By Jeff Dorsch, Contributing Editor
Applied Materials reported net income of $286 million on revenue of $2.257 billion for the fiscal first quarter ended January 31, compared with net income of $348 million on revenue of $2.359 billion in the same quarter of a year ago. Orders in Q1 were $2.275 billion, flat with $2.273 billion a year earlier.
Applied said foundry customers accounted for 38 percent of orders in the first quarter of fiscal 2016, while DRAM manufacturers represented 29 percent, flash memory suppliers 22 percent, and logic/others 11 percent. One year ago, orders were evenly split between foundry and DRAM customers, at 34 percent for each segment.
The 4 percent reduction in Q1 revenue, year over year, reflects the current softness in the semiconductor equipment business. SEMI’s book-to-bill ratio for North American equipment suppliers has been below parity for the last three months, with a preliminary figure of 0.99 in January, subject to revision.
“As the market moves into the sweet spot for Applied’s materials engineering technology, we see strong demand for our semiconductor, display and service businesses,” Gary Dickerson, Applied’s president and chief executive officer, said in a statement. “We are maintaining a positive outlook for 2016 as our customers make strategic, inflection-driven investments that play to our strengths.”
Dickerson told analysts Wednesday, “We are growing beyond semiconductor.” Applied’s display business is being driven by the industry’s move to organic light-emitting diode displays, he said.
An OLED fabrication facility represents three times the potential spending on equipment for an amorphous silicon liquid crystal display plant, according to Dickerson. “I am confident about our growth,” he said. The company’s etch and chemical vapor deposition businesses are “making significant gains,” the CEO added.
While there are “global economic risks” in 2016, similar to those in 2015, 10-nanometer chips and 3D NAND flash memory devices are creating demand for production equipment, along with “increased spending in China” by domestic and foreign companies, Dickerson said. “There is a fierce battle for leadership in these new device categories,” he commented.
Capital spending at the silicon foundries in 2016 will be at “levels more or less the same as last year,” Dickerson added. Their capital expenditures for 10nm ICs is expected to pick up in the second half of calendar 2016, he predicted.
NAND flash investment will be up 25 percent from 2015, particularly for 3D NAND, Dickerson said. The “heavy DRAM investment” of 2015 will cool off this year, falling about 20 percent in 2016, he added. Logic spending will be “relatively flat, year over year,” he said.
Bob Halliday, the company’s senior vice president and chief financial officer, forecast net income in the fiscal second quarter would be in the range of 30 to 34 cents per share, compared with 25 cents per share in Q1 and 28 cents per share in the first quarter of fiscal 2015. Thomson Reuters I/B/E/S said analysts were expecting an average of 26 cents per share for Q2.
Worldwide spending on wafer fabrication equipment will be flat in 2016, compared with 2015, Halliday said. “We expect our share to increase,” he added.
The Applied Global Services business is in its third year of growth and display is in its fourth year of growth, the CFO noted.