Applied Materials, Inc. (AMAT) Earnings Call Transcript & Summary

Good afternoon, everyone, and thanks for being with us on today's call. Joining me are Gary Dickerson, our President and CEO, and Brice Hill, our Chief Financial Officer. Before we get started, I want to remind you that this call contains forward-looking statements. These statements carry risks and uncertainties that might cause our actual results to differ. You can find information about these risks and uncertainties discussed in our most recent Form 10-Q and other filings with the SEC. This call also includes non-GAAP financial measures. Reconciliations to GAAP measures are available in today's earnings press release and in our quarterly earnings materials, which you can find on our website at ir.appliedmaterials.com. Also, any comments about calendar 2026 refer to fiscal Q2 2026 through fiscal Q1 2027. With that introduction, I'd now like to hand the call over to Gary Dickerson.

Thanks, Mike. Quarterly results came in at the top end of our guidance range, and with revenue and profitability at all-time highs, Applied posted a record fiscal 2026 and our seventh straight year of growth. I want to thank our employees and supply chain partners worldwide for their outstanding execution this year, which let us keep customer trust high through an industry ramp unlike any we've seen. Since this is our year-end call, I'll start with a quick look at how we performed in 2026. I'll give our perspective on market conditions as demand continues to build, and then I'll explain how Applied has put together the most enabling portfolio to move the AI computing roadmap forward, which provides us with a strong basis for revenue and profit growth across multiple years. During fiscal 2026, revenue increased by over 21% while earnings climbed at close to double that pace, which shows the operating leverage built into our model. Using the midpoint of the guidance for our first quarter, we anticipate semiconductor systems revenue will rise by more than 40% in calendar 2026. AI computing is fueling robust long-term expansion in semiconductors and wafer fab equipment, and Applied is outpacing that wafer fab equipment market thanks to leadership positions we've established in the technologies that enable AI computing most and carry the highest value. This outperformance stems from growth in our addressable market along with meaningful share gains in advanced foundry logic and in DRAM. It additionally reflects our strength in advanced packaging, where revenue should rise roughly 90% this calendar year, as well as our expanding inspection and metrology business, where we remain on track to grow revenue by more than 50% in calendar 2026. Advanced chip demand continues to run well ahead of what supply can meet, and closing that gap will require multiyear spending on additional fab capacity across the industry; in our view, 2027 will set another record, both for the market and for Applied. We presently expect wafer fab equipment demand to grow by over 30% compared with last year, and we believe we are positioned to once again outgrow the market. The pace of industry growth will hinge on how rapidly the entire semiconductor ecosystem—from clean room construction through equipment components and raw material supply—can scale up. At Applied, we are pursuing several steps to ensure the capacity and resources are available to support our customers as they ramp. We've been engaging with customers more tightly around demand planning. Rolling eight-quarter projections and orders placed further ahead are now coming from our biggest accounts. Collaboration with suppliers is getting deeper too. To give you an example, I sat down not long ago with over 250 senior executives representing our key suppliers, and we aligned on what capacity ramp to expect and how prepared we are to serve various growth scenarios. Within an AI data center, silicon accounts for roughly 60% of the capital cost, and leading-edge foundry logic, DRAM and advanced packaging make up over 85% of that silicon content. Those three areas with the biggest influence on the AI computing road map should be the quickest-expanding segments of wafer fab equipment in 2027 and jointly account for roughly 75% of WFE growth through 2030. That is precisely where Applied has put investment across the last several years to assemble the industry's most enabling portfolio, which positions us to beat the market once more in 2027 and afterward as we picked up share at major device inflections. In mid-October, we introduced the Epic Center in Silicon Valley and held an investor breakfast in San Francisco, and thanks to everyone who joined us in person or online. During that investor event, we laid out 3 main themes: the unprecedented opportunities the AI era creates, the distinctive advantages in Applied's capabilities and portfolio for pursuing those opportunities, and how we are generating more value for customers while capturing more value for Applied. With global AI deployment speeding up and AI adoption widening quickly, an intense contest for AI computing leadership exists that boils down to 2 interconnected races, and Applied sits at the center of both. Race one concerns technology leadership, made possible by faster chip and packaging road maps that deliver gains in data center tokens per second per watt. The second race is about rapidly standing up new fabs to add chipmaking capacity, while simultaneously improving output and yield at plants already running. Here at Applied, we've built the sector's leading lineup across materials, integration, and yield innovation technologies. Our materials innovation leadership rests on a wide, interconnected technology portfolio. We address roughly 55% of all wafer fab equipment, and we're #1 in CVD, PVD, epitaxy, CMP, implant, thermal processing, e-beam, and conductor etch for advanced foundry logic and DRAM. At leading-edge nodes, tighter feature dimensions, 3D architectures, and the introduction of new materials together generate tremendous process complexity. How process steps interact matters greatly, particularly in engineering interfaces, where material layers now measure merely 1 to 2 nanometers in thickness. That is why codeveloping deposition, etch, treatment, inspection and measurement technologies and resolving integration challenges right from the outset of development is such a strong advantage, and one that only Applied is positioned to provide. Applied has likewise established world-class integration, modeling and simulation teams plus extensive lab infrastructure to speed transistor, wiring, memory and advanced packaging innovations. As yield and output grow more critical for customers, Applied is launching new yield innovations; we offer the highest resolution and fastest e-beam imaging paired with industry-leading AI-enabled services that we call AIX. E-beam and AIX allow faster learning loops in R&D, speedier transfer and qualification of new technologies in pilot production, and more good ships in high-volume manufacturing. Applied has by far the largest installed base of connected systems, with more than 37,000 chambers linked to AIX as of today, growing over 20% per year. Our EPIC platform accelerates progress in materials, integration, and yield. Through Epic, Applied is able to collaborate with customers and partners on technology creation, giving them much earlier access to next-generation applied technology, faster learning cycles, and quicker transfer and ramp to high yield and output. Applied's take on Epic is that it lets us be designed in sooner when new chip and packaging architectures emerge, gives us a clearer view across several generations of customer road maps, and boosts the productivity of our R&D. Four more Epic partners have come on board since the last earnings call — Intel, Kioxia, BESI and UCLA — taking announced EPIC partnerships to 15 in total, which plainly confirms how valuable co-innovating with Applied is. During our investor event, we also shared the value creation goals we've set for the 2025 to 2030 period: securing over 2 points of additional wafer fab equipment share, boosting service revenue per installed base tool by at least 20%, and lifting gross margin along with operating margin by 5 points and 10 points, respectively. I'm confident that in 2027 we'll deliver meaningful progress against these goals, and all of our teams are pushing toward even higher targets. Before I turn things over to Brice, here's a quick recap. Applied Materials had a record year in fiscal 2026, and we remain on track to grow our semiconductor systems business by more than 40% this calendar year. Our growth is outpacing the wafer fab equipment market, and that comes from the strong leadership position we've established in leading-edge foundry logic, DRAM and advanced packaging. Those are the most enabling areas for AI computing, they're the fastest-growing portions of wafer fab equipment in 2027, and they're where Applied has invested strategically to build the industry's most enabling portfolio. We view 2027 as another record year for the industry and another year of outperformance for Applied, and we expect to make significant progress toward our long-term targets in that year. Put simply, AI is fueling a multiyear expansion in semiconductor demand, and Applied has never been better positioned to lead and outgrow the market. Brice, over to you.

