Applied Materials has reported its financial results for the second quarter ended April 30, 2023. The company achieved solid revenue growth, with a 6% increase year over year, reaching US$6.63 billion.
On a GAAP basis, Applied Materials recorded a gross margin of 46.7%, generating US$1.91 billion in operating income, equivalent to 28.8% of net sales, down 1.5 points year over year. Earnings per share (EPS) on a GAAP basis stood at US$1.86, up 7% year over year.
Furthermore, Applied Materials demonstrated strong cash flow performance, generating US$2.29 billion in cash from operations during the second quarter. The company returned US$1.02 billion to shareholders through share repurchases totaling US$800 million and dividend payments amounting to US$219 million.
Due to the sluggish memory market and excessive inventory levels, however, chip manufacturers have reduced their equipment upgrades and new plant investments. As a result, the semiconductor material provider expects a 6% decline in revenue in the third quarter of fiscal 2023, with only US$6.15 billion remaining. This will mark the first negative growth in several quarters.
Applied Materials has observed that customer spending levels in the memory industry are the lowest in over 10 years. CEO Gary Dickerson stated that while there are indeed some challenges in the macroeconomic conditions, the demand for chips in automotive and industrial applications remains very strong. He emphasized that this demand is particularly helpful in offsetting the slowdown in spending on memory manufacturing equipment.
In addition, as Chinese manufacturers are restricted from acquiring the most advanced manufacturing equipment due to US export regulations. Dickerson observed that, encouraged by government policies, the demand for cutting-edge equipment is gaining momentum in the US, Europe, and Japan markets. He believes that in the future, the growth rate in these markets will surpass that of China.
Dickerson also estimated that global government support for the semiconductor industry amounts to around US$400 billion. He mentioned that as countries seek to establish highly flexible local production capacities to support the development of the industry's upstream and downstream sectors, it is evident that the supply chain is moving towards regionalization.