APPLIED MATERIALS INC DE
For the period ended Jul 28, 2024. Filed Aug 22, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jul 28, 2024 · Filed Aug 22, 2024
AMAT$332.72+4.2%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-04-28; filed 2024-05-23.
0000006951-24-000022
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-07-28; filed 2024-08-22.
0000006951-24-000032
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 96 previous paragraphs and 101 current paragraphs.
67 unchanged; 29 reworded; 4 added; 0 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 15 previous and 15 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (4)
Current report
Our Applied Global Services net revenue in the three and nine months ended July 28, 2024 increased compared to the same periods in the prior year primarily due to an increase in net revenue associated with long-term service agreements and customer spending on spares. Demand for services is expected to grow as the installed base of systems and chambers increases and customers renew long-term service agreements.
Current report
The United States government has implemented export regulations for U.S. semiconductor items sold or provided to customers in China, which have limited our ability to provide certain products and services to customers in China, particularly in the past two years. The U.S. government is continually considering updates to export regulations, and may issue new or additional updates and other requirements that may have the effect of further limiting our ability to provide certain products and services to customers outside the U.S., including in China. 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 II, Item 1A, “Risk Factors.”
Current report
Interest and other income (expense), net in the three months ended July 28, 2024 increased compared to the same period in the prior year, primarily driven by higher cash balances and an increase in market rates resulting in higher interest income, offset by higher net loss and higher impairment on equity investments, compared to the prior year.
Current report
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.
Reworded paragraphs (29)
Previous wording
Fiscal 2024 and 2023 each contain 52 weeks and the first six months of fiscal 2024 and 2023 each contained 26 weeks.
Current wording
Fiscal 2024 and 2023 each contain 52 weeks and the first nine months of fiscal 2024 and 2023 each contained 39 weeks.
Previous wording
Semiconductor equipment customers continued to make strategic investments in new capacity and new technology transitions during the six months ended April 28, 2024. Foundry and logic customers’ spending decreased in the three and six months ended April 28, 2024 compared to the same periods in the prior year driven primarily by lower customer investments in leading-edge manufacturing technologies, partially offset by increased customer investments in mature manufacturing technologies. Memory customers’ spending in the three and six months ended April 28, 2024 was higher as compared to the same periods in the prior year due to increased investments in technology transitions.
Current wording
Semiconductor equipment customers continued to make strategic investments in new capacity and new technology transitions during the three and nine months ended July 28, 2024. Semiconductor Systems revenue increased for the three months and decreased for the nine months ended July 28, 2024 as compared to the same periods in the prior year. Foundry and logic customers’ spending decreased in the three and nine months ended July 28, 2024 compared to the same periods in the prior year driven primarily by lower customer investments in leading-edge manufacturing technologies, partially offset by increased customer investments in mature manufacturing technologies. Memory customers’ spending in the three and nine months ended July 28, 2024 was higher as compared to the same periods in the prior year 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 mature nodes.
Previous wording
Our Applied Global Services net revenue in the three and six months ended April 28, 2024 increased compared to the same periods in the prior year primarily due to an increase in net revenue associated with long-term service agreements and higher customer spending on 200mm generation equipment. Our Display and Adjacent Markets net revenue increased in the three and six months ended April 28, 2024 compared to the same periods in the prior year primarily due to higher customer investments in display manufacturing equipment for IT products including laptops, monitors and tablets.
Current wording
Our Display and Adjacent Markets net revenue increased in the three and nine months ended July 28, 2024 compared to the same periods in the prior year primarily due to higher customer investments in display manufacturing equipment for IT products including laptops, monitors and tablets, partially offset by lower customer investments in display manufacturing equipment for TVs and products in the mobile market.
Previous wording
For the three and six months ended April 28, 2024, net revenue remained relatively flat as compared to the same periods in the prior year. The decrease in net revenue from customer investment in semiconductor equipment was offset by increases in net revenue associated with long-term service agreements, customer spending on 200mm generation equipment and customer investments in display manufacturing equipment for IT products including laptops, monitors and tablets. The Semiconductor Systems segment continued to represent the largest contributor of net revenue.