Thanks, Gary. I'm glad to say that Applied delivered a third consecutive quarter of double-digit growth, with sequential and year-over-year gains in revenue, operating profit and non-GAAP earnings per share. Fiscal Q4 also marks our 14th quarter in a row of year-over-year gross margin improvement, a sign of how highly customers value our portfolio of products and services, which is strongly enabling. We expect to outperform the market this calendar year, with robust growth in DRAM, leading-edge foundry logic and advanced packaging — precisely the areas where we've been investing to lead. I want to thank our manufacturing and operations teams and our partners for meeting further increases in customer demand and for helping make these strong results possible. In this call, I’ll update you on demand conditions, review our fiscal 2026 and Q4 results, and share our Q1 business outlook. All the leading indicators we monitor continue to move higher. Cloud CapEx is projected to increase by over 50% in 2027 and to exceed $1 trillion by a wide margin. Use of AI tokens is rising exponentially. The expanding range of AI models is making more applications possible and creating positive economics both for service providers and for early adopters such as Applied Materials. AI has become a central element of daily work at Applied. Over 80% of our employees rely on tools like Microsoft CoPilot and Anthropics Cloud, as well as newer domain-specific tools for materials discovery and engineering. Inferencing is producing favorable outcomes across the entire company—spanning equipment and software development, field service operations, and back office functions. Every one of our software developers relies on AI, and their productivity improves by an average of more than 40%. Consequently, our monthly token consumption expanded by over 50x during this year, and we anticipate that our token and task usage will rise substantially in 2027 as we discover additional ways to leverage AI for accelerating revenue, enhancing customer service, and operating more efficiently. AI keeps generating robust incremental growth in wafer demand, and leading-edge logic plus DRAM fabs are running at full utilization. NAND trails somewhat behind, and ICAP has now reached a healthy zone. Looking ahead to the near term, one of our biggest priorities is growing supply chain capacity so that we can build more systems. Throughout this year, we have increased the demand forecast we give our suppliers each quarter, and as the 2027 demand outlook keeps rising, they are working alongside us. Our supply chain has been mapped out, and our teams and partners are carrying out plans to handle pinch points and produce another year of very strong growth. When we look at the medium term, clean room capacity continues to be a gating factor determining how much equipment the industry can consume. Luckily, we are tracking more than 20 fab ramps and line expansions in 2027 alone. We have set up additional teams along with AIX technologies, and these will assist our customers in speeding up those ramps while getting the most wafer output and yields possible. Over the longer run, the demand signals coming from customers are still quite positive — more than 10 major fabs and expansion projects have been added to our tracker for a third consecutive quarter. Many of these new projects are not expected to come online before 2029 and 2030, which indicates that demand across the 5- and 10-year horizon will run far above what we had planned previously in both logic and memory. At Applied, we are already working alongside customers to forecast what they will require through 2030. Supporting our customers' expansion means committing capital now: by 2028, our systems output should be twice what it was in Q4 26, and by 2030, manufacturing and lab capacity will be more than doubled. Next, a brief recap of fiscal 2026 — revenue increased more than 21%, reaching $34.4 billion; non-GAAP gross margin expanded 130 basis points, hitting 50.1%; and non-GAAP EPS advanced 37%, arriving at $12.89. Both semi systems and AGS delivered double-digit revenue gains, while gross margins improved roughly 150 basis points in each of those segments. Operating cash flow totaled $8.9 billion, an 11% increase. Following $2.7 billion of capex, we generated $6.2 billion in free cash flow, a 9% increase. We returned more than $4.7 billion to shareholders — nearly $3.2 billion through buybacks and $1.6 billion via cash dividends. Turning to Q4: we posted the biggest dollar growth ever in