APPLIED MATERIALS INC DE

Previous wording

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 significant investments in research, development and engineering (RD&E) are intended to enable us to deliver new products and technologies before the emergence of strong demand, allowing customers to incorporate these products into their manufacturing plans during early-stage technology selection. We collaborate closely with our global customers to design systems and processes to meet their technical and production requirements.

Current wording

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 and display industries. 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 significant investments in research, development and engineering (RD&E) are intended to enable us to deliver new products and technologies before the emergence of strong demand, allowing customers to incorporate these products into their manufacturing plans during early-stage technology selection. We collaborate closely with our global customers to design systems and processes to meet their technical and production requirements.

Previous wording

The United States government has implemented export regulations for U.S. semiconductor technology sold or provided to customers in China, which have limited our ability to provide certain products and services to customers in China, over the past several years. 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. 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 wording

The United States government has implemented export regulations for U.S. semiconductor technology sold or provided to customers in China, which have limited our ability to provide certain products and services to customers in China, over the past several years. 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 recently announced changes to its trade policy, including increased tariffs on imports. 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. 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 recent changes in trade policies, increased tariffs and trade disputes” in Part II, Item 1A, “Risk Factors.”

Previous wording

Fiscal 2025 and 2024 each contain 52 weeks and the first three months of fiscal 2025 and 2024 each contained 13 weeks.

Current wording

Fiscal 2025 and 2024 each contain 52 weeks and the first six months of fiscal 2025 and 2024 each contained 26 weeks.

Previous wording

Net revenue in the first quarter of fiscal 2025 increased as compared to the same period in the prior year. Gross margin in the three months ended January 26, 2025 increased compared to the same period in the prior year, primarily driven by favorable changes in customer and product mix and lower material and manufacturing costs.

Current wording

Net revenue in the three and six months ended April 27, 2025 increased as compared to the same periods in the prior year. Gross margin in the three and six months ended April 27, 2025 increased compared to the same periods in the prior year, primarily driven by higher net revenue, favorable changes in customer and product mix and lower material and manufacturing costs.

Previous wording

The Semiconductor Systems segment continued to represent the largest contributor of net revenue. Semiconductor Systems net revenue increased for the three months ended January 26, 2025 compared to the same period in the prior year as customers continued to make strategic investments in new capacity and new technology transitions. Foundry and logic customers’ spending increased for the three months ended January 26, 2025, compared to the same period in the prior year driven primarily by higher customer investments in leading-edge manufacturing technologies. Memory customers’ spending in the first quarter of fiscal 2025 compared to the same period in the prior year was lower due to decreased investments in DRAM technology transitions.

Current wording

The Semiconductor Systems segment continued to represent the largest contributor of net revenue. Semiconductor Systems net revenue increased for the three and six months ended April 27, 2025 compared to the same periods in the prior year as customers continued to make strategic investments in new capacity and new technology transitions. Foundry and logic customers’ spending increased for the three and six months ended April 27, 2025, compared to the same periods in the prior year driven primarily by higher customer investments in leading-edge manufacturing technologies. Memory customers’ spending in the three months ended April 27, 2025 was higher compared to the same period in the prior year due to increased customer investments in NAND fabrication equipment upgrades, partially offset by decreased investments in DRAM technology transitions. Memory customers’ spending in the first six months of fiscal 2025 compared to the same period in the prior year was lower due to decreased investments in DRAM technology transitions, offset by an increase in customer investments in NAND fabrication equipment upgrades.

Previous wording

Our AGS net revenue in the three months ended January 26, 2025 increased compared to the same period in the prior year 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.

Current wording

Our AGS net revenue in the three and six months ended April 27, 2025 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, partially offset by lower customer spending on 200mm equipment.

Previous wording

Our Display net revenue decreased in the three months ended January 26, 2025 compared to the same period in the prior year primarily due to lower customer investments in display fabrication equipment amid ongoing weakness in end market demand.

Current wording

Our Display net revenue increased in the three and six months ended April 27, 2025 compared to the same periods in 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 mobile devices.