Current wording
For the three months ended July 28, 2024, net revenue increased as compared to the same period in the prior year primarily due to higher customer investment in semiconductor equipment and increases in net revenue associated with long-term service agreements and customer spending on spares. For the nine months ended July 28, 2024, net revenue increased as compared to the same period in the prior year primarily due to increases in revenue associated with long-term service agreements, customer spending on spares and customer investments in display manufacturing equipment for IT products including laptops, monitors and tablets, partially offset by the decrease in net revenue from customer investment in semiconductor equipment. The Semiconductor Systems segment continued to represent the largest contributor of net revenue.
Previous wording
The changes in net revenue to customers in all regions in the three and six months ended April 28, 2024 compared to the same periods in the prior year primarily reflected changes in semiconductor manufacturing equipment spending.
Current wording
The changes in net revenue to customers in all regions in the nine months ended July 28, 2024 compared to the same period in the prior year primarily reflected changes in semiconductor manufacturing equipment spending.
Previous wording
Gross margin in the three months ended April 28, 2024 increased compared to the same period in the prior year, primarily driven by lower material, freight and logistics costs, favorable changes in customer and product mix and a decrease in inventory reserves, partially offset by an increase in labor costs. Gross margin in the six months ended April 28, 2024 increased compared to the same period in the prior year, primarily driven by lower material, freight and logistics costs and a decrease in inventory reserves, partially offset by unfavorable changes in customer and product mix and an increase in labor costs. Gross margin during the three months ended April 28, 2024 and April 30, 2023 included $33 million and $42 million of share-based compensation expense, respectively. Gross margin during the six months ended April 28, 2024 and April 30, 2023 included $65 million and $96 million of share-based compensation expense, respectively.
Current wording
Gross margin in the three months ended July 28, 2024 increased compared to the same period in the prior year, primarily driven by lower material, freight, logistics and manufacturing costs. Gross margin in the nine months ended July 28, 2024 increased compared to the same period in the prior year, primarily driven by lower material, freight, logistics and manufacturing costs and a decrease in inventory reserves, partially offset by unfavorable changes in customer and product mix and an increase in labor costs. Gross margin during the three months ended July 28, 2024 and July 30, 2023 included $33 million and $42 million of share-based compensation expense, respectively. Gross margin during the nine months ended July 28, 2024 and July 30, 2023 included $98 million and $138 million of share-based compensation expense, respectively.
Previous wording
The changes in RD&E expenses during the three and six months ended April 28, 2024 compared to the same periods in the prior year were 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 and lower impairment of fixed assets in fiscal 2024. We continued to prioritize existing RD&E investments in technical capabilities and critical research and development programs in current and new markets, with a focus on semiconductor technologies. RD&E expenses during the three months ended April 28, 2024 and April 30, 2023 included $54 million and $41 million of share-based compensation expense, respectively. RD&E expense during the six months ended April 28, 2024 and April 30, 2023 included $110 million and $95 million of share-based compensation expense, respectively.
Current wording
The changes in RD&E expenses during the three and nine months ended July 28, 2024 compared to the same periods in the prior year were 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. We continued to prioritize existing RD&E investments in technical capabilities and critical research and development programs in current and new markets, with a focus on semiconductor technologies. RD&E expenses during the three months ended July 28, 2024 and July 30, 2023 included $53 million and $42 million of share-based compensation expense, respectively. RD&E expense during the nine months ended July 28, 2024 and July 30, 2023 included $163 million and $137 million of share-based compensation expense, respectively.
Previous wording
Marketing and selling expenses for the three and six months ended April 28, 2024 increased compared to the same periods in the prior year primarily due to additional headcount. Marketing and selling expenses during the three months ended April 28, 2024 and April 30, 2023 included $18 million and $12 million of share-based compensation expense, respectively. Marketing and selling expenses during the six months ended April 28, 2024 and April 30, 2023 included $36 million and $29 million of share-based compensation expense, respectively.
