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1、Table of ContentsUNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549Form 10-Q(Mark One)QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIESEXCHANGE ACT OF 1934For the quarterly period ended April 28,2024or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITI

2、ESEXCHANGE ACT OF 1934For the transition period from to Commission File Number 000-06920Applied Materials,Inc.(Exact name of registrant as specified in its charter)Delaware94-1655526(State or other jurisdiction of incorporation or organization)(I.R.S.Employer Identification No.)3050 Bowers Avenue,P.

3、O.Box 58039,Santa Clara,California 95052-8039(Address of principal executive offices)(Zip Code)Registrants telephone number,including area code:(408)727-5555Securities registered pursuant to Section 12(b)of the Act:Title of Each ClassTrading SymbolName of Each Exchange on Which RegisteredCommon Stoc

4、k,par value$.01 per shareAMATThe NASDAQ Stock Market LLCIndicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding12 months(or for such shorter period that the registrant was required to

5、 file such reports),and(2)has been subject to such filing requirements for the past90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the

6、preceding 12 months(or for such shorter period that the registrant was required to submit such files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company or an emerging growthcompany.See definition

7、s of“large accelerated filer,”“accelerated filer,”“smaller reporting company”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filerAccelerated filer Non-accelerated filerSmaller reporting companyEmerging growth companyIf an emerging growth company,indicate by check mar

8、k if the registrant has elected not to use the extended transition period for complying with any new or revisedfinancial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchang

9、e Act).Yes No Number of shares outstanding of the issuers common stock as of April 28,2024:827,974,828 Table of ContentsAPPLIED MATERIALS,INC.FORM 10-Q FOR THE QUARTERLY PERIOD ENDED APRIL 28,2024TABLE OF CONTENTS PagePART I.FINANCIAL INFORMATIONItem 1:Financial Statements(Unaudited)3Consolidated Co

10、ndensed Statements of Operations for the Three and Six Months Ended April 28,2024 and April 30,20233Consolidated Condensed Statements of Comprehensive Income for the Three and Six Months Ended April 28,2024 and April30,20234Consolidated Condensed Balance Sheets as of April 28,2024 and October 29,202

11、35Consolidated Condensed Statements of Stockholders Equity for the Three and Six Months Ended April 28,2024 and April 30,20236Consolidated Condensed Statements of Cash Flows for the Six Months Ended April 28,2024 and April 30,20238Notes to Consolidated Condensed Financial Statements9Item 2:Managemen

12、ts Discussion and Analysis of Financial Condition and Results of Operations33Item 3:Quantitative and Qualitative Disclosures About Market Risk46Item 4:Controls and Procedures47PART II.OTHER INFORMATIONItem 1:Legal Proceedings48Item 1A:Risk Factors49Item 2:Unregistered Sales of Equity Securities and

13、Use of Proceeds63Item 3:Default Upon Senior Securities63Item 4:Mine Safety Disclosures63Item 5:Other Information63Item 6:Exhibits64Signatures65Table of ContentsPART I.FINANCIAL INFORMATIONItem 1.Financial StatementsAPPLIED MATERIALS,INC.CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS(In millions,exc

14、ept per share amounts)Three Months EndedSix Months EndedApril 28,2024April 30,2023April 28,2024April 30,2023(Unaudited)Net revenue$6,646$6,630$13,353$13,369 Cost of products sold3,493 3,536 6,996 7,130 Gross profit3,153 3,094 6,357 6,239 Operating expenses:Research,development and engineering785 775

15、 1,539 1,546 Marketing and selling209 194 416 391 General and administrative247 214 523 421 Total operating expenses1,241 1,183 2,478 2,358 Income from operations1,912 1,911 3,879 3,881 Interest expense59 61 118 120 Interest and other income(expense),net141(73)536(23)Income before income taxes1,994

16、1,777 4,297 3,738 Provision for income taxes272 202 556 446 Net income$1,722$1,575$3,741$3,292 Earnings per share:Basic$2.08$1.87$4.50$3.90 Diluted$2.06$1.86$4.47$3.88 Weighted average number of shares:Basic830 843 831 844 Diluted836 847 837 848 See accompanying Notes to Consolidated Condensed Finan

17、cial Statements.3Table of ContentsAPPLIED MATERIALS,INC.CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME(In millions)Three Months EndedSix Months EndedApril 28,2024April 30,2023April 28,2024April 30,2023(Unaudited)Net income$1,722$1,575$3,741$3,292 Other comprehensive income(loss),net of ta

18、x:Change in unrealized gain(loss)on available-for-sale investments(9)5 18 28 Change in unrealized net loss on derivative instruments3(5)36(61)Change in defined and postretirement benefit plans (9)Other comprehensive income(loss),net of tax(6)45(33)Comprehensive income$1,716$1,575$3,786$3,259 See acc

19、ompanying Notes to Consolidated Condensed Financial Statements.4Table of ContentsAPPLIED MATERIALS,INC.CONSOLIDATED CONDENSED BALANCE SHEETS(In millions)April 28,2024October 29,2023 ASSETSCurrent assets:Cash and cash equivalents$7,085$6,132 Short-term investments472 737 Accounts receivable,net4,778

20、5,165 Inventories5,691 5,725 Other current assets1,239 1,388 Total current assets19,265 19,147 Long-term investments2,983 2,281 Property,plant and equipment,net2,958 2,723 Goodwill3,732 3,732 Purchased technology and other intangible assets,net273 294 Deferred income taxes and other assets2,738 2,55

21、2 Total assets$31,949$30,729 LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Short-term debt$99$100 Accounts payable and accrued expenses4,174 4,297 Contract liabilities2,611 2,975 Total current liabilities6,884 7,372 Long-term debt5,463 5,461 Income taxes payable656 833 Other liabilities747

22、714 Total liabilities13,750 14,380 Stockholders equity:Common stock8 8 Additional paid-in capital9,321 9,131 Retained earnings46,871 43,726 Treasury stock(37,829)(36,299)Accumulated other comprehensive loss(172)(217)Total stockholders equity18,199 16,349 Total liabilities and stockholders equity$31,

23、949$30,729 Amounts as of April 28,2024 are unaudited.Amounts as of October 29,2023 are derived from the October 29,2023 audited consolidated financialstatements.See accompanying Notes to Consolidated Condensed Financial Statements.5Table of ContentsAPPLIED MATERIALS,INC.CONSOLIDATED CONDENSED STATEM

24、ENTS OF STOCKHOLDERS EQUITY(In millions,except per share amount)Common StockAdditional Paid-In CapitalRetained EarningsTreasury StockAccumulated Other Comprehensive Income(Loss)TotalThree Months Ended April 28,2024SharesAmountSharesAmount(Unaudited)Balance as of January 28,2024831$8$9,109$45,480 1,1

25、96$(37,002)$(166)$17,429 Net income 1,722 1,722 Other comprehensive income(loss),net of tax (6)(6)Dividends declared($0.40 per common share)(331)(331)Share-based compensation 134 134 Net issuance under stock plans1 78 78 Common stock repurchases(4)4(827)(827)Balance as of April 28,2024828$8$9,321$46

26、,871 1,200$(37,829)$(172)$18,199 Common StockAdditional Paid-In CapitalRetained EarningsTreasury StockAccumulated Other Comprehensive Income(Loss)TotalSix Months Ended April 28,2024SharesAmountSharesAmount(Unaudited)Balance as of October 29,2023833$8$9,131$43,726 1,191$(36,299)$(217)$16,349 Net inco

27、me 3,741 3,741 Other comprehensive income(loss),net of tax 45 45 Dividends declared($0.72 per common share)(596)(596)Share-based compensation 304 304 Net issuance under stock plans4 (114)(114)Common stock repurchases(9)9(1,530)(1,530)Balance as of April 28,2024828$8$9,321$46,871 1,200$(37,829)$(172)

28、$18,199 6Table of ContentsAPPLIED MATERIALS,INC.CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS EQUITY-(Continued)(In millions,except per share amount)Common StockAdditional Paid-In CapitalRetained EarningsTreasury StockAccumulated Other Comprehensive Income(Loss)TotalThree Months Ended April 30,2

29、023SharesAmountSharesAmount(Unaudited)Balance as of January 29,2023845$8$8,605$39,389 1,175$(34,347)$(235)$13,420 Net income 1,575 1,575 Dividends declared($0.32 per common share)(268)(268)Share-based compensation 113 113 Net issuance under stock plans2 93 93 Common stock repurchases(7)7(804)(804)Ba

30、lance as of April 30,2023840$8$8,811$40,696 1,182$(35,151)$(235)$14,129 Common StockAdditional Paid-In CapitalRetained EarningsTreasury StockAccumulated Other Comprehensive Income(Loss)TotalSix Months Ended April 30,2023SharesAmountSharesAmount(Unaudited)Balance as of October 30,2022844$8$8,593$37,8

31、92 1,173$(34,097)$(202)$12,194 Net income 3,292 3,292 Other comprehensive income(loss),net of tax (33)(33)Dividends declared($0.58 per common share)(488)(488)Share-based compensation 261 261 Net issuance under stock plans5 (43)(43)Common stock repurchases(9)9(1,054)(1,054)Balance as of April 30,2023

32、840$8$8,811$40,696 1,182$(35,151)$(235)$14,129 See accompanying Notes to Consolidated Condensed Financial Statements.7Table of ContentsAPPLIED MATERIALS,INC.CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS(In millions)Six Months EndedApril 28,2024April 30,2023(Unaudited)Cash flows from operating acti

33、vities:Net income$3,741$3,292 Adjustments required to reconcile net income to cash provided by operating activities:Depreciation and amortization187 249 Share-based compensation304 261 Deferred income taxes(206)(136)Other(247)174 Changes in operating assets and liabilities:Accounts receivable387 552

34、 Inventories34(8)Other current and non-current assets152 113 Accounts payable and accrued expenses(255)(613)Contract liabilities(364)231 Income taxes payable(17)396 Other liabilities1 51 Cash provided by operating activities3,717 4,562 Cash flows from investing activities:Capital expenditures(486)(5

35、42)Cash paid for acquisitions,net of cash acquired(18)Proceeds from sales and maturities of investments1,113 669 Purchases of investments(1,223)(730)Cash used in investing activities(596)(621)Cash flows from financing activities:Proceeds from issuance of commercial paper200 595 Repayments of commerc

36、ial paper(200)(400)Proceeds from common stock issuances119 111 Common stock repurchases(1,520)(1,050)Tax withholding payments for vested equity awards(233)(154)Payments of dividends to stockholders(532)(439)Repayments of principal on finance leases(13)(9)Cash used in financing activities(2,179)(1,34