our history, with revenue hitting a record $10.4 billion — that's 14% higher quarter over quarter and 53% higher year over year. Non-GAAP gross margin climbed to 50.6%, 20 basis points better sequentially and 250 basis points better year over year, aided by favorable mix and higher pricing. Non-GAAP operating margin expanded to a record 35.3%, up 130 basis points quarter over quarter and 670 basis points year over year. We delivered solid operating leverage: non-GAAP operating expenses came in at 15.2% of revenue, a year-over-year drop of 430 basis points, and non-GAAP EPS climbed to an all-time high of $4.16 — a 19% gain from the prior quarter and 92% higher than a year ago. Our plan is to drive gross margin up further by introducing additional enabling products and capturing a portion of the value they deliver to customers. We also plan to extend operating leverage and margins, because our AI and automation initiatives allow us to expand support capabilities while adding very few people. Turning to how the segments performed in Q4: Semiconductor Systems set a revenue record of $8 billion, rising 14% quarter over quarter and 64% year over year, which included record sales in Korea and Taiwan. DRAM delivered strong growth, exactly as we had anticipated, and we achieved record revenue in both DRAM and advanced packaging. Turning to Q4 product results, we set records for revenue and deposition across PVD, CVD, ALD and epitaxy. We likewise reached record revenue in etch, CMP and process control. Non-GAAP gross margin for the segment increased 240 basis points versus a year ago, reaching 55.2%, while non-GAAP operating margin jumped more than 940 basis points year-over-year to 39%. Applied Global Services reported record revenue of $1.9 billion, a 26% year-over-year increase, driven by record revenue in both services and spares. AGS gross margin improved 100 basis points year-over-year to 35.1%, and non-GAAP operating margin climbed almost 170 basis points to 30.5%. Other revenue came in at $517 million, matching what we had expected for the quarter, and we produced record operating cash flow of $3.3 billion in Q4. Capital expenditures fell on a sequential basis to $684 million, which gave us record free cash flow of $2.6 billion. More than $2.4 billion went back to shareholders, made up of $2 billion in stock buybacks and $421 million in cash dividends. We still have $10.8 billion left under our share buyback authorization, and we continue to anticipate returning 80% to 100% of free cash flow to shareholders over time. Let me now take you through the Q1 outlook. Just to remind everyone, this quarter spans 14 weeks, so AGS revenue growth gets a boost during the period. We anticipate total company revenue of $11.1 billion, give or take $500 million — at the midpoint that's a 58% increase versus a year ago. Non-GAAP EPS is expected to land at $4.35, plus or minus $0.20, which is 83% higher year-over-year. Within that guidance, Semiconductor Systems revenue comes in at about $8.7 billion, a 69% year-over-year gain. Our inaugural AGS quarter should hit $2 billion, up 28% from last year, while other revenue lands near $400 million. Non-GAAP gross margin is projected to climb to roughly 50.8%, an improvement of 170 basis points year-over-year, and non-GAAP operating expenses should be approximately $1.7 billion. Regarding the non-GAAP tax rate, our model assumes approximately 13%. Finally, to help with your modeling after that 14-week quarter has passed, AGS revenue in Q2 should remain near Q1 levels, and OpEx in Q2 is expected to come in at about 15% of revenue. In summary, AI continues to add a rapidly expanding, incremental demand layer to the industry. The investments we have made to help enable this new wave have provided us with a rich and growing portfolio of highly enabling products and services. Our technology leadership in the most critical markets is now clearly reflected in our strong revenue growth and gross margin expansion. Our emphasis on operating leverage is producing record operating margins and helping drive robust cash flow and shareholder distributions, including the biggest quarterly share buyback in more than 8 years. We still have long visibility from our customers, anticipate another strong record year in 2027, and are making substantial investments so we can ramp to higher levels beyond next year. We have high confidence in our strategy and that we will show continuous progress on share gains, gross margin expansion and operating leverage. Now Mike, let's begin the Q&A.