Current wording
Marketing and selling expenses for the three and nine months ended July 28, 2024 increased compared to the same periods in the prior year primarily due to additional headcount. Marketing and selling expenses during the three months ended July 28, 2024 and July 30, 2023 included $17 million and $13 million of share-based compensation expense, respectively. Marketing and selling expenses during the nine months ended July 28, 2024 and July 30, 2023 included $53 million and $42 million of share-based compensation expense, respectively.
Previous wording
G&A expenses in the three and six months ended April 28, 2024 increased compared to the same periods in the prior year primarily due to the increases in labor costs and share-based compensation expense. G&A expenses during the three months ended April 28, 2024 and April 30, 2023 included $29 million and $18 million of share-based compensation expense, respectively. G&A expenses during the six months ended April 28, 2024 and April 30, 2023 included $93 million and $41 million of share-based compensation expense, respectively.
Current wording
G&A expenses in the three and nine months ended July 28, 2024 increased compared to the same periods in the prior year primarily due to the increases in share-based compensation expense, labor costs and professional fees. G&A expenses during the three months ended July 28, 2024 and July 30, 2023 included $29 million and $17 million of share-based compensation expense, respectively. G&A expenses during the nine months ended July 28, 2024 and July 30, 2023 included $122 million and $58 million of share-based compensation expense, respectively.
Previous wording
Interest expense incurred was primarily associated with issued senior unsecured notes. Interest expense in the three and six months ended April 28, 2024 remained relatively flat compared to the same periods in the prior year.
Current wording
Interest expense incurred was primarily associated with issued senior unsecured notes. Interest expense in the three and nine months ended July 28, 2024 remained relatively flat compared to the same periods in the prior year.
Previous wording
Interest and other income (expense), net in the three and six months ended April 28, 2024 increased compared to the same periods in the prior year, primarily driven by higher net gain and lower impairment on equity investments and higher interest income as a result of an increase in market rates of interest, compared to the prior year.
Current wording
Interest and other income (expense), net in the nine months ended July 28, 2024 increased compared to the same period in the prior year, primarily driven by higher net gain and lower impairment on equity investments and higher interest income due to higher cash balances and an increase in market rates, compared to the prior year.
Previous wording
Our effective tax rates for the second quarter of fiscal 2024 and 2023 were 13.6 percent and 11.4 percent, respectively. The effective tax rate for the second quarter of fiscal 2024 was higher than the same period in the prior fiscal year primarily due to lower tax credits in fiscal 2024.
Current wording
Our effective tax rates for the third quarter of fiscal 2024 and 2023 were 13.0 percent and 13.6 percent, respectively. The effective tax rate for the third quarter of fiscal 2024 was lower than the same period in the prior fiscal year primarily due to larger excess tax benefits from share-based compensation in fiscal 2024.
Previous wording
Our effective tax rates for the first six months of fiscal 2024 and 2023 were 12.9 percent and 11.9 percent, respectively. The effective tax rate for the first six months of fiscal 2024 was higher than the same period in the prior fiscal year primarily due to lower tax credits in fiscal 2024, partially offset by larger excess tax benefits from share-based compensation in fiscal 2024.
Current wording
Our effective tax rates for the first nine months of fiscal 2024 and 2023 were 13.0 percent and 12.5 percent, respectively. The effective tax rate for the first nine months of fiscal 2024 was higher than the same period in the prior fiscal year primarily due to lower tax credits in fiscal 2024, partially offset by larger excess tax benefits from share-based compensation in fiscal 2024.