37、6)Increase(decrease)in cash,cash equivalents and restricted cash equivalents942 2,595 Cash,cash equivalents and restricted cash equivalents beginning of period6,233 2,100 Cash,cash equivalents and restricted cash equivalents end of period$7,175$4,695 Reconciliation of cash,cash equivalents and restr

38、icted cash equivalentsCash and cash equivalents$7,085$4,588 Restricted cash equivalents included in deferred income taxes and other assets90 107 Total cash,cash equivalents and restricted cash equivalents$7,175$4,695 Supplemental cash flow information:Cash payments for income taxes$606$221 Cash refu

39、nds from income taxes$5$51 Cash payments for interest$102$102 See accompanying Notes to Consolidated Condensed Financial Statements.8Table of ContentsAPPLIED MATERIALS,INC.NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTSNote 1 Basis of PresentationBasis of PresentationIn the opinion of our manag

40、ement,the unaudited interim consolidated condensed financial statements of Applied Materials,Inc.and its subsidiaries(we,us,and our)included herein have been prepared on a basis consistent with the October 29,2023 audited consolidated financial statements and includeall material adjustments,consisti

41、ng of normal recurring adjustments,necessary to fairly state the information set forth therein.These unaudited interimconsolidated condensed financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included inour Annual Report on Form 10

42、-K for the fiscal year ended October 29,2023(2023 Form 10-K).The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requiresmanagement to make judgments,estimates and assumptions that affect the amounts reported in the fina

43、ncial statements and accompanying notes.Actualresults could differ materially from those estimates.Our results of operations for the three and six months ended April 28,2024 are not necessarilyindicative of future operating results.Our fiscal year ends on the last Sunday in October of each year.Fisc

44、al 2024 and 2023 contain 52 weeks each and thefirst six months of fiscal 2024 and 2023 each contained 26 weeks.Certain prior-year amounts have been reclassified to conform to current-year presentation.Use of EstimatesThe preparation of financial statements in conformity with accounting principles ge

45、nerally accepted in the United States of America requiresmanagement to make judgments,estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.Actualresults could differ materially from those estimates.On an ongoing basis,we evaluate our estimates

46、,including those related to standalone selling price(SSP)related to revenue recognition,accounts receivable and sales allowances,fair values of financial instruments,inventories,intangible assets andgoodwill,useful lives of intangible assets and property,plant and equipment,fair values of share-base

47、d awards,warranty,and income taxes,among others.We base our estimates on historical experience and on various other assumptions that are believed to be reasonable,the results of which form the basis formaking judgments about the carrying values of assets and liabilities.Property,Plant and EquipmentP

48、roperty,plant and equipment is stated at cost.Depreciation is provided over the estimated useful lives of the assets using the straight-line method.Inconnection with our periodic review of estimated useful lives of the property,plant,and equipment effective as of the beginning of fiscal 2024,we have

49、increased the estimated useful lives of certain assets.The updated estimated useful lives for financial reporting purposes are as follows:buildings andimprovements,3 to 30 years with certain buildings and improvements useful lives increased by 5 years;demonstration and manufacturing equipmentincreas

50、ed to between 5 to 8 years.The estimated useful lives for the remaining asset categories remained unchanged from fiscal 2023.The change in accounting estimate is being applied on a prospective basis to the assets on our balance sheet as of October 29,2023,as well as tosubsequent asset purchases.Base

51、d on the net carrying amounts of assets in use as of the end of fiscal 2023,the impact of this change was a reduction of$30 million and$67 million in depreciation expense during the three and six months ended April 28,2024,respectively,and an increase of$0.03 and$0.06in both basic and diluted earnin

52、gs per share for the three and six months ended April 28,2024,respectively.Recent Accounting PronouncementsAccounting Standards AdoptedContract Assets and Contract Liabilities from Revenue Contracts with Customers in a Business Combination.In October 2021,the FinancialAccounting Standards Board(FASB

53、)issued an accounting standard update to improve the accounting for contract assets and contract liabilities fromrevenue contracts with customers in a business combination(Topic 805).This amendment improves comparability for both the recognition andmeasurement of acquired revenue contracts with cust

54、omers at the date of and after a business combination.We adopted this authoritative guidance in thefirst quarter of fiscal 2024 and the impact of the adoption depends on the facts and circumstances of future acquisitions.9APPLIED MATERIALS,INC.NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-(Co

55、ntinued)Accounting Standards Not Yet AdoptedImprovements to Income Tax Disclosures.In December 2023,the FASB issued an accounting standard update to improve income tax disclosures(Topic 740).The standard prescribes specific categories for the components of the effective tax rate reconciliation,requi

56、res disclosure of income taxes paidby jurisdiction,and modifies other income tax-related disclosures.This authoritative guidance will be effective for us beginning with our annual reportingfor fiscal year 2026,with early adoption permitted.We are evaluating the effect of this new guidance on our con

57、solidated financial statements and relateddisclosures.Improvements to Reportable Segment Disclosures.In November 2023,the FASB issued an accounting standard update to improve reportablesegment disclosure requirements,primarily through enhanced disclosures about significant segment expenses(Topic 280

58、).The standard requires interimand annual disclosure of significant segment expenses that are regularly provided to the chief operating decision-maker(CODM)and included within thereported measure of a segments profit or loss,requires interim disclosures about a reportable segments profit or loss and

59、 assets that are currently requiredannually,requires disclosure of the position and title of the CODM,clarifies circumstances in which an entity can disclose multiple segment measures ofprofit or loss and contains other disclosure requirements.This authoritative guidance will be effective for us in

60、fiscal 2025 for annual periods and in thefirst quarter of fiscal 2026 for interim periods,with early adoption permitted.We are evaluating the effect of this new guidance on our consolidatedcondensed financial statements.Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrict

61、ions.In June 2022,the FASB issued an accounting standard updatewhich clarifies how the fair value of equity securities subject to contractual sale restrictions is determined(Topic 820).The amendment clarifies that acontractual sale restriction should not be considered in measuring fair value.It also

62、 requires certain qualitative and quantitative disclosures related to equitysecurities subject to contractual sale restrictions.This authoritative guidance will be effective for us in the first quarter of fiscal 2025,with early adoptionpermitted.We are evaluating the effect of this new guidance on o

63、ur consolidated condensed financial statements.Note 2 Earnings Per ShareBasic earnings per share is determined using the weighted average number of common shares outstanding during the period.Diluted earnings pershare is determined using the weighted average number of common shares and potential com

64、mon shares(representing the dilutive effect of restricted stockunits and employee stock purchase plan shares)outstanding during the period.Our net income has not been adjusted for any period presented for purposesof computing basic or diluted earnings per share due to our non-complex capital structu

65、re.Three Months EndedSix Months EndedApril 28,2024April 30,2023April 28,2024April 30,2023(In millions,except per share amounts)Numerator:Net income$1,722$1,575$3,741$3,292 Denominator:Weighted average common shares outstanding830 843 831 844 Effect of weighted dilutive restricted stock units and emp

66、loyee stock purchaseplan shares6 4 6 4 Denominator for diluted earnings per share836 847 837 848 Basic earnings per share$2.08$1.87$4.50$3.90 Diluted earnings per share$2.06$1.86$4.47$3.88 Potentially weighted dilutive securities 2 2 Excluded from the calculation of diluted earnings per share are se

67、curities attributable to outstanding restricted stock units where the combinedexercise price and average unamortized fair value are greater than the average market price of our common stock,and therefore their inclusion would beanti-dilutive.10APPLIED MATERIALS,INC.NOTES TO CONSOLIDATED CONDENSED FI

68、NANCIAL STATEMENTS-(Continued)Note 3 Cash,Cash Equivalents and InvestmentsSummary of Cash,Cash Equivalents and InvestmentsThe following tables summarize our cash,cash equivalents and investments by security type:April 28,2024CostGross Unrealized GainsGross Unrealized LossesEstimated Fair Value(In mi

69、llions)Cash$1,359$1,359 Cash equivalents:Money market funds1,420 1,420 Bank certificates of deposit and time deposits42 42 U.S.Treasury and agency securities1,993 1,993 Municipal securities44 44 Commercial paper,corporate bonds and medium-term notes2,227 2,227 Total cash equivalents5,726 5,726 Total

70、 cash and cash equivalents$7,085$7,085 Short-term and long-term investments:Bank certificates of deposit and time deposits$19$19 U.S.Treasury and agency securities401 5 396 Non-U.S.government securities6 6 Municipal securities443 7 436 Commercial paper,corporate bonds and medium-term notes764 1 7 75

71、8 Asset-backed and mortgage-backed securities573 1 10 564 Total fixed income securities2,206 2 29 2,179 Publicly traded equity securities543 447 3 987 Equity investments in privately held companies231 74 16 289 Total equity investments774 521 19 1,276 Total short-term and long-term investments$2,980

72、$523$48$3,455 Total cash,cash equivalents and investments$10,065$523$48$10,540 _*Excludes$90 million of restricted cash equivalents invested in money market funds related to deferred compensation plans.*Includes Canadian provincial government debt.*11APPLIED MATERIALS,INC.NOTES TO CONSOLIDATED CONDE

73、NSED FINANCIAL STATEMENTS-(Continued)October 29,2023CostGrossUnrealized GainsGrossUnrealized LossesEstimatedFair Value(In millions)Cash$1,417$1,417 Cash equivalents:Money market funds3,260 3,260 Municipal securities26 26 Commercial paper,corporate bonds and medium-term notes1,429 1,429 Total cash eq

74、uivalents4,715 4,715 Total cash and cash equivalents$6,132$6,132 Short-term and long-term investments:Bank certificates of deposit and time deposits$18$18 U.S.Treasury and agency securities381 7 374 Non-U.S.government securities7 1 6 Municipal securities438 11 427 Commercial paper,corporate bonds an

75、d medium-term notes760 12 748 Asset-backed and mortgage-backed securities502 15 487 Total fixed income securities2,106 46 2,060 Publicly traded equity securities543 171 16 698 Equity investments in privately held companies192 78 10 260 Total equity investments735 249 26 958 Total short-term and long

76、-term investments$2,841$249$72$3,018 Total cash,cash equivalents and investments$8,973$249$72$9,150 _*Excludes$101 million of restricted cash equivalents invested in money market funds related to deferred compensation plans.*Includes Canadian provincial government debt.During the three months ended

77、April 28,2024 and April 30,2023,interest income from our cash,cash equivalents and fixed income securities was$118 million and$61 million,respectively.During the six months ended April 28,2024 and April 30,2023,interest income from our cash,cash equivalents and fixed income securities was$221 millio

