- Outlines strategy to be “the PPACt enablement company”
- Plans to grow revenue by over 55 percent and non-GAAP EPS by more than 100 percent by fiscal 2024
- Commits to return 80 to 100 percent of free cash flow to shareholders
Applied outlined five major inflections that are fueling secular growth and the need for innovation as the company drives its longer-term strategy. At a macro level, the digital transformation of the global economy is accelerating. In computing, AI workloads are fueling the need for new architectures based on entirely new types of silicon. Within chipmaking, traditional Moore's Law 2D scaling is slowing, creating the need for a “new playbook” for PPACt that enables continued chip- and system-level improvements. Another inflection is the need to grow the industry in a more sustainable and equitable manner. Finally, customers are seeking not just better products, but also better outcomes, resulting in a business model shift to solutions delivered via subscription models.
“The core of our strategy is to be the PPACt enablement company,” said
Applied has aligned its strategy to meet the increasingly complex needs of its customers, many of whom participated in the event to discuss trends in computing, semiconductor technology, services and ESG (environmental, social and governance).
Applied summarized the evolution of its Semiconductor Systems business. The portfolio is expanding from unit process equipment that performs a single step to include co-optimized systems with pre-proven combinations along with Integrated Materials Solutions where multiple process technologies are combined under vacuum to create novel materials and chip structures that are not otherwise possible.
“It has been a great journey to walk with
The company also presented case studies of Applied AIX (Actionable Insight Accelerator) – a new platform that enables semiconductor engineers to use the power of big data and AI to accelerate the discovery, development and commercial deployment of new chip technologies.
“It’s hard to simply put a number on it, but we all know that improving the process margin is the key to enable technology node migration,” said
As electronic products become smarter the silicon content per device is increasing, including specialty semiconductors based on mature process nodes. Applied is addressing this growing demand with its ICAPS group (IoT, Communications, Automotive, Power and Sensors). The company is now generating more than
“GF is focused on the largest, most pervasive segments of the semiconductor industry and where technology has the broadest impact,” said
To support the sustainable growth of the semiconductor industry, Applied underscored its ESG commitments with initiatives that are being driven within the company and in collaboration with suppliers, customers and the computing industry.
“Micron is highly committed to reducing our environmental impact,” said
2024 Financial Model
In the base case assumptions of its 2024 financial model, Applied plans to grow revenue by over 55 percent and non-GAAP EPS by more than 100 percent as compared to fiscal 2020. It plans to increase Semiconductor Systems revenue by over 60 percent. The company announced a commitment to return between 80 and 100 percent of free cash flow to shareholders.
Applied plans to grow its services business by over 45 percent as it increasingly moves beyond transactional parts and maintenance to comprehensive services delivered via subscription to give customers better outcomes from lab to fab. Key to the growth strategy is expanding the use of digital services and remote capabilities that use sensors, analytics and AI.
In its Display business, Applied expects to benefit from the next wave of OLED growth as the technology becomes more pervasive in smartphones, notebook PCs, tablets and TVs. Applied plans to increase annual operating margin in its Display business to around
“The growth momentum in our reporting segments is the foundation of our new target financial model,” said
A replay of the Applied Materials Investor Meeting, along with the presentation and related materials, are available on the company’s website at http://www.appliedmaterials.com/company/investor-relations.
Non-GAAP and Other Financial Measures
Free cash flow is defined as operating cash flow, less net capital expenditures. Reconciliations of non-GAAP to GAAP measures are contained in the 2021 Investor Meeting presentation, which is available on the investor page of the company’s website. The non-GAAP adjusted EPS and gross and operating margin targets assume non-GAAP adjustments as applicable for future periods, which we are unable to predict without unreasonable efforts due to their inherent uncertainty. Management uses non-GAAP adjusted financial measures to evaluate the company's operating and financial performance and for planning purposes. Applied believes these measures enhance investors’ ability to review the company’s business from the same perspective as the company’s management, and facilitate comparisons between periods on a consistent basis. There are limitations in using non-GAAP financial measures because they are not prepared in accordance with GAAP and may differ from non-GAAP methods of accounting and reporting used by other companies.
This release contains forward-looking statements, including those regarding anticipated growth and trends in our businesses and markets, industry outlooks and demand drivers, technology transitions, our business and financial performance and market share positions, our capital allocation and cash deployment strategies, our investment and growth strategies, our development of new products and technologies, our business outlook through fiscal 2024, and other statements that are not historical facts. These statements and their underlying assumptions are subject to risks and uncertainties and are not guarantees of future performance. Factors that could cause actual results to differ materially from those expressed or implied by such statements include, without limitation: the level of demand for our products; global economic and industry conditions; the effects of regional or global health epidemics, including the severity and duration of the ongoing COVID-19 pandemic; global trade issues and changes in trade and export license policies, including the recent rules and interpretations promulgated by the
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Source: Applied Materials, Inc.