Thanks, Brice. <<operator_script>>. Operator, let's please begin.

To kick things off, I'd really like to understand how demand has changed or evolved across the last three months. You brought up visibility at 28 and 29. I'd be curious to learn more about how those conversations are developing? And if you could be somewhat specific by end market — foundry, logic, DRAM, NAND? And I guess as part of that, Brice, you mentioned doubling your system output, but also doubling manufacturing and lab capacity by 2030 — if you could sort of bridge what kind of growth that implies overall for shipments into the 20 and the 30 time frame as part of it, that would be very helpful.

Absolutely. Thanks for the question, C.J. — good to hear from you. Now, regarding demand conditions during the past 90 days, we've continued to observe growth from our customers. As we noted, we added over 10 projects to the factory tracker — those consist of new fab construction projects along with conversions of existing fabs — making it the third consecutive quarter in which more than 10 projects have been added to that tracker. So conditions continue to strengthen. In leading-edge logic and DRAM, the market remains constrained, and as a result customers are trying to add as much capacity as they can and are pulling projects forward wherever possible. The conditions we're seeing remain much like what we saw in earlier quarters, and from that standpoint things keep getting stronger. Turning to investments in capacity, we're adding more of it. We'll have the ability to double what we produce by 2028. We just posted an $8 billion quarter, so you can do the math on that; that's the capacity capability we'll be holding. And because we aren't at full utilization right now, doubling production is one matter, while doubling our capacity is a separate matter, and we'll get that done by 2030. That will permit an even higher level of output. Our thinking is that, from a production standpoint, we need enough capacity to handle every possible scenario, and we are certainly monitoring the accelerating growth rate to ensure we can meet it. Beyond that, we are passing all of this information along to our suppliers as well.

CJ, beyond the leading-edge foundry, logic and DRAM that AI is driving, there’s one more thing I’d mention: advanced packaging is another field where we’re seeing enormous customer demand. We’ve discussed how our business in that area rose 90% during the calendar year. In ’27 we expect very strong growth there as well, and in that segment going forward too.

That's really useful. Just one more quick question. Could you talk a bit about the work you're doing with your suppliers, and with your suppliers' own suppliers? Are you putting up deposits in advance — I'd like to hear how you're enabling what ought to be yet another huge growth vector across the next 2, 3-plus years?

Sure, C.J., good question. We refer to having more than 2,000 suppliers, and every one of them has to raise output. The first step we took was making certain that all the data flows from our customers through to our suppliers. We mention the 8-quarter forecast — we're getting that data over to them. We're delivering it in detail so they can plan their production. Second, we're collaborating closely on the real schedules for each quarter as we move through those 8 quarters of the year; and when it comes to investments, I believe every supplier has an incentive to make those investments and improve its own profitability. So no problems on that front, in our view. And looking at it — we don't see any obstacles standing in the way of the higher demand levels that are being contemplated. There will be plenty of pinch points, as we've discussed. Essentially all the suppliers must add capacity and add labor, so we're working through that with each of them.