78、n and$92 million,respectively.Maturities of InvestmentsThe following table summarizes the contractual maturities of our investments as of April 28,2024:CostEstimated Fair Value(In millions)Due in one year or less$460$456 Due after one through five years1,169 1,155 Due after five years4 4 No single m

79、aturity date*1,347 1,840 Total$2,980$3,455 _*Securities with no single maturity date include publicly traded and privately held equity securities and asset-backed and mortgage-backed securities.*12APPLIED MATERIALS,INC.NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-(Continued)Gains and Losses

80、on InvestmentsDuring the three and six months ended April 28,2024 and April 30,2023 gross realized gains and losses on our fixed income portfolio were notmaterial.As of April 28,2024 and October 29,2023,gross unrealized losses related to our fixed income portfolio were not material.We regularly revi

81、ew ourfixed income portfolio to identify and evaluate investments that have indications of possible impairment from credit losses or other factors.Factorsconsidered in determining whether an unrealized loss is considered to be a credit loss include:the significance of the decline in value compared t

82、o the costbasis;the financial condition;credit quality and near-term prospects of the investee;and whether it is more likely than not that we will be required to sellthe security prior to recovery.Credit losses related to available-for-sale debt securities are recorded as an allowance for credit los

83、ses through interest andother income(expense),net.Any additional changes in fair value that are not related to credit losses are recognized in accumulated other comprehensiveincome(loss)(AOCI).During the three and six months ended April 28,2024 and April 30,2023,we did not recognize material credit

84、losses and the endingallowance for credit losses was not material to our fixed income portfolio.The components of gain(loss)on equity investments for the three and six months ended April 28,2024 and April 30,2023 were as follows:Three Months EndedSix Months EndedApril 28,2024April 30,2023April 28,20

85、24April 30,2023(In millions)Publicly traded equity securitiesUnrealized gain$25$1$312$19 Unrealized loss(1)(11)(3)(27)Realized gain on sales and dividends2 1 2 1 Realized loss on sales or impairment(1)(1)(2)Equity investments in privately held companiesUnrealized gain 8 1 12 Unrealized loss(4)(9)(10

86、)(11)Realized gain on sales and dividends1 3 5 Realized loss on sales or impairment(117)(117)Total gain(loss)on equity investments,net$23$(128)$304$(120)13APPLIED MATERIALS,INC.NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-(Continued)Note 4 Fair Value MeasurementsOur financial assets are meas

87、ured and recorded at fair value on a recurring basis,except for equity investments in privately held companies.Theseequity investments are generally accounted for under the measurement alternative,defined as cost,less impairments,adjusted for subsequent observableprice changes and are periodically a

88、ssessed for impairment when events or circumstances indicate that a decline in value may have occurred.Ournonfinancial assets,such as goodwill,intangible assets,and property,plant and equipment,are recorded at cost and are assessed for impairment wheneverevents or changes in circumstances indicate t

89、hat the carrying value of an asset may not be recoverable.Fair Value HierarchyWe use the following fair value hierarchy,which prioritizes the inputs to valuation techniques used to measure fair value into three levels and basesthe categorization within the hierarchy upon the lowest level of input th

90、at is available and significant to the fair value measurement:Level 1 Quoted prices in active markets for identical assets or liabilities;Level 2 Inputs other than Level 1 that are observable,either directly or indirectly,such as quoted prices for similar assets or liabilities,quotedprices in market

91、s that are not active,or other inputs that are observable or can be corroborated by observable market data for substantially the fullterm of the assets or liabilities;andLevel 3 Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the a

92、ssets or liabilities.Our investments consist primarily of debt securities that are classified as available-for-sale and recorded at their fair values.In determining the fairvalue of investments,we use pricing information from pricing services that value securities based on quoted market prices and m

93、odels that utilizeobservable market inputs.In the event a fair value estimate is unavailable from a pricing service,we generally obtain non-binding price quotes frombrokers.In addition,to validate pricing information obtained from pricing services,we periodically perform supplemental analysis on a s

94、ample ofsecurities.We review any significant unanticipated differences identified through this analysis to determine the appropriate fair value.As of April 28,2024,substantially all of our available-for-sale,short-term and long-term investments were recognized at fair value that was determined based

95、 upon observableinputs or quoted prices.Our equity investments with readily determinable values consist of publicly traded equity securities.These investments are measured at fair valueusing quoted prices for identical assets in an active market and the changes in fair value of these equity investme

96、nts are recognized in the consolidatedstatements of operations.Investments with remaining effective maturities of 12 months or less from the balance sheet date are classified as short-term investments.Investments with remaining effective maturities of more than 12 months from the balance sheet date

97、are classified as long-term investments.14APPLIED MATERIALS,INC.NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-(Continued)Assets Measured at Fair Value on a Recurring BasisFinancial assets(excluding cash balances)measured at fair value on a recurring basis are summarized below:April 28,2024Oct

98、ober 29,2023 Level 1Level 2TotalLevel 1Level 2Total(In millions)Assets:Available-for-sale debt security investmentsMoney market funds*$1,510$1,510$3,361$3,361 Bank certificates of deposit and time deposits 61 61 18 18 U.S.Treasury and agency securities2,365 24 2,389 331 43 374 Non-U.S.government sec

99、urities 6 6 6 6 Municipal securities 480 480 453 453 Commercial paper,corporate bonds and medium-term notes 2,985 2,985 2,177 2,177 Asset-backed and mortgage-backed securities 564 564 487 487 Total available-for-sale debt security investments$3,875$4,120$7,995$3,692$3,184$6,876 Equity investments wi

100、th readily determinable valuesPublicly traded equity securities$987$987$698$698 Total equity investments with readily determinable values$987$987$698$698 Total$4,862$4,120$8,982$4,390$3,184$7,574 _*Amounts as of April 28,2024 and October 29,2023 include$90 million and$101 million,respectively,invest

101、ed in money market funds related todeferred compensation plans.Due to restrictions on the distribution of these funds,they are classified as restricted cash equivalents and are included indeferred income taxes and other assets in the Consolidated Condensed Balance Sheets.We did not have any financia

102、l assets measured at fair value on a recurring basis within Level 3 fair value measurements as of April 28,2024 orOctober 29,2023.Assets and Liabilities without Readily Determinable Values Measured on a Non-recurring BasisOur equity investments without readily determinable values consist of equity i

103、nvestments in privately held companies.We elected the measurementalternative,defined as cost,less impairments,adjusted for subsequent observable price changes on a prospective basis for certain equity investmentswithout readily determinable fair values and are required to account for any subsequent

104、observable changes in fair value within the statements ofoperations.These investments are classified as Level 3 within the fair value hierarchy and periodically assessed for impairment when an event orcircumstance indicates that a decline in value may have occurred.Impairment losses on equity invest

105、ments in privately held companies were not materialduring the three and six months ended April 28,2024 and were$117 million during the three and six months ended April 30,2023.These impairmentlosses are included in interest and other income(expense),net in the Consolidated Condensed Statement of Ope

106、rations.OtherThe carrying amounts of our financial instruments,including cash and cash equivalents,restricted cash equivalents,accounts receivable,commercialpaper notes,and accounts payable and accrued expenses,approximate fair value due to their short maturities.As of April 28,2024,the aggregate pr

107、incipalamount of long-term senior unsecured notes was$5.5 billion and the estimated fair value was$4.9 billion.As of October 29,2023,the aggregate principalamount of long-term senior unsecured notes was$5.5 billion and the estimated fair value was$4.7 billion.The estimated fair value of long-term se

108、niorunsecured notes is determined by Level 2 inputs and is based primarily on quoted market prices for the same or similar issues.See Note 10 of the Notes tothe Consolidated Condensed Financial Statements for further detail of existing debt.15APPLIED MATERIALS,INC.NOTES TO CONSOLIDATED CONDENSED FIN

109、ANCIAL STATEMENTS-(Continued)Note 5 Derivative Instruments and Hedging ActivitiesDerivative Financial InstrumentsWe conduct business in a number of foreign countries,with certain transactions denominated in local currencies,such as the Japanese yen,Israelishekel,euro and Taiwanese dollar.We use deri

110、vative financial instruments,such as foreign currency forward and option contracts,to hedge certainforecasted foreign currency denominated transactions expected to occur typically within the next 24 months.The purpose of our foreign currencymanagement is to mitigate the effect of exchange rate fluct

111、uations on certain foreign currency denominated revenues,costs and eventual cash flows.Theterms of currency instruments used for hedging purposes are generally consistent with the timing of the transactions being hedged.We do not use derivative financial instruments for trading or speculative purpos

112、es.Derivative instruments and hedging activities,including foreignexchange and interest rate contracts,are recognized on the balance sheet at fair value.Changes in the fair value of derivatives that do not qualify for hedgeaccounting treatment are recognized currently in earnings.All of our derivati

113、ve financial instruments are recorded at their fair value in other current assetsor in accounts payable and accrued expenses.Hedges related to anticipated transactions are designated and documented at the inception of the hedge as cash flow hedges and foreign exchangederivatives are typically entere

114、d into once per month.Cash flow hedges are evaluated for effectiveness quarterly.The effective portion of the gain or losson these hedges is reported as a component of AOCI in stockholders equity and is reclassified into earnings when the hedged transaction affects earnings.The majority of the after

115、-tax net income or loss related to foreign exchange derivative instruments included in AOCI as of April 28,2024 is expected to bereclassified into earnings within 12 months.Changes in fair value caused by changes in time value of option contracts designated as cash flow hedges areexcluded from the a

116、ssessment of effectiveness.The initial value of this excluded component is amortized on a straight-line basis over the life of thehedging instrument and recognized in the financial statement line item to which the hedge relates.If the transaction being hedged is probable not to occur,we recognize th

117、e gain or loss on the associated financial instrument in the consolidated condensed statement of operations.The amount recognized due todiscontinuance of cash flow hedges that were probable of not occurring by the end of the originally specified time period was not significant for the threeand six m

118、onths ended April 28,2024 and April 30,2023.Foreign currency forward contracts are generally used to hedge certain foreign currency denominated assets or liabilities.Accordingly,changes in thefair value of these hedges are recorded in earnings to offset the changes in the fair value of the assets or

119、 liabilities being hedged.As of April 28,2024 and October 29,2023,the total outstanding notional amounts of foreign exchange contracts were$1.8 billion and$1.7 billion.The fair values of foreign exchange derivative instruments as of April 28,2024 and October 29,2023 were not material.We are also exp

120、osed to interest rate risk associated with our potential future borrowings.During the six months ended April 28,2024,we entered intoa series of interest rate contracts to hedge against the variability of cash flows due to changes in the benchmark interest rate of fixed rate debt.Theseinstruments wer