Previous wording
The Semiconductor Systems segment is comprised primarily of capital equipment used to fabricate semiconductor chips. Semiconductor industry spending on capital equipment is driven by demand for electronic products, including smartphones and other mobile devices, servers, personal computers, automotive electronics, storage, and other products, and the nature and timing of technological advances in fabrication processes, and as a result is subject to variable industry conditions. Spending can also depend on customer facility readiness and timeline for installation of capital equipment at customer sites. Development efforts are focused on solving customers’ key technical challenges in transistor, interconnect, patterning and packaging performance.
Current wording
The Semiconductor Systems segment is comprised primarily of capital equipment used to fabricate semiconductor chips. Semiconductor industry spending on capital equipment is driven by demand for electronic products, including smartphones and other mobile devices, servers for AI and data center computing, personal computers, automotive electronics, storage, and other products, and the nature and timing of technological advances in fabrication processes, and as a result is subject to variable industry conditions. Spending can also depend on customer facility readiness and timeline for installation of capital equipment at customer sites. Development efforts are focused on solving customers’ key technical challenges in transistor, interconnect, patterning and packaging performance.
Previous wording
Semiconductor equipment customers continued to make strategic investments in new capacity and new technology transitions during the first six months of fiscal 2024. Foundry and logic customers’ spending decreased in the three and six months ended April 28, 2024 compared to the same periods in the prior year driven primarily by lower customer investments in leading-edge manufacturing technologies, partially offset by increased customer investments in mature manufacturing technologies. Memory customers’ spending in the three and six months ended April 28, 2024 was higher as compared to the same periods in the prior year primarily due to increased investments in DRAM technology transitions.
Current wording
Semiconductor equipment customers continued to make strategic investments in new capacity and new technology transitions during the first nine months of fiscal 2024. Semiconductor Systems revenue increased for the three months and decreased for the nine months ended July 28, 2024 as compared to the same periods in the prior year. Foundry and logic customers’ spending decreased in the three and nine months ended July 28, 2024 compared to the same periods in the prior year driven primarily by lower customer investments in leading-edge manufacturing technologies, partially offset by increased customer investments in mature manufacturing technologies. Memory customers’ spending in the three and nine months ended July 28, 2024 was higher as compared to the same periods in the prior year primarily due to increased investments in DRAM technology transitions.
Previous wording
Operating margin for the three and six months ended April 28, 2024 remained relatively flat compared to the same periods in the prior year primarily driven by lower net revenue and increased RD&E expenses, offset by lower material, freight and logistics costs and lower depreciation expense as a result of changes in certain assets’ useful lives effective as of the beginning of fiscal 2024.
Current wording
Operating margin for the three and nine months ended July 28, 2024 increased compared to the same periods in the prior year primarily driven by lower material, freight, logistics and manufacturing costs 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.
Previous wording
Net revenue for the three and six months ended April 28, 2024 increased compared to the same periods in the prior year primarily due to an increase in net revenue associated with long-term service agreements and higher customer spending on 200mm generation equipment. Operating margin for the three and six months ended April 28, 2024 increased compared to the same periods in the prior year primarily due to the increase in net revenue.
Current wording
Net revenue for the three and nine months ended July 28, 2024 increased compared to the same periods in the prior year primarily due to an increase in net revenue associated with long-term service agreements and customer spending on spares. The increase in net revenue for the three months ended July 28, 2024 was also partially offset by lower customer spending on 200mm generation equipment. Operating margin for the three and nine months ended July 28, 2024 increased compared to the same periods in the prior year primarily due to the increase in net revenue and favorable change in product mix.
Previous wording
Net revenue for the three and six months ended April 28, 2024 increased compared to the same periods in the prior year primarily due to higher customer investments in display manufacturing equipment for IT products including laptops, monitors and tablets. In addition, the increase in net revenue for the three months ended April 28, 2024 was partially offset by lower customer investments in display manufacturing equipment for products in the mobile market. Operating margin for the three months ended April 28, 2024 decreased compared to the same period in the prior year primarily due to unfavorable changes in product mix, partially offset by higher net revenue. Operating margin for the six months ended April 28, 2024 increased compared to the same period in the prior year primarily due to higher net revenue, partially offset by unfavorable changes in product mix.
