01—Abstract
Summary
Summary of the 10-K filed December 16, 2022. Cited figures are marked; the original filing is the authoritative source.
Applied Materials Inc. (AMAT) demonstrated robust performance in fiscal year 2022, with net sales reaching $25.785 billiona, a 12% increase year-over-year.
This growth was primarily driven by strong demand in the Semiconductor Systems segment, which benefited from increased customer investments in new technology transitions and capacity expansion. The Applied Global Services segment also showed growth, supported by an expanding installed base and service agreements. However, the company faced headwinds in its Display and Adjacent Markets segment, which saw a 19%b decline in net sales due to reduced customer investment.
Geographically, while sales in Taiwan and the US showed significant increases, sales in China and Korea experienced a decrease. The company is also navigating supply chain constraints and the impact of new U.S. export regulations on sales to China, estimating a potential $2.5 billionc reduction in net sales for fiscal year 2023. Despite these challenges, Applied Materials continues to invest heavily in research and development to maintain its technological leadership.
02—Key points
Key Highlights
- Net sales increased by 12% to $25.785 billion in fiscal year 2022, driven by the Semiconductor Systems segment.
- The Semiconductor Systems segment saw a 15% increase in net sales, reflecting strong customer investment in new technology and capacity.
- The Applied Global Services segment grew by 11%, supported by an increasing installed equipment base and service agreements.
- The Display and Adjacent Markets segment experienced a 19% decrease in net sales due to lower customer investments.
- The company reported significant stock repurchases totaling $6.1 billion in fiscal year 2022, alongside consistent dividend payments.
- Applied Materials is managing supply chain constraints and the impact of new export regulations, particularly for sales to China, with an estimated fiscal 2023 impact.
- Research and Development (RD&E) expenses increased by 11% to $2.771 billion, underscoring the company's commitment to innovation.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, Applied Materials kept $0.25.
- Revenue$25.79B100.0%
- Cost of revenue−$13.79B53.5%
- Gross profit$11.99B46.5%
- Operating costs−$4.21B16.3%
- Operating income$7.79B30.2%
- Interest, other & tax−$1.26B4.9%
- Net income$6.53B25.3%
Where FY2022 revenue went
$25.79B- Cost of revenue: $13.79B, 53% of revenue
- Net income: $6.53B, 25% of revenue
- R&D: $2.77B, 11% of revenue
- Other operating costs: $1.43B, 5.6% of revenue
- Interest, other & tax: $1.26B, 4.9% of revenue
Kept 25% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed December 16, 2022Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $25.79B$23.06B | +11.8% |
| Cost of Revenue | $13.79B$12.15B | +13.5% |
| Gross Profit | $11.99B$10.91B | +9.9% |
| R&D Expenses | $2.77B$2.48B | +11.5% |
| Operating Expenses | $4.21B$4.03B | +4.5% |
| Operating Income | $7.79B$6.89B | +13.0% |
| Interest Expense | $228.00M$236.00M | −3.4% |
| Net Income | $6.53B$5.89B | +10.8% |
| EPS (Basic) | $7.49$6.47 | +15.8% |
| EPS (Diluted) | $7.44$6.40 | +16.3% |
| Shares Outstanding (Basic) | 871.00M910.00M | −4.3% |
| Shares Outstanding (Diluted) | 877.00M919.00M | −4.6% |
05—Questions
Frequently Asked Questions
What were the main drivers of Applied Materials' revenue growth in fiscal year 2022?
Applied Materials' revenue growth in fiscal year 2022 was primarily driven by strong demand in its Semiconductor Systems segment, fueled by customer investments in new technology transitions and capacity expansion. The Applied Global Services segment also contributed to growth through an increasing installed base of equipment and service agreements.
What challenges is Applied Materials facing, particularly concerning its sales to China?
The company is facing challenges in its Display and Adjacent Markets segment due to reduced customer investment. Additionally, new U.S. export regulations announced in October 2022 are impacting sales to China, with Applied Materials estimating a potential reduction of up to $2.5 billion in net sales and a decrease in overall gross margin for fiscal year 2023 due to these regulations.
How is Applied Materials managing its capital allocation, such as stock repurchases and dividends?
Applied Materials demonstrated a strong commitment to returning capital to shareholders in fiscal year 2022. The company repurchased approximately $6.1 billion of its common stock and continued to pay quarterly cash dividends. A significant portion of the previously authorized stock repurchase program remained available at the end of the fiscal year, indicating ongoing capital return plans.
What is the company's outlook for its key segments in fiscal year 2023?
Applied Materials anticipates a decline in memory customer spending in fiscal year 2023 compared to fiscal year 2022, attributed to weaknesses in consumer electronics and personal computer markets. However, demand for advanced foundry and logic is expected to remain strong as customers continue to invest in new technology. The company is actively managing the implications of new export regulations on its sales, particularly to China.
06—Continue