121、e designated as cash flow hedges at inception and will be settled upon the issuance of debt.The gain(loss)on derivatives in cash flow hedging relationships recognized in AOCI for derivatives designated as hedging instruments for theindicated periods were as follows:Three Months EndedSix Months Ended

122、April 28,2024April 30,2023April 28,2024April 30,2023(In millions)Derivatives in Cash Flow Hedging Relationships:Foreign exchange contracts$(6)$2$28$(47)Interest rate contracts15 20 Total$9$2$48$(47)16APPLIED MATERIALS,INC.NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-(Continued)The effects of

123、 derivative instruments and hedging activities on the Consolidated Condensed Statements of Operations were as follows:Three Months EndedApril 28,2024April 30,2023Derivatives in Cash Flow Hedging RelationshipsDerivatives in Cash Flow Hedging RelationshipsTotal Amount Presented inthe ConsolidatedConde

124、nsed Statement ofOperations in which theEffects of Cash FlowHedges are RecordedAmount ofGain or(Loss)Reclassified from AOCI into Consolidated CondensedStatement of OperationsAmount of Gain(Loss)Excluded fromEffectiveness Testing Recognized in Consolidated CondensedStatement of OperationsTotal Amount

125、 Presented inthe ConsolidatedCondensed Statement ofOperations in which theEffects of Cash FlowHedges are RecordedAmount ofGain or(Loss)Reclassified from AOCI into Consolidated CondensedStatement of OperationsAmount of Gain(Loss)Excluded fromEffectiveness Testing Recognized in Consolidated CondensedS

126、tatement of Operations(In millions)Foreign Exchange Contracts:Net revenue$6,646$9$(1)$6,630$14$Research,development andengineering$785(1)$775(3)Marketing and selling$209(1)$194 General and administrative$247$214(1)Interest Rate Contracts:Interest expense$59(3)$61(3)$4$(1)$7$Six Months EndedApril 28,

127、2024April 30,2023Derivatives in Cash Flow Hedging RelationshipsDerivatives in Cash Flow Hedging RelationshipsTotal Amount Presented inthe ConsolidatedCondensed Statement ofOperations in which theEffects of Cash FlowHedges are RecordedAmount ofGain or(Loss)Reclassified from AOCI into Consolidated Con

128、densedStatement of OperationsAmount of Gain(Loss)Excluded fromEffectiveness Testing Recognized in Consolidated CondensedStatement of OperationsTotal Amount Presented inthe ConsolidatedCondensed Statement ofOperations in which theEffects of Cash FlowHedges are RecordedAmount ofGain or(Loss)Reclassifi

129、ed from AOCI into Consolidated CondensedStatement of OperationsAmount of Gain(Loss)Excluded fromEffectiveness Testing Recognized in Consolidated CondensedStatement of Operations(In millions)Foreign Exchange Contracts:Net sales$13,353$14$(1)$13,369$39$Cost of products sold$6,996(1)$7,130 2 Research,d

130、evelopment andengineering$1,539(4)$1,546(3)Marketing and selling$416(1)$391 General and administrative$523$421(1)Interest Rate Contracts:Interest expense$118(6)$120(6)$2$(1)$31$17APPLIED MATERIALS,INC.NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-(Continued)Amount of Gain or(Loss)Recognized i

131、n Consolidated Condensed Statement of OperationsThree Months EndedSix Months EndedLocation of Gain or(Loss)Recognized in Consolidated Condensed Statement ofOperationsApril 28,2024April 30,2023April 28,2024April 30,2023(In millions)Derivatives Not Designated as Hedging InstrumentsForeign exchange con

132、tractsInterest and other income,net$17$12$18$(36)Total return swaps-deferred compensationCost of products sold1 4 1 Total return swaps-deferred compensationOperating expenses8 2 39 14 Total return swaps-deferred compensationInterest and other income,net(4)(2)(7)(4)Total$22$12$54$(25)Credit Risk Cont

133、ingent FeaturesIf our credit rating were to fall below investment grade,we would be in violation of credit risk contingent provisions of the derivative instrumentsdiscussed above,and certain counterparties to the derivative instruments could request immediate payment on derivative instruments in net

134、 liabilitypositions.The aggregate fair value of all derivative instruments with credit-risk related contingent features that were in a net liability position wasimmaterial as of April 28,2024.Entering into derivative contracts with banks exposes us to credit-related losses in the event of the banks

135、nonperformance.However,our exposure isnot considered significant.Note 6 Accounts Receivable,NetWe have agreements with various financial institutions to sell accounts receivable and discount promissory notes from selected customers.We sellour accounts receivable generally without recourse.From time

136、to time,we also discount letters of credit issued by customers through various financialinstitutions.The discounting of letters of credit depends on many factors,including the willingness of financial institutions to discount the letters of creditand the cost of such arrangements.We sold$95 million

137、and$264 million of account receivables during the three and six months ended April 28,2024,respectively.We sold$250million and$529 million of account receivables during the three and six months ended April 30,2023,respectively.We did not discount letters of creditissued by customers or discount prom

138、issory notes during the three and six months ended April 28,2024 and April 30,2023.Financing charges on the saleof receivables and discounting of letters of credit are included in interest expense in the accompanying Consolidated Condensed Statements of Operationsand were not material for all period

139、s presented.Accounts receivable are presented net of allowance for credit losses of$29 million as of April 28,2024 and as of October 29,2023.We sell ourproducts principally to manufacturers within the semiconductor and display industries.While we believe that our allowance for credit losses is adequ

140、ateand represents our best estimate as of April 28,2024,we continue to closely monitor customer liquidity and industry and economic conditions,which mayresult in changes to our estimates.Note 7 Contract Balances and Performance ObligationsContract Assets and LiabilitiesContract assets primarily resu

141、lt from receivables for goods transferred to customers where payment is conditional upon technical sign off and not justthe passage of time.Contract liabilities consist of unsatisfied performance obligations related to advance payments received and billings in excess ofrevenue recognized.Our contrac

142、t assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period.Contract assets are generally classified as current and are included in Other Current Assets in the Consolidated Condensed Balance Sheets.Contractliabilities are classified as

143、current or non-current based on the timing of when performance obligations will be satisfied and associated revenue is expectedto be recognized.18APPLIED MATERIALS,INC.NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-(Continued)Contract balances at the end of each reporting period were as follow

144、s:April 28,2024October 29,2023(In millions)Contract assets$334$274 Contract liabilities$2,611$2,975 The increase in contract assets during the six months ended April 28,2024 was primarily due to an increase in unsatisfied performance obligationsrelated to goods transferred to customers where payment

145、 was conditional upon technical sign off.During the six months ended April 28,2024,we recognized revenue of approximately$2.2 billion related to contract liabilities at October 29,2023.Contract liabilities decreased during the six months ended April 28,2024 due to revenue recognized related to contr

146、act liabilities at October 29,2023,partially offset by new billings for products and services for which there were unsatisfied performance obligations to customers and revenue had not yetbeen recognized as of April 28,2024.There were no credit losses recognized on our accounts receivables and contra

147、ct assets during both the six months ended April 28,2024 and April 30,2023.Performance ObligationsAs of April 28,2024,the amount of remaining unsatisfied performance obligations on contracts,primarily consisting of written purchase ordersreceived from customers,with an original estimated duration of

148、 one year or more was approximately$4.3 billion,of which approximately 62%is expectedto be recognized within 12 months and the remainder is expected to be recognized within the following 24 months thereafter.We have elected the available practical expedient to exclude the value of unsatisfied perfor

149、mance obligations for contracts with an original expectedduration of one year or less.Note 8 Balance Sheet Detail April 28,2024October 29,2023(In millions)InventoriesCustomer service spares$1,654$1,589 Raw materials1,722 1,653 Work-in-process901 997 Finished goodsDeferred cost of sales313 413 Evalua

150、tion inventory462 423 Manufactured on-hand inventory639 650 Total finished goods1,414 1,486 Total inventories$5,691$5,725 April 28,2024October 29,2023(In millions)Other Current AssetsPrepaid income taxes and income taxes receivable$223$412 Prepaid expenses and other1,016 976$1,239$1,388 19APPLIED MA

151、TERIALS,INC.NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-(Continued)Useful LifeApril 28,2024October 29,2023(In years)(In millions)Property,Plant and Equipment,NetLand and improvements$435$393 Buildings and improvements3-302,255 2,194 Demonstration and manufacturing equipment5-82,479 2,353 Fu

152、rniture,fixtures and other equipment3-5786 762 Construction in progress780 672 Gross property,plant and equipment6,735 6,374 Accumulated depreciation(3,777)(3,651)$2,958$2,723 April 28,2024October 29,2023(In millions)Deferred Income Taxes and Other AssetsNon-current deferred income taxes$1,928$1,729

153、 Operating lease right-of-use assets379 370 Finance lease right-of-use assets91 108 Income tax receivables and other assets340 345$2,738$2,552 April 28,2024October 29,2023(In millions)Accounts Payable and Accrued ExpensesAccounts payable$1,457$1,478 Compensation and employee benefits788 1,024 Warran

154、ty346 332 Dividends payable331 267 Income taxes payable363 282 Other accrued taxes72 65 Interest payable38 38 Operating lease liabilities,current87 84 Finance lease liabilities,current89 102 Other603 625$4,174$4,297 20APPLIED MATERIALS,INC.NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-(Contin

155、ued)April 28,2024October 29,2023(In millions)Other LiabilitiesDefined and postretirement benefit plans$122$126 Operating lease liabilities,non-current260 252 Other365 336$747$714 Government AssistanceWe receive government assistance from various domestic and foreign governments in the form of cash g

156、rants or refundable tax credits.Thesearrangements incentivize capital investments and research and development activities.Government incentives generally contain conditions that must bemet in order for the assistance to be earned.We recognize the incentives when there is reasonable assurance that we

157、 will comply with all conditionsspecified in the incentive arrangement and the incentive will be received.We record capital expenditure related incentives as an offset to the associated property,plant and equipment,net within our Consolidated CondensedBalance Sheets and recognize a reduction to depr

158、eciation expense over the useful life of the corresponding acquired asset.We record incentives related tooperating activities as a reduction to expense in the same line item on the Consolidated Condensed Statements of Operations as the expenditure for whichthe grant is intended to compensate.Capital

159、 expenditure related incentives reduced gross property,plant and equipment,net by$232 million as of April 28,2024.Contra-depreciation expense was not material during the three and six months ended April 28,2024.Operating incentives recognized as a reductionto research,development and engineering exp

