $6.2 billion outstanding as of October 27, 2024.
In October 2025, we used a portion of the net proceeds from the offering to repay the outstanding $700 million in aggregate principal amount of our 3.900% senior unsecured notes due October 1, 2025. The remaining net proceeds from the issuance of the senior unsecured notes are intended for general corporate purposes.
We are subject to the minimum tax in fiscal 2024 and expect to claim a credit for the minimum tax in future years. 40 Table of Contents 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.
Various countries where we do business have enacted or plan to enact new tax laws to implement the global minimum tax regimes based on the Organization for Economic Cooperation and Development Base Erosion and Profit Shifting Project, and where enacted, the rules began to be effective in fiscal 2025.
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.
Purchase Obligations As of October 26, 2025, we had $10.6 billion of purchase obligations for goods and services, of which $7.3 billion is payable within 12 months and the remaining amount is payable beyond 12 months. Deemed Repatriation Tax Payable As of October 26, 2025, we had one remaining payment of $255 million, payable in February of 2026.
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.
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 2025 2024 2025 over 2024 (In millions) Interest expense $ 269 $ 247 $ 22 Interest and other income (expense), net $ 1,251 $ 532 $ 719 Interest expense incurred was primarily associated with senior unsecured notes.
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.
The Tax Act requires a one-time transition tax on certain unrepatriated earnings of foreign subsidiaries. The transition tax expense has been paid in installments starting with fiscal 2018, and as of October 26, 2025, we had one remaining payment of $255 million, payable in February of 2026. On August 9, 2022, the U.S. government enacted the U.S.
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.
We sold $501 million and $444 million of accounts receivable during fiscal 2025 and 2024, respectively. We did not discount letters of credit issued by customers in fiscal 2025 and 2024. There was no discounting of promissory notes in each of fiscal 2025 and 2024.
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.
This transition tax liability is associated with the deemed repatriation of accumulated foreign earnings as a result of the enactment of the Tax Act. Other Long-term Liabilities We also have the obligation to fund our pension, postretirement and deferred compensation plans.
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.
Significant non-cash charges included depreciation, amortization, gain or loss on investments or asset sale, share-based compensation, deferred income taxes and restructuring charges. Cash provided by operating activities in fiscal 2025 was lower primarily due to higher payments for income taxes and inventory. We have agreements with various financial institutions to sell accounts receivable and discount promissory notes from selected customers.
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.
CHIPS and Science Act (CHIPS Act). The CHIPS Act creates a 25% investment tax credit for certain investments in domestic semiconductor manufacturing.
This authoritative guidance will be effective for us in fiscal 2025 for annual periods and in the first quarter of fiscal 2026 for interim periods, with early adoption permitted. We are evaluating the effect of this guidance on our consolidated financial statements and related disclosures. Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.
This authoritative guidance will be effective for us beginning with our interim and annual reporting for fiscal year 2027, with early adoption permitted. Although this guidance will simplify our process of calculating expected credit losses on accounts receivable and contract assets, we do not expect this guidance to materially impact our consolidated financial statements or related disclosures.
In Display, RD&E investments were focused on expanding our market opportunity with new display technologies. Marketing and selling expenses for fiscal 2024 increased primarily due to additional headcount.
We continued to prioritize RD&E investments in technical capabilities and critical RD&E programs in current and new markets. Marketing and selling expenses for fiscal 2025 increased primarily due to higher employee related expenses.
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.
We have credit facilities for unsecured borrowings in various currencies of up to an aggregate amount of $4.1 billion.
AGS’ operating margin for fiscal 2024 increased primarily due to the increase in net revenue and a favorable change in product mix. Display’s operating margin for fiscal 2024 decreased primarily due to unfavorable changes in product mix. 37 Table of Contents Recent Accounting Pronouncements Accounting Standards Not Yet Adopted Disaggregation of Income Statements Expenses .
AGS’ operating margin for fiscal 2025 decreased compared to the same periods in the prior year primarily due to a decrease in 200mm equipment net revenue, higher expense related to an increase in headcount to support business growth, and higher excess and obsolete inventory charges, partially offset by higher net revenue from services and spares. 32 Table of Contents Recent Accounting Pronouncements Accounting Standards Not Yet Adopted Targeted Improvements to the Accounting for Internal-Use Software.
Removed
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.
Added
The financial results of our other operating segments that do not meet the requirements for a reportable segment, including our Display operating segment, are included in Corporate and Other. Prior-year Corporate and Other balances have been recast to include Display financial results.
Removed
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.
Added
The AGS segment also includes 200 millimeter (200mm) and other equipment, which is shipped to many customers globally that serve the non-leading-edge end markets. Effective the first quarter of fiscal 2026, our 200mm equipment business will be moved to our Semiconductor Systems segment.
Removed
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.
Added
These actions have caused substantial uncertainty and have resulted in retaliatory measures, including new tariffs on U.S. goods imposed by China and other countries. Some of these actions have been followed by announcements of limited exemptions and temporary pauses.
Removed
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.
Added
Foundry and logic customers’ spending in fiscal 2025 increased driven primarily by higher customer investments in leading-edge manufacturing technologies. Memory customers’ spending in fiscal 2025 was higher due to increased customer investments in NAND fabrication equipment upgrades.
Removed
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.
Added
General and administrative expenses in fiscal 2025 decreased primarily due to lower spending on professional services, partially offset by an impairment of goodwill of $41 million recognized during the fourth quarter of fiscal 2025.
Removed
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.
Added
In the fourth quarter of fiscal 2025, we approved a workforce reduction plan (Fiscal 2025 Restructuring Plan) to position us for continued growth as a more competitive and productive organization and expect approximately 4% of our global workforce to be impacted under this plan.
Removed
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.
Added
In the fourth quarter of fiscal 2025, we recognized $181 million of restructuring charges consisting primarily of severance and other employment termination benefits to be paid in cash, and other non-cash related charges. We expect to complete the plan in fiscal 2026.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeGains 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.
Biggest changeDollar would result in a decrease in the fair value of these hedging contracts of $177 million at October 26, 2025. We use primarily foreign currency forward contracts to offset the impact of foreign exchange movements on non-U.S. dollar denominated monetary assets and liabilities.
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.
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 26, 2025.
An 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.
An immediate hypothetical 100 basis point increase in interest rates would result in a decrease in the fair value of investments as of October 26, 2025 of approximately $36 million. Debt - At October 26, 2025, the aggregate principal of long-term senior unsecured notes issued by us was $6.5 billion with an estimated fair value of $6.2 billion.
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.
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 $462 million at October 26, 2025.
Hedges are used to reduce, but not eliminate, the impact of foreign currency exchange rate movements on the consolidated balance sheet, statement of operations, and statement of cash flows. We use primarily foreign currency forward contracts to offset the impact of foreign exchange movements on non-U.S. dollar denominated monetary assets and liabilities.
Hedges are used to reduce, but not eliminate, the impact of foreign currency exchange rate movements on the consolidated balance sheet, statement of operations, and statement of cash flows. A hypothetical 10% adverse change in foreign currency exchange rates relative to the U.S.
We do not use foreign currency forward or option contracts for trading or speculative purposes.
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. We do not use foreign currency forward or option contracts for trading or speculative purposes.

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