Previous wording

Net revenue increased from customers in Korea and Taiwan in the three months ended January 26, 2025 compared to the same period in the prior year primarily due to investments in semiconductor equipment and spending on spares and services.

Current wording

Net revenue increased from customers in Korea and Taiwan in the three and six months ended April 27, 2025 compared to the same periods in the prior year primarily due to investments in semiconductor equipment and spending on spares and services.

Previous wording

Net revenue decreased from customers in China in the three months ended January 26, 2025 compared to the same period in the prior year primarily due to lower investments in semiconductor equipment, partially offset by higher customer spending on spares and services.

Current wording

Net revenue decreased from customers in China in the three and six months ended April 27, 2025 compared to the same periods in the prior year primarily due to lower investments in semiconductor equipment, partially offset by higher customer spending on spares and services and display fabrication equipment.

Previous wording

Net revenue increased from customers in the United States in the three months ended January 26, 2025 compared to the same period in the prior year primarily due to investments in semiconductor equipment, partially offset by a decrease in investments in 200mm equipment.

Current wording

Net revenue decreased from customers in the United States in the three months ended April 27, 2025 compared to the same period in the prior year primarily due to a decrease in investments in 200mm equipment, partially offset by increased investments in semiconductor equipment. Net revenue increased from customers in the United States in the six months ended April 27, 2025 compared to the same period in the prior year primarily due to increased investments in semiconductor equipment, partially offset by a decrease in investments in 200mm equipment.

Previous wording

The changes in net revenue from customers in all other regions in the three months ended January 26, 2025 compared to the same period in the prior year primarily reflected changes in investment in semiconductor equipment and spending on services.

Current wording

The changes in net revenue from customers in all other regions in the three and six months ended April 27, 2025 compared to the same periods in the prior year primarily reflected changes in investment in semiconductor equipment and spending on services.

Previous wording

RD&E expenses for the three months ended January 26, 2025 increased compared to the same period in the prior year primarily due to additional headcount to support our ongoing investments in product development initiatives, consistent with our growth strategy. We continued to prioritize existing RD&E investments in technical capabilities and critical RD&E programs in current and new markets.

Current wording

RD&E expenses for the three and six months ended April 27, 2025 increased compared to the same periods in the prior year primarily due to additional headcount to support our ongoing investments in product development initiatives, consistent with our growth strategy. We continued to prioritize RD&E investments in technical capabilities and critical RD&E programs in current and new markets.

Previous wording

Marketing and selling expenses for the three months ended January 26, 2025 was flat compared to the same period in the prior year.

Current wording

Marketing and selling expenses for the three and six months ended April 27, 2025 were flat compared to the same periods in the prior year.

Previous wording

G&A expenses in the three months ended January 26, 2025 decreased compared to the same period in the prior year primarily due to decreases in professional fees and variable compensation.

Current wording

G&A expenses in the three and six months ended April 27, 2025 decreased compared to the same periods in the prior year primarily due to lower spending on professional services.

Previous wording

Interest expense incurred was primarily associated with issued senior unsecured notes. Interest expense in the three months ended January 26, 2025 increased slightly as a result of the issuance of senior unsecured notes in June 2024, compared to the same period in the prior year.

Current wording

Interest expense incurred was primarily associated with issued senior unsecured notes. Interest expense in the three and six months ended April 27, 2025 increased as a result of the issuance of senior unsecured notes in June 2024, compared to the same period in the prior year.

Previous wording

Interest and other income (expense), net in the three months ended January 26, 2025 decreased compared to the same period in the prior year, primarily driven by higher net loss on equity investments, partially offset by higher interest income.

Current wording

Interest and other income (expense), net in the three months ended April 27, 2025 increased compared to the same period in the prior year, primarily driven by higher net gain on equity investments and a gain on asset sale during the second quarter of fiscal 2025. Interest and other income (expense), net in the six months ended April 27, 2025 decreased compared to the same period in the prior year, primarily driven by higher net loss on equity investments, partially offset by a gain on asset sale during the second quarter of fiscal 2025.