160、ense were$6 million and$22 million in the three and six months ended April 28,2024,respectively.Capitalexpenditure related incentives reduced our income taxes payable by$112 million as of April 28,2024,of which$105 million is in accounts payable andaccrued expenses and$7 million is in income taxes p

161、ayable,in our Consolidated Condensed Balance Sheets.Note 9 Goodwill and Intangible AssetsGoodwill and intangible assets with indefinite useful lives are not amortized but are reviewed for impairment annually during the fourth quarter ofeach fiscal year and whenever events or changes in circumstances

162、 indicate that the carrying value of an asset may not be recoverable.GoodwillAs of April 28,2024,our reporting units include Semiconductor Products Group and Imaging and Process Control Group,Applied Global Services,Display and Adjacent Markets and other reporting units recorded under Corporate and

163、Other.The Semiconductor Products Group and Imaging and ProcessControl Group combine to form the Semiconductor Systems reporting segment.Details of goodwill as of April 28,2024 and October 29,2023 were as follows:April 28,2024October 29,2023(In millions)Goodwill by reportable segmentSemiconductor Sys

164、tems$2,460$2,460 Applied Global Services1,032 1,032 Display and Adjacent Markets199 199 Corporate and Other41 41$3,732$3,732 21APPLIED MATERIALS,INC.NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-(Continued)Intangible AssetsDetails of intangible assets other than goodwill were as follows:April

165、 28,2024October 29,2023 Gross CarryingAmountAccumulatedAmortization Net CarryingAmountGross CarryingAmountAccumulatedAmortizationNet CarryingAmount(In millions)Intangible assets with finite lives:Semiconductor Systems$2,001$(1,734)$267$2,001$(1,714)$287 Applied Global Services79(79)79(78)1 Display a

166、nd Adjacent Markets194(194)194(194)Corporate and Other37(31)6 36(30)6 Total intangible assets with finite lives$2,311$(2,038)$273$2,310$(2,016)$294 Amortization expense of intangible assets was$11 million and$22 million during the three and six months ended April 28,2024,respectively.Amortization ex

167、pense of intangible assets was$12 million and$23 million during the three and six months ended April 30,2023,respectively.As of April 28,2024,future estimated amortization expense of intangible assets with finite lives is expected to be as follows:Amortization Expense(In millions)2024(remaining 6 mo

168、nths)$21 202541 202640 202726 202823 Thereafter122 Total$273 22APPLIED MATERIALS,INC.NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-(Continued)Note 10 Borrowing Facilities and DebtRevolving Credit FacilitiesIn February 2020,we entered into a five-year$1.5 billion committed unsecured revolving

169、credit agreement(Revolving Credit Agreement)with agroup of banks.The Revolving Credit Agreement includes a provision under which we may request an increase in the amount of the facility of up to$500 million for a total commitment of no more than$2.0 billion,subject to the receipt of commitments from

170、 one or more lenders for any such increaseand other customary conditions.The Revolving Credit Agreement is scheduled to expire in February 2026,unless extended as permitted under theRevolving Credit Agreement.The Revolving Credit Agreement provides for borrowings that bear interest for each advance

171、at one of two rates selected byus,plus an applicable margin,which varies according to our public debt credit ratings.No amounts were outstanding under the Revolving Credit Agreement as of April 28,2024 and October 29,2023.In addition,we have revolving credit facilities with Japanese banks pursuant t

172、o which we may borrow up to approximately$52 million in aggregateat any time.Our ability to borrow under these facilities is subject to bank approval at the time of the borrowing request,and any advances will be at ratesindexed to the banks prime reference rate denominated in Japanese yen.As of Apri

173、l 28,2024 and October 29,2023,no amounts were outstanding underthese revolving credit facilities.Short-term Commercial PaperWe have a short-term commercial paper program under which we may issue unsecured commercial paper notes of up to a total amount of$1.5 billion.The proceeds from the issuances o

174、f commercial paper are used for general corporate purposes.As of April 28,2024,we had commercial papernotes outstanding with an aggregate principal amount of$100 million,which were recorded as short-term debt with a weighted-average interest rate of5.34%and maturities of 105 days,and as of October 2

175、9,2023,we had$100 million of commercial paper notes outstanding and recorded as short-term debtwith a weighted-average interest rate of 5.39%and maturities of 90 days.Senior Unsecured NotesDebt outstanding as of April 28,2024 and October 29,2023 was as follows:Principal AmountApril 28,2024October 29

176、,2023Effective Interest RateInterest Pay Dates(In millions)Long-term debt:3.900%Senior Notes Due 2025$700$700 3.944%April 1,October 13.300%Senior Notes Due 20271,200 1,200 3.342%April 1,October 11.750%Senior Notes Due 2030750 750 1.792%June 1,December 15.100%Senior Notes Due 2035500 500 5.127%April

177、1,October 15.850%Senior Notes Due 2041600 600 5.879%June 15,December 154.350%Senior Notes Due 20471,000 1,000 4.361%April 1,October 12.750%Senior Notes Due 2050750 750 2.773%June 1,December 15,500 5,500 Total unamortized discount(10)(11)Total unamortized debt issuance costs(27)(28)Total long-term de

178、bt$5,463$5,461 23APPLIED MATERIALS,INC.NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-(Continued)Note 11 LeasesA contract contains a lease when we have the right to control the use of an identified asset for a period of time in exchange for consideration.Amajority of our lease arrangements are

179、 operating leases.We also have certain leases that qualify as finance leases.We lease certain facilities,vehicles andequipment under non-cancelable operating leases,many of which include options to renew.Options that are reasonably certain to be exercised are includedin the calculation of the right-

180、of-use asset and lease liability.Our finance leases are those that contain a purchase option which we are reasonably certain toexercise at the end of the lease term.Our leases do not contain residual value guarantees or significant restrictions that impact the accounting for leases.Asimplicit rates

181、are not available for the leases,we use the incremental borrowing rate as of the lease commencement date in order to measure the right-of-useasset and liability.Operating lease expense is generally recognized on a straight-line basis over the lease term.Finance lease expense is generallyrecognized o

182、n a straight-line basis over the life of the underlying leased asset.We elected the practical expedient to account for lease and non-lease components as a single lease component for all leases.For leases with a term ofone year or less,we elected not to record a right-of-use asset or lease liability

183、and to account for the associated lease payments as they become due.The components of lease expense and supplemental information were as follows:Three Months EndedSix Months EndedApril 28,2024April 30,2023April 28,2024April 30,2023(In millions,except percentages)Operating lease cost$27$39$54$65 Fina

184、nce lease cost:Amortization of right-of-use assets$1$1$1 Interest on lease liabilities$1$1$2$1 Weighted-average remaining lease term(in years)-operating leases5.86.1Weighted-average remaining lease term(in years)-finance leases0.41.4Weighted-average discount rate-operating leases3.2%2.7%Weighted-ave

185、rage discount rate-finance leases4.6%4.6%Supplemental cash flow information related to leases are as follows:Six Months EndedApril 28,2024April 30,2023(In millions)Operating cash flows paid for operating leases$53$65 Operating cash flows paid for finance leases$2$1 Financing cash flows paid for fina

186、nce leases$13$9 Right-of-use assets obtained in exchange for operating lease liabilities$58$50 Right-of-use assets obtained in exchange for finance lease liabilities$109 24APPLIED MATERIALS,INC.NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-(Continued)As of April 28,2024,the maturities of leas

187、e liabilities are as follows:Operating LeasesFinance LeasesFiscal(In millions)2024(remaining 6 months)$47$91 202593 202658 202746 202838 Thereafter101 Total lease payments$383$91 Less imputed interest(36)(2)Total$347$89 Note 12 Stockholders Equity,Comprehensive Income and Share-Based CompensationAcc

188、umulated Other Comprehensive Income(Loss)Changes in the components of accumulated other comprehensive income(loss)(AOCI),net of tax,were as follows:Unrealized Gain(Loss)onInvestments,NetUnrealized Gain(Loss)onDerivativeInstrumentsQualifying asCash FlowHedgesDefined andPostretirementBenefit PlansCumu

189、lativeTranslationAdjustmentsTotal(in millions)Balance as of October 29,2023$(50)$(118)$(62)$13$(217)Other comprehensive income(loss)before reclassifications13 37 50 Amounts reclassified out of AOCI5(1)(9)(5)Other comprehensive income(loss),net of tax18 36(9)45 Balance as of April 28,2024$(32)$(82)$(

190、71)$13$(172)Unrealized Gain(Loss)onInvestments,NetUnrealized Gain(Loss)onDerivativeInstrumentsQualifying asCash FlowHedgesDefined andPostretirementBenefit PlansCumulativeTranslationAdjustmentsTotal(in millions)Balance as of October 30,2022$(75)$(52)$(88)$13$(202)Other comprehensive income(loss)befor

191、e reclassifications20(37)(17)Amounts reclassified out of AOCI8(24)(16)Other comprehensive income(loss),net of tax28(61)(33)Balance as of April 30,2023$(47)$(113)$(88)$13$(235)The tax effects on net income of amounts reclassified from AOCI for the three and six months ended April 28,2024 and April 30

192、,2023 were notmaterial.25APPLIED MATERIALS,INC.NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-(Continued)Stock Repurchase ProgramIn March 2023,our Board of Directors approved a common stock repurchase program authorizing$10.0 billion in repurchases,which supplementedthe previously existing$6.0

193、 billion authorization approved in March 2022.As of April 28,2024,approximately$11.2 billion remained available for futurestock repurchases under the repurchase program.The following table summarizes our stock repurchases,including and excluding excise tax,for the three and six months ended April 28

194、,2024 andApril 30,2023:Three Months EndedSix Months EndedApril 28,2024April 30,2023April 28,2024April 30,2023(in millions,except per share amount)Shares of common stock repurchased4 7 9 9 Cost of stock repurchased(including excise tax)$827$804$1,530$1,054 Average price paid per share(including excis

195、e tax)$199.59$115.53$175.23$112.39 Cost of stock repurchased(excluding excise tax)$820$800$1,520$1,050 Average price paid per share(excluding excise tax)$197.77$114.94$174.04$111.96(*)Stock repurchase amounts include the 1%surcharge on stock repurchases under the Inflation Reduction Acts excise tax.