Current wording
Net revenue for the three and nine months ended July 28, 2024 increased compared to the same periods in the prior year primarily due to higher customer investments in display manufacturing equipment for IT products including laptops, monitors and tablets, partially offset by lower customer investments in display manufacturing equipment for TVs and products in the mobile market. Operating margin for the three and nine months ended July 28, 2024 decreased compared to the same periods in the prior year primarily due to unfavorable changes in product mix.
Previous wording
Cash from operating activities for the six months ended April 28, 2024 was $3.7 billion, which reflects net income adjusted for the effect of non-cash items and changes in working capital components. Significant non-cash items included depreciation, amortization, gain on investments, and share-based compensation. Cash provided by operating activities decreased in the first six months of fiscal 2024 compared to the same period in the prior year primarily due to higher payments for income taxes and lower new billings for products and services for which there were unsatisfied performance obligations, partially offset by lower payments to vendors.
Current wording
Cash from operating activities for the nine months ended July 28, 2024 was $6.1 billion, which reflects net income adjusted for the effect of non-cash items and changes in working capital components. Significant non-cash items included depreciation, amortization, gain on investments, and share-based compensation. Cash provided by operating activities decreased in the first nine months of fiscal 2024 compared to the same period in the prior year primarily due to lower new billings for products and services for which there were unsatisfied performance obligations, lower collections of customer receivable balances and higher payments for income taxes, partially offset by lower payments to vendors.
Previous wording
We have agreements with various financial institutions to sell accounts receivable and discount promissory notes from selected customers. We sell our accounts receivable generally without recourse. From time to time, we also discount letters of credit issued by customers through various financial institutions. The 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 $264 million and $529 million of account receivables during the six months ended April 28, 2024 and April 30, 2023, respectively. We did not discount letters of credit issued by customers or discount promissory notes during the six months ended April 28, 2024 and April 30, 2023, respectively.
Current wording
We have agreements with various financial institutions to sell accounts receivable and discount promissory notes from selected customers. We sell our accounts receivable generally without recourse. From time to time, we also discount letters of credit issued by customers through various financial institutions. The 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 $395 million and $619 million of account receivables during the nine months ended July 28, 2024 and July 30, 2023, respectively. We did not discount letters of credit issued by customers or discount promissory notes during the nine months ended July 28, 2024 and July 30, 2023, respectively.
Previous wording
Our working capital was $12.4 billion as of April 28, 2024 and $11.8 billion as of October 29, 2023.
Current wording
Our working capital was $13.4 billion as of July 28, 2024 and $11.8 billion as of October 29, 2023.
Previous wording
Days sales outstanding of our accounts receivable for the three months ended April 28, 2024 and April 30, 2023 were 65 days and 76 days, respectively. Days sales outstanding varies due to the timing of shipments and payment terms. The decrease in days sales outstanding was primarily due to favorable revenue linearity and lower accounts receivable balance as a result of the timing of customer payments.
Current wording
Days sales outstanding of our accounts receivable for the three months ended July 28, 2024 and July 30, 2023 were 67 days and 74 days, respectively. Days sales outstanding varies due to the timing of shipments and payment terms. The decrease in days sales outstanding was primarily due to favorable revenue linearity and lower accounts receivable balance as a result of the timing of customer payments.
Previous wording
We used $596 million of cash in investing activities during the six months ended April 28, 2024. Capital expenditures totaled $486 million and purchases of investments, net of proceeds from sales and maturities of investments were $110 million, during the six months ended April 28, 2024.
Current wording
We used $1,256 million of cash in investing activities during the nine months ended July 28, 2024. Capital expenditures totaled $783 million and purchases of investments, net of proceeds from sales and maturities of investments were $473 million, during the nine months ended July 28, 2024.