Previous wording

Our effective tax rates for the first quarter of fiscal 2025 and 2024 were 44.1 percent and 12.3 percent, respectively. The effective tax rate for the first quarter of fiscal 2025 was higher than the same period in the prior fiscal year, primarily due to a remeasurement of deferred tax assets resulting from new tax incentive agreements in Singapore in fiscal 2025.

Current wording

Our effective tax rates for the first six months of fiscal 2025 and 2024 were 25.2 percent and 12.9 percent, respectively. The effective tax rate for the first six months of fiscal 2025 was higher than the same period in the prior fiscal year, primarily due to a remeasurement of deferred tax assets resulting from new tax incentive agreements in Singapore, partially offset by a reduction of unrecognized tax benefits related to foreign operations as a result of the lapse of statutes of limitations.

Previous wording

Operating income by segment for the periods presented were as follows:

Current wording

Operating income (loss) by segment for the periods presented were as follows:

Previous wording

Semiconductor System’s operating margin for the three months ended January 26, 2025 increased compared to the same period in the prior year primarily driven by favorable changes in customer and product mix, lower material and manufacturing costs, partially offset by increased RD&E expenses.

Current wording

Semiconductor System’s operating margin for the three and six months ended April 27, 2025 increased compared to the same periods in the prior year primarily driven by 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.

Previous wording

AGS’ operating margin for the three months ended January 26, 2025 decreased slightly compared to the same period in the prior year primarily due to a decrease in 200mm equipment net revenue, higher excess and obsolete inventory, partially offset by higher net revenue from services and spares.

Current wording

AGS’ operating margin for the six months ended April 27, 2025 decreased slightly compared to the same period in the prior year primarily due to a decrease in 200mm equipment net revenue, higher excess and obsolete inventory, partially offset by higher net revenue from services and spares.

Previous wording

Display’s operating margin for the three months ended January 26, 2025 decreased compared to the same period in the prior year primarily due to the decrease in Display net revenue, partially offset by favorable product mix.

Current wording

Display’s operating margin for the three and six months ended April 27, 2025 increased compared to the same periods in the prior year primarily due to the increase in Display net revenue and favorable product mix.

Previous wording

Our cash, cash equivalents and investments consist of the following:

Current wording

Our cash, cash equivalents and investments consisted of the following:

Previous wording

A summary of cash provided by (used in) operating, investing, and financing activities is as follows:

Current wording

A summary of cash provided by (used in) operating, investing, and financing activities was as follows:

Previous wording

Cash from operating activities for the three months ended January 26, 2025 was $925 million, which reflects net income adjusted for the effect of non-cash charges and changes in working capital components. Significant non-cash charges included depreciation, amortization, gain or loss on investments, share-based compensation and deferred income taxes. Cash provided by operating activities decreased in the first three months of fiscal 2025 compared to the same period in the prior year primarily due to lower collections of customer receivable balances, 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 six months ended April 27, 2025 was $2,496 million, which reflects net income adjusted for the effect of non-cash charges and changes in working capital components. Significant non-cash charges included depreciation, amortization, gain or loss on investments or asset sale, share-based compensation and deferred income taxes. Cash provided by operating activities decreased in the first six months of fiscal 2025 compared to the same period in the prior year primarily due to lower collections of customer receivable balances, higher payments for income taxes and higher vendor payments.

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 $34 million and $169 million of account receivables during the three months ended January 26, 2025 and January 28, 2024, respectively. We did not discount letters of credit issued by customers or discount promissory notes during the three months ended January 26, 2025 and January 28, 2024, 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 $109 million and $264 million of account receivables during the six months ended April 27, 2025 and April 28, 2024, respectively. We did not discount letters of credit issued by customers or discount promissory notes during the six months ended April 27, 2025 and April 28, 2024, respectively.

Previous wording

Our working capital was $13.0 billion as of January 26, 2025 and $12.8 billion as of October 27, 2024.