Brice, could you give us some idea of the mix you're assuming for fiscal Q1? I ask because DRAM rose a lot in fiscal Q4. So I'm curious whether you expect it to climb sharply once more. Just if you could give us a sense of how the mix looks.

Tim, yes, we anticipate comparable trends for Q1, with DRAM and leading logic both very strong; in our view, both of those end markets are constrained. Customers are therefore doing everything they can to add capacity as fast as possible. So we actually expect a mix similar to Q4. And looking across the year for '27, we expect that to remain roughly unchanged. So leading-edge DRAM and advanced packaging are the strongest growers for the year; and what changes for us in '27 is that ICAPs, the mature logic technologies, appear set to grow again and attract greater investment in 27, as the market has absorbed the capacity and is returning to normal from a capacity utilization standpoint.

Yes. And Tim, one more point I’d probably add: compared with ICAP growth in 27, non-China is set to grow at a much quicker pace than China.

All right, good. So, Gary, I just wanted to ask you this: the stock market at times runs ahead of fundamentals, though not always. And we're aware there's a mismatch between what the supply chain is building when it comes to gigawatts that will be ready from a shell standpoint versus what the chips are being built. So have you noticed in the past, I don't know, a few weeks or months or anything, have any customers come to you and say, "Hey, this seems great, but I might not want to take that tool exactly when I thought I would, and so maybe I'd like to take it a quarter or 2 or like a month or 2 later"? Are you seeing any of that, or is literally everyone pushing to get tools as fast as they can?

No, very clear. The answer is no. Nobody is saying that they don't want the tools as fast as we can get them. I've been traveling quite a bit over the last couple of months, and we're constantly receiving requests from customers to accelerate our ramp and deliver earlier.

Gary, I'd like to put the final question a bit differently. Suppose there is some slowdown in data center build-out — whether that comes next year or in 2028 — and it has an impact, what effect do you think that would have on the WFE forecast? Do you believe your customers are planning this deployment with a long-term view, so that a slowdown — any short-term one — won't throw them off? How should investors think about what happens to the semi cap industry if the build-out of data centers slows temporarily or for a somewhat longer stretch?

Yes. Thanks for the question. So, as I said on the previous question, what I'm hearing from some of our leading customer CEOs — we meet with them monthly — is that they are really asking us to ramp faster. I think demand across all of those areas, particularly the ones driven by AI — leading foundry, logic, DRAM and advanced packaging demand — is significant. And as you know, ramping capacity takes time; so I mean, you have to begin with a view of computing demand, and everything we see, everything I hear when I talk with companies across the ecosystem, points to computing demand continuing to go higher. And so I don't see any signs from people that they're worried about ramping too quickly — it's really the opposite, where people want us to pull in and ramp faster. I don't know, Brice, if you'd like to add any color?

Right, and I’ll just add one point that’s probably not a surprise, but supply is greater than demand, particularly in DRAM and leading logic, so there’s a bit of cushion there. Sorry, I mean demand is greater than supply, so there’s a bit of cushion there. And then there are markets that are underserved right now as well, so we have the PC market, smartphone markets that are constrained, smart TVs that are constrained. So we believe there is a substantial cushion in the market even if data center demand were to be lower over the next 2 years, and as Gary pointed out, that is not what we are seeing, just to be clear.

Okay, that's really useful. For my follow-up, looking back at last year, at the start of it I believe the expectation was that semi systems would grow by more than 20%, correct? And the actual figure now looks like it will be nearer 40%, right? So the growth came in much faster. And the conservatism about clean room availability and so on was the same. So what improved as last year went on? And then I suppose the real question is this: when you say the industry will grow 30%, is that a fixed threshold? For instance, what could make the industry grow beyond 30%? For instance, why couldn't what happened in '26 also happen in '27?

Yes, Vivek, great question; so we do believe clean room and clean room availability are the governing factor. Now, to your point, throughout last year, customers could either add clean room, pull projects forward, work on projects that raised output from their factories through upgrades and that kind of thing. So those are the tools customers have for increasing output. I think the macro equation at the end of the day is guided by the clean room that can become available.

