Great. Good morning, everybody. Usually when I have done the first session, they gave me a script of things I was supposed to say. And I don't have that script. So welcome to the Morgan Stanley TMT Conference, and I'm sure we'll have something smarter to say later. Just quickly on the research disclosure side, for important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales rep. So with that out of the way, very happy to have, kicking us off, Brice Hill, the CFO of Applied Materials. So you've had a great year. Maybe you could talk just a little bit about, you know, the outperformance that you guys have seen, the strategy that led to that, and then we'll get into the details.
Sure. Joe, thanks for inviting us. Great to be here, San Francisco. You know, for us, it's been a great year. And what we described to our investors was we spend $3 billion approximately in R&D. And we point those toward inflections that the company sees, technology inflections that the company sees on customer roadmaps, coming up in future years. This year, we had some markets that were very strong this past 4 or 5 quarters. The ICAPS market, which we use ICAPS, the acronym, to describe the more mature technologies, IoT, communications, auto, power, sensors, those types of devices. That market was very strong for us. And it was so strong over the past 2 years that it outweighed weakness we saw in the NAND market, weakness we saw in the leading-edge market, etc.
ICAPS has been an area where the company started a group that focused five years ago on developing new products for that market. That's an example of an inflection that is manifesting in today's market. Another area has been, you know, HBM. We talk about high bandwidth memory and how that's growing in the marketplace. The company has greater than 50% share in HBM. The DRAM market in general was also strong in the past year. That allowed us, again, to sort of offset weakness that we saw in leading edge and in the NAND business. So Joe, it's really a function of the company investing its R&D in areas of inflection where the technology and the market is growing. In the past year's case, that let us offset some weakness in NAND and leading logic.
That's great. And you've characterized this year, WFE. You know, you sort of talked about strength in DRAM, NAND maybe a little better, and then this kind of handoff that you've talked about from ICAPS to the cutting edge. You know, how do you think that positions Applied, you know, relative to the WFE market and your ability to outperform WFE with that context?
Yeah. So going through that and thinking about the shape of the year, even in this quarter outlook that we have for the quarter that we're in right now, it's still a strong ICAPS. It's still a strong DRAM market. We've benefited from being allowed to ship some technologies to China DRAM customers, that weren't allowed last year. So we've had three quarters, including this quarter, of elevated DRAM shipments. I describe that as approximately $500 million incremental per quarter over what we would normally expect, shipping to DRAM shipping to those DRAM customers. That strength and the ICAPS strength, primarily in China, although we saw, you know, strength in all the markets last year, that strength has offset the weakness we see in leading edge. We were very clear about that. And then also NAND.
The handoff that you're mentioning is we have articulated that there should be some digestion in ICAPS, especially in China. There's been a significant ramp. ICAPS grew. You know, we said more than 40% two years ago, or approximately 40% two years ago and even faster last year. That's a lot of capacity that has been put in place. A good portion of that was put in place in China. And we expect that market to remain strong in the coming years. But we think there'll be some digestion. And it won't grow as fast. It'll be slower. So the handoff that you're saying that you're alluding to, if ICAPS is slower and China is slower in the second half of this year, then what can replace it from a customer perspective? And that's really leading edge from our perspective.
We also expect DRAM and HBM to remain strong. The leading edge should be driven by the ramp of Gate-All-Around technology, with some of our customers, and then also just new nodes to serve the newest designs on leading edge.
Great. And so I, I guess, you know, the natural question is the durability of all this into 2025. You know, you had such a, I feel like other people had a downturn in 2023 that you didn't really have. I mean, but do you feel like we're sort of at a foundational stage where we can continue to grow from 2024 on? Just, you know, obviously it's early to call. But any thoughts you can give us on that?
Sure. You know, I most of the people who ask us the durability question ask us in terms of ICAPS.
Mm-hmm.