196、This excise tax is recorded in equity and reduces the amount availableunder the repurchase program,as applicable.We record treasury stock purchases under the cost method using the first-in,first-out(FIFO)method.Upon reissuance of treasury stock,amounts inexcess of the acquisition cost are credited t

197、o additional paid in capital.If we reissue treasury stock at an amount below our acquisition cost and additionalpaid in capital associated with prior treasury stock transactions is insufficient to cover the difference between the acquisition cost and the reissue price,thisdifference is recorded agai

198、nst retained earnings.DividendsIn 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.Dividends paid during the six months ended April 28,2024 and April

199、 30,2023totaled$532 million and$439 million,respectively.We currently anticipate that cash dividends will continue to be paid on a quarterly basis,although thedeclaration of any future cash dividend is at the discretion of the Board of Directors and will depend on our financial condition,results of

200、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 interestsof our stockholders.Share-Based CompensationWe have a stockholder-approved equity plan,the Employee Stock Incentive Plan(ESIP),which

201、 permits grants to employees of share-based awards,including stock options,stock appreciation rights,restricted stock,restricted stock units,performance share units and performance units.In addition,theplan provides for the automatic grant of restricted stock units to non-employee directors and perm

202、its the grant of share-based awards to non-employeedirectors and consultants.Share-based awards made under the plan may be subject to accelerated vesting under certain circumstances in the event of achange in control.In addition,we have an Omnibus Employees Stock Purchase Plan(ESPP),which enables el

203、igible employees to purchase our commonstock.*26APPLIED MATERIALS,INC.NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-(Continued)During the three and six months ended April 28,2024 and April 30,2023,we recognized share-based compensation expense related to equity awardsand ESPP shares.The effec

204、t of share-based compensation on the results of operations was as follows:Three Months EndedSix Months EndedApril 28,2024April 30,2023April 28,2024April 30,2023(In millions)Cost of products sold$33$42$65$96 Research,development and engineering54 41 110 95 Marketing and selling18 12 36 29 General and

205、 administrative29 18 93 41 Total share-based compensation$134$113$304$261 The cost associated with share-based awards is typically recognized over the awards service period for the entire award on a straight-line basis,adjusting for estimated forfeitures.However,in the case of share-based awards gra

206、nted to certain members of senior management that allow for partialaccelerated vesting in the event of a qualifying retirement based on age and years of service,the compensation expense is recognized once the individualmeets the conditions for a qualifying retirement.We calculate estimated forfeitur

207、e rate on an annual basis,based on historical forfeiture activities.The costassociated with performance-based equity awards,which include performance and/or market goals,is recognized for each tranche over the service period.The cost of the portion of performance-based equity awards subject to perfo

208、rmance goals is recognized based on an assessment of the likelihood that theapplicable performance goals will be achieved,and the cost of the portion of performance-based equity awards subject to market goals is recognized basedon the assumption of 100%achievement of the goal.As of April 28,2024,we

209、had$1.1 billion in total unrecognized compensation expense,net of estimated forfeitures,related to grants of share-basedawards under the ESIP and shares issued under the ESPP,which will be recognized over a weighted average period of 2.8 years.As of April 28,2024,therewere 21 million shares availabl

210、e for grant of share-based awards under the ESIP,and an additional 11 million shares available for issuance under the ESPP.Restricted Stock Units,Restricted Stock,Performance Share Units and Performance UnitsA summary of the changes in restricted stock units,restricted stock,performance share units

211、and performance units outstanding under our equitycompensation plans during the six months ended April 28,2024 is presented below:SharesWeighted Average Grant Date Fair Value(In millions,except per share amounts)Outstanding as of October 29,202312$106.24 Granted4$146.05 Vested(4)$96.54 Canceled(1)$1

212、19.20 Outstanding as of April 28,202411$124.99 As of April 28,2024,0.7 million additional performance-based awards could be earned based upon achievement of certain levels of specifiedperformance and/or market goals.During the first half of fiscal 2024,certain members of senior management were grant

213、ed awards that are subject to the achievement of targeted levelsof adjusted operating margin and targeted levels of total shareholder return(TSR)relative to the TSR of the companies in the Standard&Poors 500 Index.Each of these two metrics will be weighted 50%and will be measured over a three-year p

214、eriod.27APPLIED MATERIALS,INC.NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-(Continued)The number of shares that may vest in full after three years ranges from 0%to 200%of the target amount.The awards become eligible to vest only ifthe goals are achieved and will vest only if the grantee rema

215、ins employed by us through each applicable vesting date,subject to a qualifying retirementbased on age and years of service.The awards provide for a partial vesting based on actual performance at the conclusion of the three-year performanceperiod in the event of a qualifying retirement.The fair valu

216、e of the portion of the awards subject to targeted levels of relative TSR is estimated on the date of grant using a Monte Carlo simulationmodel.Compensation expense is recognized based upon the assumption of 100%achievement of the TSR goal and will not be reversed even if thethreshold level of TSR i

217、s never achieved,and is reflected over the service period and reduced for estimated forfeitures.The fair value of the portion of the awards subject to targeted levels of adjusted operating margin is estimated on the date of grant.If the performancegoals are not met as of the end of the performance p

218、eriod,no compensation expense is recognized and any previously recognized compensation expense isreversed.The expected cost is based on the portion of the awards that is probable to vest and is reflected over the service period and reduced for estimatedforfeitures.Employee Stock Purchase PlansUnder

219、the ESPP,substantially all employees may purchase our common stock through payroll deductions at a price equal to 85 percent of the lowerof the fair market value of our common stock at the beginning or end of each 6-month purchase period,subject to certain limits.Our purchasing cyclesbegin in March

220、and September of each of fiscal year.We issued a total of 1 million shares in the three and six months ended April 28,2024 and a total of1 million shares in the three and six months ended April 30,2023.Compensation expense is calculated using the fair value of the employees purchaserights under the

221、Black-Scholes model.Underlying assumptions used in the model are outlined in the following table:Three and Six Months EndedApril 28,2024April 30,2023Dividend yield0.76%1.09%Expected volatility35.6%43.3%Risk-free interest rate5.27%5.14%Expected life(in years)0.50.5Weighted average estimated fair valu

222、e$53.98$32.47Note 13 Income TaxesOur provision for income taxes and effective tax rate are affected by the geographical composition of pre-tax income which includes jurisdictionswith differing tax rates,conditional reduced tax rates and other income tax incentives.It is also affected by events that

223、vary from period to period,such aschanges in income tax laws and the resolution of prior-years income tax filings.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 thesecond quarter of fiscal 2024 was hig

224、her than the same period in the prior fiscal year primarily due to lower tax credits in fiscal 2024.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 thefirst six months of fiscal 2024 was higher than t

225、he same period in the prior fiscal year primarily due to lower tax credits in fiscal 2024,partially offset bylarger excess tax benefits from share-based compensation in fiscal 2024.28APPLIED MATERIALS,INC.NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-(Continued)Note 14 Warranty,Guarantees,Com

226、mitments and Contingencies WarrantyChanges in the warranty reserves are presented below:Three Months EndedSix Months EndedApril 28 2024April 30 2023April 28 2024April 30 2023(In millions)Beginning balance$344$302$332$286 Provisions for warranty60 62 119 124 Changes in reserves related to preexisting

227、 warranty(8)(2)(6)2 Consumption of reserves(50)(52)(99)(102)Ending balance$346$310$346$310 Our products are generally sold with a warranty for a 12-month period following installation.The provision for the estimated cost of warranty isrecorded when revenue is recognized.Parts and labor are covered u

228、nder the terms of the warranty agreement.The warranty provision is based on historicalexperience by product,configuration and geographic region.Quarterly warranty consumption is generally associated with sales that occurred during thepreceding four quarters,and quarterly warranty provisions are gene

229、rally related to the current quarters sales.GuaranteesIn the ordinary course of business,we provide standby letters of credit or other guarantee instruments to third parties as required for certaintransactions initiated by either us or our subsidiaries.As of April 28,2024,the maximum potential amoun

230、t of future payments that we could be required tomake under these guarantee agreements was approximately$387 million.We have not recorded any liability in connection with these guarantee agreementsbeyond that required to appropriately account for the underlying transaction being guaranteed.We do not

231、 believe,based on historical experience andinformation currently available,that it is probable that any amounts will be required to be paid under these guarantee agreements.We also have agreements with various banks to facilitate subsidiary banking operations worldwide,including overdraft arrangemen

232、ts,issuance ofbank guarantees,and letters of credit.As of April 28,2024,we have provided parent guarantees to banks for approximately$292 million to cover thesearrangements.Legal MattersFrom time to time,we receive notification from third parties,including customers and suppliers,seeking indemnifica

233、tion,litigation support,paymentof money or other actions by us in connection with claims made against them.In addition,from time to time,we receive notification from third partiesclaiming that we may be or are infringing or misusing their intellectual property or other rights.We also are subject to

234、various legal proceedings,government investigations or inquiries,and claims,both asserted and unasserted,that arise in the ordinary course of business.These matters are subject touncertainties,and we cannot predict the outcome of these matters,or governmental inquiries or proceedings that may occur.

235、Although the outcome of theabove-described matters,claims and proceedings cannot be predicted with certainty,we do not believe at this time that any of the above-described matterswill have a material effect on our consolidated financial condition or results of operations.We have received multiple su

236、bpoenas from government authorities requesting information relating to certain China customer shipments.In August2022 and February 2024,we received subpoenas from the U.S.Attorneys Office for the District of Massachusetts;in November 2023 and May 2024,wereceived subpoenas from the U.S.Commerce Depar

237、tments Bureau of Industry and Security;and in February 2024,we received a subpoena from the U.S.Securities and Exchange Commission.Also in February 2024,we received a subpoena from the U.S.Attorneys Office for the District of Massachusettsrequesting information related to certain federal award appli

238、cations.We are cooperating fully with the government in these matters.These matters aresubject to uncertainties,and we cannot predict the outcome,nor reasonably estimate a range of loss or penalties,if any,relating to these matters.29APPLIED MATERIALS,INC.NOTES TO CONSOLIDATED CONDENSED FINANCIAL ST

239、ATEMENTS-(Continued)Note 15 Industry Segment OperationsOur three reportable segments are:Semiconductor Systems,Applied Global Services,and Display and Adjacent Markets.As defined under theaccounting literature,our chief operating decision-maker has been identified as the President and Chief Executiv

240、e Officer,who reviews operating results tomake decisions about allocating resources and assessing performance for the entire company.Segment information is presented based upon ourmanagement organization structure as of April 28,2024 and the distinctive nature of each segment.Future changes to this

241、internal financial structure mayresult in changes to our reportable segments.The Semiconductor Systems reportable segment includes semiconductor capital equipment for etch,rapid thermal processing,deposition,chemicalmechanical planarization,metrology and inspection,wafer packaging,and ion implantati

242、on.The Applied Global Services segment provides integrated solutions to optimize equipment and fab performance and productivity,including spares,upgrades,services,200mm generation equipment and factory automation software for semiconductor,display and other products.The Display and Adjacent Markets