First off, if we look at your equipment, you're set to grow equipment by more than 40% in '26. I suppose my question is, what do you figure WC is actually growing at on a percentage basis in 2026? And since you see WD growing more than 30% in 2017, should we be expecting that same type of outperformance in '27 versus WP that you're — that we're seeing in '26?

Stacy. Yes, we do believe we're outperforming WFE in '26, and we expect that to be the case in '27 as well, and that comes on the strength of our top positions in leading logic DRAM and advanced packaging and the strong mix toward those being the fast-growing markets. So I think greater than 40% for our business, and whatever our business is, slightly less than that for WFE for '26.

Understood. As a follow-up, a few competitors mentioned near-term supply constraints that ended up affecting their guidance for the coming quarter. Are you actually running into any of that? It sounded like much the same kind of stuff you guys will be purchasing regardless. Are you seeing any of it? Is it actually — I mean, with the outlook as strong as it is, is it being impaired in any way by supply constraints? And would it be higher if you weren't seeing anything, or if you are seeing anything at all?

Yes, Stacy, good question. As I've highlighted, there are a few pinch points from a supply perspective. Our Q1 number would be slightly higher if everything were perfectly available. It's not a major impact, but we are working closely with all the suppliers. You saw 3 sequential quarters of more than double-digit growth as we went through the year; and supply chain is just reacting greatly, and we're working hard to increase the output, and we expect to increase the output every quarter this year.

Yes, Stacy, I would add — at least from my perspective, as I'm talking with all of our customers, they want us to ship as quickly as possible. I mean, demand is extremely strong. Compute demand is extremely strong; so — and as Brice said, I think our teams have done a really great job with ramping, but there's more work for us to do in '27, though we are in a very strong position to outperform going forward.

My question concerns the DRAM roadmap. One memory manufacturer plans to go the 3D DRAM route rather than 4x Square. I realize you've done a nice job in the master classes explaining this technology. Could you briefly remind us how Applied Materials is positioned product-wise and what the opportunity looks like for each of those approaches?

Sure, and thanks for asking. One thing I'd do is direct you to the investor breakfast, where a slide showed both the foundry logic technology nodes and the DRAM technology nodes. What that slide shows for DRAM is that as you move to new versions of 6F square, we're picking up share. Then as you move to 4F square and 3D DRAM, our servable market grows and our share rises by multiple points. So from Applied Materials' perspective, DRAM is a very strong segment for us. We're considerably bigger than our closest process equipment rivals, and we have very deep co-innovation relationships with each of these different companies. So for Applied, we're well positioned. Adoption of 6F squared is certainly continuing, and those chips get new transistors for higher-speed bandwidth; then as you move to 4F squared and 3D DRAM, we showed at that breakfast that our SAM share is rising for 4Fs and 3D DRAM. We also show SAM per 100,000 wafer starts climbing substantially as you go from 6F square to 4Fs and then to 3D DRAM. So again, from Applied's perspective, we're deeply engaged with every one of these companies, and we hold the most enabling technologies for these major inflections. So again, this is an area where our co-innovation relationships are very, very deep.

Brice, on the AGS side, you said it's growing 20% a year and that service revenue per tool is also up 20%. So what should we expect for AGS growth next year?

Right, we've called out mid-teens. So 15% is what I'd say for the horizon. How I'd frame it is this: the installed base rises 5% to 10% every year. Revenue per tool rises 5% to 10% every year, and that adds up to roughly 15%. This year we grew faster, helped by higher utilization throughout the ecosystem. So we're near 100%. That means you won't see that same one-off benefit in the years ahead. Still, those are the 2 components, and we expect to keep launching new products that assist customers in ramping and achieving the highest yields.

I'd like to pick up where we left off on the supply question. It looks like you aren't building inventory as much, and days of inventory also fell by 10 days. So I'm curious why you wouldn't be more aggressive about building inventory. And on that same note, you gave some color on AGS in April. Do you have any thoughts about semi systems for the April quarter? And I have one quick follow-up.

Yes. Thanks, Krish. Good to hear from you. So — we added a little more than $300 million of inventory during the quarter, bringing it to $6.9 billion. And I think that's fair. I'd like to have even more inventory than that; so we're working on it with the suppliers — and let me point out again, we had 3 quarters of double-digit increases in output; so we're definitely pushing the system, and we'll keep working on that as we go through the year. And it's a good point. We would like to have more inventory.

Do you have any color on the April quarter, on any systems?