And I'll look back to a couple of quarters ago. The way I think about it is we saw the ICAPS process nodes in general worldwide running at healthy utilizations. When we think of the $1 trillion device forecast for 2030, semiconductor devices for 2030, that requires a mid to high single-digit growth rate for all device types. I think the analysts who, you know, provide forecasts say that would be across all device types. If your mature node technologies are running at good utilizations, high 80% utilizations, and the devices are gonna grow at mid to high single digits over the next five to seven years, you have to add capacity in order to serve that device growth. And so when we look at that, there is a little bit of lower utilization right now. We think that's some of the digestion.
But when we look at the next seven years up to 2030, we expect capacity has to be added globally in order to serve that. I'll stop there. We could go into it. We could break it. We could think about memory. And we could also think about leading logic. But I think the largest body of wafer starts globally is in these mature node technologies. And that's where a lot of the equipment sales are going to come from.
You know, can you give us a qualitative sense for where ICAPS is now as a percentage of logic? And then, you know, it's very clear that there's a structurally higher level of spending required in these mature nodes, if only because we're not waterfalling the cutting edge nodes down the way we used to. They're converting advanced nodes. And so we don't get that free capacity. So that's higher. But when you mention utilization coming down, it seems like in the higher technology areas, you need to spend a lot even in downturns because you need to keep progressing on technology. If we have this utilization hiccup, you know, could it be a more severe decline? And I mean, obviously, that's somewhat upset by geopolitics. But just, you know, how do you think about that dynamic?
Okay. A couple questions in there. So, the first part, about two years ago, we thought, or we said that the leading node technologies and the ICAPS technologies, the mature node technologies, were about 50/50. And we've had significant growth in ICAPS since then. So ICAPS is actually our largest market at this point. We don't get more specific about that. But it's the largest market. As we think about the business that we have, those mature node technologies are still evolving just like in the leading edge. So we're developing technologies. You might think about power as an example, silicon carbide, different technologies that we're deploying in the mature nodes. It continues to grow its capabilities, grow its TAM, and search for new solutions, new material solutions, not unlike leading edge.
Leading edge is much stronger in terms of the need because you're, you know, you're pushing the edge of the envelope. The process steps are getting a lot more complex. You're right. The leading edge, we view as just a consistent flywheel of demand requirements, new technologies. The company talks about the new transistor, which will be Gate-All-Around. There's another transistor after that called CFET technology. There'll be another technology called Backside Power Delivery, over on the roadmap the next few years. That leading edge is also a flywheel that requires our R&D, requires close collaboration with customers so that we can pick projects that will land on those customers' roadmaps and be deployed with end designs. It's a it's a very, you know, close-knit community that's working on this roadmap so that it's effective.
It makes our, you know, makes our financial returns very efficient because that $3 billion R&D that you think of deployed in developing new technologies, that's in collaboration with your customers. You have a higher probability maybe than if you're doing, you know, sort of blind, R&D, you know, looking for a market for a new solution.
Great. So maybe I'll focus a little bit more on ICAPS in China than cutting edge. You know, on this ICAPS piece, you know, you guys have obviously been very strong there. Is there a definitional thing where you guys, I mean, because you count everything, the top three nodes as more cutting edge, does the ICAPS denomination shift over time first? And, you know, are you able to, as we do advance a little bit more, as Applied able to maintain that very high share that you have?
Okay. We were shifting the definition, in years past. And we've, I think, stopped shifting the definition. So the cutoff point is between 10 nanometer and 7 nanometer. Our perspective is 7 nanometer requires EUV. That's more leading edge, from that perspective. And then, at least for now, we'll keep that dividing line there. So 7 nanometer and newer will be leading edge technologies. 10 nanometer without EUV and more mature and larger from that perspective will be the ICAPS technologies. And, sorry. What was the second piece?
Yeah. And does Applied maintain share, you know, as that spending shifts, you know, to more advanced parts of the ICAPS market?