Previous wording
We used $2.2 billion of cash in financing activities during the six months ended April 28, 2024, consisting primarily of cash used for repurchases of common stock of $1.5 billion, dividends to stockholders of $532 million, tax withholding payments for vested equity awards of $233 million and net payments of principals on financing leases of $13 million, partially offset by proceeds received from common stock issuances of $119 million under our employee stock purchase plan.
Current wording
We used $2.7 billion of cash in financing activities during the nine months ended July 28, 2024, consisting primarily of cash used for repurchases of common stock of $2.4 billion, dividends to stockholders of $863 million, tax withholding payments for vested equity awards of $258 million and net payments of principal on financing leases of $12 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 $119 million under our employee stock purchase plan.
Previous wording
In March 2024 and December 2023, our Board of Directors declared quarterly cash dividends in the amount of $0.40 and $0.32 per share, respectively. The dividend declared in March 2024 is payable in June 2024. We currently anticipate that cash dividends will continue to be paid on a quarterly basis, although the declaration of any future cash dividend is at the discretion of the Board of Directors and will depend on our financial condition, results of operations, capital requirements, business conditions and other factors, as well as a determination by the Board of Directors that cash dividends are in the best interests of our stockholders.
Current wording
In June 2024, March 2024 and December 2023, our Board of Directors declared quarterly cash dividends in the amount of $0.40, $0.40 and $0.32 per share, respectively. The dividend declared in June 2024 is payable in September 2024. We currently anticipate that cash dividends will continue to be paid on a quarterly basis, although the declaration of any future cash dividend is at the discretion of the Board of Directors and will depend on our financial condition, results of operations, capital requirements, business conditions and other factors, as well as a determination by the Board of Directors that cash dividends are in the best interests of our stockholders.
Previous wording
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. As of April 28, 2024, approximately $11.2 billion remained available for future stock repurchases under the repurchase program.
Current wording
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. As of July 28, 2024, approximately $10.3 billion remained available for future stock repurchases under the repurchase program.
Previous wording
We had senior unsecured notes in the aggregate principal amount of $5.5 billion outstanding as of April 28, 2024. See Note 10 of the Notes to the Consolidated Condensed 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, general corporate purposes and the availability of financing.
Current wording
We had senior unsecured notes in the aggregate principal amount of $6.2 billion outstanding as of July 28, 2024. See Note 10 of the Notes to the Consolidated Condensed 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, general corporate purposes and the availability of financing.
Previous wording
In the ordinary course of business, we provide standby letters of credit or other guarantee instruments to third parties as required for certain transactions initiated by either us or our subsidiaries. As of April 28, 2024, the maximum potential amount of future payments that we could be required to make under these guarantee agreements was approximately $387 million. We have not recorded any liability in connection with these guarantee agreements beyond that required to appropriately account for the underlying transaction being guaranteed. We do not believe, based on historical experience and information currently available, that it is probable that any amounts will be required to be paid under these guarantee agreements.
Current wording
In the ordinary course of business, we provide standby letters of credit or other guarantee instruments to third parties as required for certain transactions initiated by either us or our subsidiaries. As of July 28, 2024, the maximum potential amount of future payments that we could be required to make under these guarantee agreements was approximately $308 million. We have not recorded any liability in connection with these guarantee agreements beyond that required to appropriately account for the underlying transaction being guaranteed. We do not believe, based on historical experience and information currently available, that it is probable that any amounts will be required to be paid under these guarantee agreements.
Previous wording
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. 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.
Current wording
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. 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. Investments related to the 25% investment tax credit reduced our income taxes payable by $112 million as of July 28, 2024.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
The changes in net revenue to customers in all regions, other than Korea, in the three months ended July 28, 2024 compared to the same period in the prior year primarily reflected changes in semiconductor manufacturing equipment spending. The increase in net revenue to customers in Korea for the three months ended July 28, 2024 compared to the same period in the prior year primarily reflected increased customer investments in display manufacturing equipment.