Former senior executive at Applied Materials
- WFE (wafer fab equipment) demand outlook across logic, foundry, DRAM and NAND
- Evolution of customer spend on WFE and foundry CAPEX projections
- Pricing trends, gross margin considerations and revenue evolution
- Impact of EUV (extreme ultraviolet) shift
- Capacity utilisation, supply chain dynamics and expansion outlook
How would you think about the key trends and growth drivers across the WFE [wafer fab equipment] market?
What competitive dynamics would you highlight among Applied Materials, Lam, KLA and Tokyo Electron? How do they compete against each other and which player is best-placed to serve the demand in customer spend over the next five years? Applied Materials estimates that its customers will spend about USD 100bn on WFE over 2022.
You described Applied Materials as being behind the market leader in the dielectric etch space. In other areas where the company doesn’t have a leading technology, or a technology which is on par with a competitor, how long would it typically take to catch up, whether Lam, KLA or Tokyo Electron?
How might the 2022 USD 100bn customer spend figure evolve over the next five years?
There are some estimates that WFE spending could decrease back to below USD 100bn in 2023-24. What might be driving that?
We’ve seen some fairly large sums of money set aside by customers such as Samsung, TSMC and Intel to invest in expansion from semiconductor players – it was in the hundreds of billions of dollars. How much of every USD 100 CAPEX for new semiconductor manufacturing capacity is spent on WFE?
How might the revenues from Applied Materials’ top customers develop? The top customers in 2019 were Intel, Samsung and TSMC. What has driven the declines in revenue from Intel to under 10% in 2021, despite plans to increase spend on capacity expansion by 43% in 2022?
What are the considerations around Applied Materials’ revenue segmentation? The figures I’ve seen indicate that foundry and logic accounts for 60% of sales, DRAM is about 19% and flash memory is about 21%. What do you think is driving the low-single-digit growth in the foundry and logic side? What is notable about the single-digit declines in share from DRAM and flash, despite the memory market picking up somewhat in Q1 2022?
You mentioned litho solutions being expensive from players such as ASML, upwards of USD 100m for a single tool. With increasing EUV [extreme ultraviolet] adoption and greater share of customer CAPEX going towards lithography, could we start to see the share towards etch and deposition come down?
How much of a risk could customers overspending on capacity expansion be in creating future overcapacity and then quite a long period of low demand for WFE?
How should we assess the evolution of WFE share of customer CAPEX by node diameter? Will customers spend more on WFE as the nodes shrink? If we were to compare 300mm vs 200mm vs 150mm, how does the share evolve in terms of how much they’re spending on fab equipment at each node?
Can any developments in advanced packaging chiplets or changes in chip architecture improve the overall performance of chips made at legacy nodes, to a point where leading-edge WFE adoption turns out to be slower than anticipated?
Will Applied Materials need to expand on production capacity to meet the demands or low-double-digit growth you indicated in customer spend over the next five years? Can that be achieved on the company’s current footprint or will it have to add more capacity?
Where are the key supply chain choke points?
Can any supply chain-related cost increases be passed on to customers?
How much higher is COGS now because of the supply chain-related cost increases vs normally?
How can Applied Materials build out greater scale upstream from its key suppliers and ask them to hold more inventory to ease supply chain pressures, as you mentioned? How long will that take to achieve?
Do supply chain issues have more of an impact on DRAM and 3D NAND or foundry and logic? Is there not much between them?
How does ASP compare for etch and deposition vs lithography tools? The latter quite often command over USD 100m per tool.
Is there anything additional to note about Applied Materials or the WFE market more broadly?
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