Applied Materials Analyst Day Notes

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This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

“the next few devices, graphics, processor and CPU require a lot more processing power but they require a lot more power. So it’s 80 watts or so on a high performance Ultrabook compare to smartphone, that is a dramatic difference and it really shifts where we have to focus to help our customers to solve those very, very critical problems.

And that is where this war on mobility is going to be won, the companies that can solve that battery life, the high performance and functionality, the portability, the user experience, those are the companies that are going to win… we are really still at the beginning of this adventure”

“Your smartphone is not going to be used for money, it is going to be used to be the central controller for many other devices”

“Today we are still pretty much stuck with touch, I think in the future we will have much better voice and we will require more processing power on the devices. We will have better gesture recognition, handwriting recognition and the like.”

“transistors are really at the fundamental level of integrated circuits, you have to have a better transistor every generation, it needs to be higher performance and lower power, it is the beginning, it’s the foundation, it enables those things like battery life, like performance. But several generations ago, transistors stopped improving when you scaled, in fact they started to get worse, they leaked more, there was hard to get better mobility. And so we’ve had to resort to quite a number of changes from metal gate to high-k dielectrics in planar transistors. And now as Bob said, vertical transistors and logic and certainly many vertical memory cells in 3D NAND and we’re going to see that trend to continue, because it is the only way to continue to improve the requirements of transistors.”

“But even if your base transistors operates at high speed, the thing that you have to have to deliver that performance stay outside well is interconnect, Applied is clearly the leader in interconnect”

“with increased process complexity, generation over generation in the next few years we expect that foundry spending will have to increase.”

“3D NAND factories will all be greenfield factories. There is no reuse when you move to these new generation of technology because of the stark difference between it and planar NAND. ”

“we’re seeing a very, very strong drive for finFET transistors so that capability can get in to the next generation of technology.”

“I have to tell you for all of us here at Applied, this is a tremendous amount of fun. We have great, great technology and all of us spend seven days a week, 24 hours a day with tremendous passion focused on these inflections with the technology that we have.”

“two reasons, why TSMC is winning, one is because they have better yields, and the other one is around device performance and transistor technology.

When we work with all of the foundry customers, TSMC stands on global foundries and also with Intel. All of these companies are focused on more features, better performance, longer battery life and the transistor technology, 20 nanometer finFET technology, this is the key focus for all of these companies.”

“Today, as that customers are moving to 20 nanometer and beyond, in all sectors of device making, logic, in the foundry space, in the memory space, really the key is that longer development cycles are necessary, many challenges that our customers face need longer development time and earlier engagement with the customers as a result.”

” the pillars of our growth: number one transistor…Second is about extending our leadership in interconnect…And third in opportunity space that we are very excited about is change the rules in patterning and in inspection.”

“We think bendable, rollable, foldable displays will come in a not too distant future. That type of form factor will require new material, new material deposited using high precision material engineering and all of this increases capital intensity for us.”

“display is a dominating component for smart devices…Start to the resolution, then people ask to optimize power, then people ask to optimize form factor.”

“Typical newspaper print is roughly 200 pixels per inch equivalent on a display, you go to magazine and books, something in order of 280 to 300. And then you go to some glossy pictures that’s roughly 700 PPI. So in fact the human eye can once you start to pay attention to this, you will want high and high resolution devices…to give you a point of reference, the iPhone 5 is 320 PPI roughly and the Galaxy phone is over 400 PPI roughly.”

“And so we as we believe it will be imminent over the next 12 months to 24 months multiple devices will get released using LTPS technology”

“So let’s get into the number of units, about eight tools is our serve available market in the all the amorphous silicon, mobility fabs, that number steps up to about 15 tools once you go pass 300 PPI, once you go to flexible OLED or OLED, somewhere 50 to over 20 tools per fab would be the number of tools that our customers would buy. So that’s a huge jump in terms of growth multipliers for display.”

“Spare and services again we have 26, over 25,000 install based your average tool can use $200,000 a year in spares and services.”

“So in an average year the net tools we shipped could be 1300 tools net, okay”

“In our industry the two enemies of the state frankly are fixed cost and time. Those are leading indicators of financials…if we move faster and eliminate fixed cost, we will win.”

“The materials innovation and foundry, it’s about the transistor, Samsung, TSMC, Global Foundries. They are all focused on 20 nanometer and thin fab as fast as possible.”

“Our highest share is in foundry space and the published data shows, I think year-to-date were something like 26% of the TSMC CapEx.”