243、segment includes products for manufacturing liquid crystal displays(LCDs),organic light-emitting diodes(OLEDs),equipment upgrades and other display technologies for TVs,monitors,laptops,personal computers,smart phones,other consumer-orienteddevices and solar energy cells.Each operating segment is se

244、parately managed and has separate financial results that are reviewed by our chief operating decision-maker.Eachreportable segment contains closely related products that are unique to the particular segment.Segment operating income is determined based upon internalperformance measures used by our ch

245、ief operating decision-maker.The chief operating decision-maker does not evaluate operating segments using totalasset information.We derive the segment results directly from our internal management reporting system.Effective in the first quarter of fiscal 2024,managementbegan including share-based c

246、ompensation expense in the evaluation of reportable segments performance.Prior-year numbers have been recast to conformto the current-year presentation.The accounting policies we use to derive reportable segment results are substantially the same as those used for externalreporting purposes.Manageme

247、nt measures the performance of each reportable segment based upon several metrics including orders,net revenue andoperating income.Management uses these results to evaluate the performance of,and to assign resources to,each of the reportable segments.The Corporate and Other category includes revenue

248、s from products,as well as costs of products sold,for fabricating solar photovoltaic cells andmodules,and certain operating expenses that are not allocated to our reportable segments and are managed separately at the corporate level.Theseoperating expenses include costs related to certain management

249、,finance,legal,human resources,and research,development and engineering functionsprovided at the corporate level and unabsorbed information technology and occupancy.In addition,we do not allocate to our reportable segmentsrestructuring,severance and asset impairment charges and any associated adjust

250、ments related to restructuring actions,unless these actions pertain to aspecific reportable segment.Segment operating income also excludes interest income/expense and other financial charges and income taxes.Managementdoes not consider the unallocated costs in measuring the performance of the report

251、able segments.30APPLIED MATERIALS,INC.NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-(Continued)Net revenue and operating income(loss)for each reportable segment were as follows:Three Months EndedSix Months EndedNet RevenueOperatingIncome(Loss)Net RevenueOperatingIncome(Loss)(In millions)April

252、 28,2024:Semiconductor Systems$4,901$1,701$9,810$3,445 Applied Global Services1,530 436 3,006 853 Display and Adjacent Markets179 5 423 30 Corporate and Other36(230)114(449)Total$6,646$1,912$13,353$3,879 April 30,2023:Semiconductor Systems$4,977$1,715$10,139$3,570 Applied Global Services1,428 384 2,

253、797 729 Display and Adjacent Markets168 16 335 19 Corporate and Other57(204)98(437)Total$6,630$1,911$13,369$3,881 Semiconductor Systems and Display and Adjacent Markets revenues are recognized at a point in time.Applied Global Services revenue is recognizedat a point in time for tangible goods such

254、as spare parts and equipment,and over time for service agreements.The majority of revenue recognized over timeis recognized within 12 months of the contract inception.Net revenue by geographic region,determined by the location of customers facilities to which products were shipped to,were as follows

255、:Three Months EndedSix Months Ended April 28,2024April 30,2023ChangeApril 28,2024April 30,2023Change(In millions,except percentages)China$2,831 43%$1,405 21%101%$5,828 44%$2,550 19%129%Korea988 15%1,583 24%(38)%2,219 16%2,876 22%(23)%Taiwan1,019 15%1,435 22%(29)%1,578 12%3,403 25%(54)%Japan453 7%460

256、 7%(2)%1,018 8%916 7%11%Southeast Asia213 3%157 2%36%399 3%410 3%(3)%Asia Pacific5,504 83%5,040 76%9%11,042 83%10,155 76%9%United States853 13%1,113 17%(23)%1,612 12%2,164 16%(26)%Europe289 4%477 7%(39)%699 5%1,050 8%(33)%Total$6,646 100%$6,630 100%$13,353 100%$13,369 100%Net revenue for Semiconduct

257、or Systems by end use application for the periods indicated were as follows:Three Months EndedSix Months EndedApril 28,2024April 30,2023April 28,2024April 30,2023Foundry,logic and other65%84%63%81%Dynamic random-access memory(DRAM)32%11%33%12%Flash memory3%5%4%7%100%100%100%100%31APPLIED MATERIALS,I

258、NC.NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS-(Continued)The reconciling items included in Corporate and Other were as follows:Three Months EndedSix Months EndedApril 28,2024April 30,2023April 28,2024April 30,2023(In millions)Unallocated net revenue$36$57$114$98 Unallocated cost of product

259、s sold and expenses(266)(261)(563)(535)Total$(230)$(204)$(449)$(437)The following customer accounted for at least 10 percent of our net revenue for the six months ended April 28,2024,and sales to this customerincluded products and services from multiple reportable segments.Percentage of NetRevenueSa

260、msung Electronics Co.,Ltd.13%32Table of ContentsItem 2.Managements Discussion and Analysis of Financial Condition and Results of OperationsThe following managements discussion and analysis is provided in addition to the accompanying consolidated condensed financial statements andnotes,and for a full

261、 understanding of our results of operations and financial condition should be read in conjunction with the consolidated condensedfinancial statements and notes included in this Form 10-Q and the financial statements and notes for the fiscal year ended October 29,2023 contained inour Form 10-K filed

262、on December 15,2023.As used herein,the terms“we,”“us,”and“our”refer to Applied Materials,Inc.and its subsidiaries.This report contains forward-looking statements that involve a number of risks and uncertainties.Examples of forward-looking statements includethose regarding our future financial or ope

263、rating results,customer demand and spending,end-user demand,our and market and industry trends andoutlooks,cash flows and cash deployment strategies,declaration of dividends,share repurchases,business strategies and priorities,costs and cost controls,products,competitive positions,managements plans

264、and objectives for future operations,research and development,acquisitions,investments anddivestitures,growth opportunities,restructuring and severance activities,backlog,working capital,liquidity,investment portfolio and policies,taxes,supply chain,manufacturing,properties,legal matters,claims and

265、proceedings,and other statements that are not historical facts,as well as their underlyingassumptions.Forward-looking statements may contain words such as“may,”“will,”“should,”“could,”“would,”“expect,”“plan,”“anticipate,”“believe,”“estimate,”“intend,”“potential”and“continue,”the negative of these te

266、rms,or other comparable terminology.All forward-looking statements are subjectto risks and uncertainties and other important factors,including those discussed in Part II,Item 1A,“Risk Factors,”below and elsewhere in this report.These and many other factors could affect our future financial condition

267、 and operating results and could cause actual results to differ materially fromexpectations based on forward-looking statements made in this document or elsewhere by us or on our behalf.Forward-looking statements are based onmanagements estimates,projections and expectations as of the date hereof,an

268、d we undertake no obligation to revise or update any such statements.33Table of ContentsOverviewWe provide manufacturing equipment,services and software to the semiconductor,display,and related industries.Our customers includemanufacturers of semiconductor wafers and chips,liquid crystal and organic

269、 light-emitting diode(OLED)displays,and other electronic devices.Thesecustomers may use what they manufacture in their own end products or sell the items to other companies for use in electronic products.Each of oursegments is subject to variable industry conditions,as demand for manufacturing equip

270、ment and services can change depending on supply and demand forchips,display technologies,and other electronic devices,as well as other factors,such as global economic,political and market conditions,the nature andtiming of technological advances in fabrication processes and other factors described

271、under“Risk Factors”in Part II,Item 1A.We operate in three reportable segments:Semiconductor Systems,Applied Global Services,and Display and Adjacent Markets.A summary offinancial information for each reportable segment is found in Note 15 of Notes to Consolidated Condensed Financial Statements.A dis

272、cussion of factorsthat could affect our operations is set forth under“Risk Factors”in Part II,Item 1A,which is incorporated herein by reference.Product development andmanufacturing activities occur primarily in the United States,Europe,Israel,and Asia.Our broad range of equipment and service product

273、s are highlytechnical and are sold primarily through a direct sales force.Our results are driven primarily by customer spending on capital equipment and services to support key technology transitions or to increaseproduction volume in response to worldwide demand for semiconductors and displays.The

274、timing of customer investment in manufacturing equipment isalso affected by the timing of next-generation process development and the timing of capacity expansion to meet end-market demand.In light of theseconditions,our results can vary significantly year-over-year,as well as quarter-over-quarter.T

275、he following table presents certain significant measurements for the periods indicated:Three Months EndedSix Months EndedApril 28,2024April 30,2023ChangeApril 28,2024April 30,2023Change(In millions,except per share amounts and percentages)Net revenue$6,646$6,630$16$13,353$13,369$(16)Gross margin47.4

276、%46.7%0.7 points47.6%46.7%0.9 pointsOperating income$1,912$1,911$1$3,879$3,881$(2)Operating margin28.8%28.8%points29.0%29.0%pointsNet income$1,722$1,575$147$3,741$3,292$449 Earnings per diluted share$2.06$1.86$0.20$4.47$3.88$0.59 Fiscal 2024 and 2023 each contain 52 weeks and the first six months of

277、 fiscal 2024 and 2023 each contained 26 weeks.Semiconductor equipment customers continued to make strategic investments in new capacity and new technology transitions during the six monthsended April 28,2024.Foundry and logic customers spending decreased in the three and six months ended April 28,20

278、24 compared to the same periods inthe prior year driven primarily by lower customer investments in leading-edge manufacturing technologies,partially offset by increased customerinvestments in mature manufacturing technologies.Memory customers spending in the three and six months ended April 28,2024

279、was higher as comparedto the same periods in the prior year due to increased investments in technology transitions.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 yearprimarily due to an increase in net reven

280、ue 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 yearprimarily due to higher customer investments

281、 in display manufacturing equipment for IT products including laptops,monitors and tablets.34Table of ContentsResults of OperationsNet RevenueNet revenue for the periods indicated were as follows:Three Months EndedSix Months Ended April 28,2024April 30,2023ChangeApril 28,2024April 30,2023Change(In m

282、illions,except percentages)Semiconductor Systems$4,901 74%$4,977 75%(2)%$9,810 73%$10,139 76%(3)%Applied Global Services1,530 23%1,428 22%7%3,006 23%2,797 21%7%Display and AdjacentMarkets179 3%168 2%7%423 3%335 2%26%Corporate and Other36%57 1%(37)%114 1%98 1%16%Total$6,646 100%$6,630 100%$13,353 100

283、%$13,369 100%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.Thedecrease in net revenue from customer investment in semiconductor equipment was offset by increases in net revenue associated with long-term service

284、agreements,customer spending on 200mm generation equipment and customer investments in display manufacturing equipment for IT products includinglaptops,monitors and tablets.The Semiconductor Systems segment continued to represent the largest contributor of net revenue.Net revenue by geographic regio