Current wording

Our working capital was $11.7 billion as of April 27, 2025 and $12.8 billion as of October 27, 2024.

Previous wording

Days sales outstanding of our accounts receivable at January 26, 2025 and January 28, 2024 were 76 days and 64 days, respectively. Days sales outstanding varies due to the timing of shipments and payment terms. The increase in days sales outstanding was primarily due to higher accounts receivable balance as a result of the timing of customer payments, and unfavorable revenue linearity.

Current wording

Days sales outstanding of our accounts receivable at April 27, 2025 and April 28, 2024 were 79 days and 65 days, respectively. Days sales outstanding varies due to the timing of shipments and payment terms. The increase in days sales outstanding was primarily due to higher accounts receivable balance as a result of the timing of customer payments, and unfavorable revenue linearity.

Previous wording

We used $897 million of cash in investing activities during the three months ended January 26, 2025. Capital expenditures totaled $381 million, purchases of investments, net of proceeds from sales and maturities of investments were $488 million, and net cash paid for acquisition of $28 million, during the three months ended January 26, 2025

Current wording

We used $676 million of cash in investing activities during the six months ended April 27, 2025. Capital expenditures totaled $891 million, proceeds from sales and maturities of investments, net of purchases of investments, were $211 million, net proceeds from asset sale were $33 million, and net cash paid for acquisition was $29 million, during the six months ended April 27, 2025.

Previous wording

We used $1.8 billion of cash in financing activities during the three months ended January 26, 2025, consisting primarily of cash used for repurchases of common stock of $1.3 billion, a quarterly cash dividend paid to stockholders totaling $326 million, and tax withholding payments for vested equity awards of $142 million.

Current wording

We used $3.7 billion of cash in financing activities during the six months ended April 27, 2025, consisting primarily of cash used for repurchases of common stock of $3.0 billion, cash dividends paid to stockholders totaling $651 million, and tax withholding payments for vested equity awards of $177 million, partially offset by proceeds received from common stock issuances of $129 million under our employee’ stock purchase plan.

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 authorization. As of January 26, 2025, approximately $7.6 billion remained available for future stock repurchases under the repurchase program.

Current wording

In March 2025, our Board of Directors approved a common stock repurchase program authorizing $10.0 billion in repurchases, which supplemented the previously existing $10.0 billion authorization from March 2023. As of April 27, 2025, approximately $15.9 billion remained available for future stock repurchases under the repurchase program.

Previous wording

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. The Revolving Credit Agreement includes financial and other covenants with which we were in compliance as of January 26, 2025. No amounts were outstanding under the Revolving Credit Agreement as of January 26, 2025 and October 27, 2024. See Note 9, Borrowing Facilities and Debt, of the Notes to the Consolidated Condensed Financial Statements for further discussion related to our Revolving Credit Agreement and other credit facilities.

Current wording

We have credit facilities for unsecured borrowings in various currencies of up to $2.1 billion, of which $2.0 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 2030, unless extended as permitted under the Revolving Credit Agreement. The Revolving Credit Agreement includes financial and other covenants with which we were in compliance as of April 27, 2025. No amounts were outstanding under the Revolving Credit Agreement as of April 27, 2025 or under the prior revolving credit agreement as of October 27, 2024. See Note 9, Borrowing Facilities and Debt, of the Notes to the Consolidated Condensed Financial Statements for further discussion related to our Revolving Credit Agreement and other credit facilities.

Previous wording

On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (Tax Act). 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. As of January 26, 2025, we had $459 million of total payments remaining, payable in installments in the next two years.

Current wording

On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (Tax Act). 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. As of April 27, 2025, we have one remaining payment of $255 million, payable in February of 2026.

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. Investments related to the 25% investment tax credit reduced our income taxes payable by $257 million as of January 26, 2025.

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 recognized against property, plant and equipment and a reduction of income taxes payable. We recognize this investment tax credit when there is reasonable assurance that we will qualify for the credit and the benefit will be received. Our income taxes payable balance as of April 27, 2025 was reduced by $142 million due to the investment tax credit.