285、n,determined by the location of customers facilities to which products were shipped,were as follows:Three Months EndedSix Months Ended April 28,2024April 30,2023ChangeApril 28,2024April 30,2023Change(In millions,except percentages)China$2,831 43%$1,405 21%101%$5,828 44%$2,550 19%129%Korea988 15%1,58

286、3 24%(38)%2,219 16%2,876 22%(23)%Taiwan1,019 15%1,435 22%(29)%1,578 12%3,403 25%(54)%Japan453 7%460 7%(2)%1,018 8%916 7%11%Southeast Asia213 3%157 2%36%399 3%410 3%(3)%Asia Pacific5,504 83%5,040 76%9%11,042 83%10,155 76%9%United States853 13%1,113 17%(23)%1,612 12%2,164 16%(26)%Europe289 4%477 7%(39

287、)%699 5%1,050 8%(33)%Total$6,646 100%$6,630 100%$13,353 100%$13,369 100%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 prioryear primarily reflected changes in semiconductor manufacturing equipment spending.3

288、5Table of ContentsGross MarginGross margins for the periods indicated were as follows:Three Months EndedSix Months Ended April 28,2024April 30,2023ChangeApril 28,2024April 30,2023Change Gross margin47.4%46.7%0.7 points47.6%46.7%0.9 pointsGross margin in the three months ended April 28,2024 increased

289、 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 laborcosts.Gross margin in the six months ended April 28,2024 increased

290、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 inlabor costs.Gross margin during the three months ended April 28,2024

291、 and April 30,2023 included$33 million and$42 million of share-basedcompensation expense,respectively.Gross margin during the six months ended April 28,2024 and April 30,2023 included$65 million and$96 million ofshare-based compensation expense,respectively.Research,Development and EngineeringResear

292、ch,Development and Engineering(RD&E)expenses for the periods indicated were as follows:Three Months EndedSix Months Ended April 28,2024April 30,2023ChangeApril 28,2024April 30,2023Change(In millions)Research,development and engineering$785$775$10$1,539$1,546$(7)Our future operating results depend to

293、 a considerable extent on our ability to maintain a competitive advantage in the equipment and service productswe provide.Development cycles range from 12 to 36 months depending on whether the product is an enhancement of an existing product,which typicallyhas a shorter development cycle,or a new pr

294、oduct,which typically has a longer development cycle.Most of our existing products resulted from internaldevelopment activities and innovations involving new technologies,materials and processes.In certain instances,we acquire technologies,either inexisting or new product areas,to complement our exi

295、sting technology capabilities and to reduce time to market.We believe that it is critical to continue to make substantial investments in RD&E to assure the availability of innovative technology that meets thecurrent and projected requirements of our customers most advanced designs.We have maintained

296、 and intend to continue our commitment to investing inRD&E in order to continue to offer new products and technologies.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 primarilydue to additional headcount to support

297、our ongoing investments in product development initiatives,consistent with our growth strategy,offset by lowerdepreciation 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 infiscal 2024.We continued to pri

298、oritize existing RD&E investments in technical capabilities and critical research and development programs in current andnew markets,with a focus on semiconductor technologies.RD&E expenses during the three months ended April 28,2024 and April 30,2023 included$54million and$41 million of share-based

299、 compensation expense,respectively.RD&E expense during the six months ended April 28,2024 and April 30,2023included$110 million and$95 million of share-based compensation expense,respectively.36Table of ContentsMarketing and SellingMarketing and selling expenses for the periods indicated were as fol

300、lows:Three Months EndedSix Months Ended April 28,2024April 30,2023ChangeApril 28,2024April 30,2023Change(In millions)Marketing and selling$209$194$15$416$391$25 Marketing and selling expenses for the three and six months ended April 28,2024 increased compared to the same periods in the prior year pr

301、imarilydue 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 30,20

302、23 included$36 million and$29 million of share-based compensation expense,respectively.General and AdministrativeGeneral and administrative(G&A)expenses for the periods indicated were as follows:Three Months EndedSix Months Ended April 28,2024April 30,2023ChangeApril 28,2024April 30,2023Change(In mi

303、llions)General and administrative$247$214$33$523$421$102 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 theincreases in labor costs and share-based compensation expense.G&A expenses during the three months ended

304、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.Interest Expense and Intere

305、st and Other Income(Expense),netInterest expense and interest and other income(expense),net for the periods indicated were as follows:Three Months EndedSix Months EndedApril 28,2024April 30,2023ChangeApril 28,2024April 30,2023Change(In millions)Interest expense$59$61$(2)$118$120$(2)Interest and othe

306、r income(expense),net$141$(73)$214$536$(23)$559 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.Interest and other income(exp

307、ense),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 ofinterest,compared to the prior yea

308、r.37Table of ContentsIncome TaxesProvision for income taxes and effective tax rates for the periods indicated were as follows:Three Months EndedSix Months EndedApril 28,2024April 30,2023ChangeApril 28,2024April 30,2023Change(In millions,except percentages)Provision for income taxes$272$202$70$556$44

309、6$110 Effective income tax rate13.6%11.4%2.2 points12.9%11.9%1.0 pointOur provision for income taxes and effective tax rate are affected by the geographical composition of pre-tax income which includes jurisdictionswith differing tax rates,conditional reduced tax rates and other income tax incentive

310、s.It is also affected by events that vary from period to period,such aschanges in income tax laws and the resolution of prior-years income tax filings.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

311、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.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 thefirst six mo

312、nths 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 bylarger excess tax benefits from share-based compensation in fiscal 2024.38Table of ContentsSegment InformationWe report financial results in three segment

313、s:Semiconductor Systems,Applied Global Services,and Display and Adjacent Markets.A description ofthe products and services,as well as financial data,for each reportable segment can be found in Note 15 of Notes to Consolidated Condensed FinancialStatements.Effective in the first quarter of fiscal 202

314、4,management began including share-based compensation expense in the evaluation of reportable segmentsperformance.Prior-year numbers have been recast to conform to the current-year presentation.The Corporate and Other category includes revenues from products,as well as costs of products sold,for fab

315、ricating solar photovoltaic cells andmodules and certain operating expenses that are not allocated to our reportable segments and are managed separately at the corporate level.These operatingexpenses include costs for certain management,finance,legal,human resource,and RD&E functions provided at the

316、 corporate level and unabsorbedinformation technology and occupancy.In addition,we do not allocate to our reportable segments restructuring,severance and asset impairment chargesand any associated adjustments related to restructuring actions,unless these actions pertain to a specific reportable segm

317、ent.The results for each reportable segment are discussed below.Semiconductor Systems SegmentThe Semiconductor Systems segment is comprised primarily of capital equipment used to fabricate semiconductor chips.Semiconductor industryspending on capital equipment is driven by demand for electronic prod

318、ucts,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 subjectto variable industry conditions.Spending can also depend on customer

319、 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.Certain significant measures for the periods indicated were as follow

320、s:Three Months EndedSix Months EndedApril 28,2024April 30,2023ChangeApril 28,2024April 30,2023Change(In millions,except percentages and ratios)Net revenue$4,901$4,977$(76)(2)%$9,810$10,139$(329)(3)%Operating income$1,701$1,715$(14)(1)%$3,445$3,570$(125)(4)%Operating margin34.7%34.5%0.2 points35.1%35

321、.2%(0.1)pointNet revenue for Semiconductor Systems by end use application for the periods indicated were as follows:Three Months EndedSix Months EndedApril 28,2024April 30,2023April 28,2024April 30,2023Foundry,logic and other65%84%63%81%Dynamic random-access memory(DRAM)32%11%33%12%Flash memory3%5%4

322、%7%100%100%100%100%Semiconductor equipment customers continued to make strategic investments in new capacity and new technology transitions during the first sixmonths of fiscal 2024.Foundry and logic customers spending decreased in the three and six months ended April 28,2024 compared to the same pe

323、riods inthe prior year driven primarily by lower customer investments in leading-edge manufacturing technologies,partially offset by increased customerinvestments in mature manufacturing technologies.Memory customers spending in the three and six months ended April 28,2024 was higher as comparedto t

324、he same periods in the prior year primarily due to increased investments in DRAM technology transitions.39Table of ContentsOperating margin for the three and six months ended April 28,2024 remained relatively flat compared to the same periods in the prior year primarilydriven by lower net revenue an

325、d increased RD&E expenses,offset by lower material,freight and logistics costs and lower depreciation expense as a resultof changes in certain assets useful lives effective as of the beginning of fiscal 2024.Applied Global Services SegmentThe Applied Global Services segment provides integrated solut

326、ions to optimize equipment and fab performance and productivity,including spares,upgrades,services,200mm generation equipment and factory automation software for semiconductor,display and solar products.Demand for Applied Global Services solutions are driven by our large and growing installed base o

327、f manufacturing systems,and customers needs toshorten ramp times,improve device performance and yield,and optimize factory output and operating costs.Industry conditions that affect Applied GlobalServices sales of spares and services are primarily characterized by changes in semiconductor manufactur

328、ers wafer starts and utilization rates,growth ofthe installed base of equipment,growing service intensity of newer tools,and our ability to sell more comprehensive service agreements.Certain significant measures for the periods indicated were as follows:Three Months EndedSix Months EndedApril 28,202

329、4April 30,2023ChangeApril 28,2024April 30,2023Change(In millions,except percentages and ratios)Net revenue$1,530$1,428$102 7%$3,006$2,797$209 7%Operating income$436$384$52 14%$853$729$124 17%Operating margin28.5%26.9%1.6 points28.4%26.1%2.3 pointsNet revenue for the three and six months ended April

330、28,2024 increased compared to the same periods in the prior year primarily due to an increasein net revenue associated with long-term service agreements and higher customer spending on 200mm generation equipment.Operating margin for thethree and six months ended April 28,2024 increased compared to t

331、he same periods in the prior year primarily due to the increase in net revenue.40Table of ContentsDisplay and Adjacent Markets SegmentThe Display and Adjacent Markets segment encompasses products for manufacturing liquid crystal and OLED displays,and other displaytechnologies for TVs,monitors,laptop

332、s,personal computers,electronic tablets,smart phones,other consumer-oriented devices,equipment upgrades andsolar energy cells.The segment is focused on expanding its presence through technologically-differentiated equipment for manufacturing large-scale LCDTVs,OLEDs,low temperature polysilicon(LTPS)

333、,metal oxide,and touch panel sectors;and development of products that provide customers withimproved performance and yields.Display industry growth depends primarily on consumer demand for increasingly larger and more advanced TVs as well as larger and higherresolution displays for next-generation mobile devices.Uneven spending patterns by customers in the Display and Adjacent Markets segment can