Well, we do think that that goes back to what's the engine of the company and what should investors understand. $3 billion of R&D working with the customers to identify the future inflections and then investing for the solutions that enable those technology inflections. And so our perspective is for the ones that we've named, Gate-All-Around, backside power, CFET, HBM memory, DRAM in general, we've gained 10 points of share in DRAM. Our perspective is we've been successful at identifying some important inflections and that we'll gain share in those inflections. It's approximately 50% in each of the ones that I named except for DRAM. And that is what, you know, an investor is looking for is, are you effective at calling those inflections? Is your R&D, your Ph.D.s, your engineers, are they effective at developing the solutions?
And then do you have the customer relationships to put them in the field in time to ramp new devices for end customers?
Great. And with regards to China, I mean, you've talked about the DRAM element that's got a little bit, you know, the timing all got pushed into the second half. But when you think about the broader logic investment in China, numbers got pretty high. I mean, you're up over 45%, I think, of your revenue. You know, if you think in terms of China achieving self-sufficiency, that they would have to maintain those levels of investments for quite a while. But they also, you know, there's a lack of, you know, building fab is only part of it. They need to have product. They need to fill those factories. So how do you think about those dynamics? You know, do you look at this as something that endures beyond, you know, this kind of export control anxiety environment?
Do you see something that where there's a multi-year phase of very strong investment in China?
We do think that the investment will continue to be strong, in China. That's, you know, our internal information. We have, of course, a lot of accounts in China. We have a forecast from all those accounts. When you think about a factory, of a particular customer in China, you know, we have our perspective, which shows each factory, maybe they've put 5,000 wafer starts per month in place. And then they have a plan for the next four years to add capacity. And so we have a perspective of, who are all these customers? What factory and capacity do they have in place today? What are their plans the next four years? And, you know, that gives us a perspective of, you know, what the aggregate demand is. We test that, Joe, to make sure that, you know, it's rational at least from our perspective.
Does the overall equipment market make sense relative to the overall semiconductor market? That's the intensity equation that people have talked about in the past. And then you alluded to we also look at how much capacity has China put in place relative to local consumption? We think that still makes sense. I, you know, if you're looking for any, any softness in the equation, I think what we also think is that the China capacity is a, a large number of new customers. They're coming up the learning curve. Their yields are lower than world-class, you know, foundry yields. So as that capacity is put in place and those yields mature, we do think there's some digestion. And that's actually what explains why the market we've described over the near term will be stable and not growing at that.
Mm-hmm.
7.5%-8% because we're gonna grow into that capacity, both yield and utilization-wise.
But their investment, you know, wasn't predicated on super high utilization to begin with, right? At least, I mean, from the public, from SMIC, Hua Hong, Grace, the numbers we know, those utilizations weren't that high. And they were investing anyway in the same way that TI is in the U.S. So it seems like even if utilization falters a little bit, the underlying commitment to spend is still there.
We think so. We think it's a national strategy. It's a national priority. We think there's subsidies in place. We know there's you know government grants that are you know in place in China. And so our perspective is that the roadmaps that we see from the customers, they'll follow through on those roadmaps. Now, you know, there's a large number of customers. We do think there'll be some consolidation. If you have multiple different customers making image sensors, for example, some will be more successful. We think there'll be some consolidation and some rationalization of the market over time. But we do expect that that will be a continued you know growth in capacity in China.
Okay. Great. So you see the decline from the mid-40s to the mid-30s that you've guided to as an exposure. That's mostly the DRAM side and then a little bit of consolidation.
That's right. So for Applied, our business was 45% revenues to China in our Q1. And we highlighted that as the year goes on, that should return to a more normal level, which is about 30% for us, on historical average. That'll be pretty, you know, reasonably linear through the course of the year. And this Q2, we have another quarter of elevated DRAM shipments. After this quarter, we expect that to slow down in the second half.
On the China DRAM piece, you know, can you talk a little bit about that? 'Cause that was, you know, much stronger than I expected it that it would be. Now you have a second customer spending quite a bit there. The sustainability of that and, and the viability of building a DRAM business with the limitations that they have in terms of what nodes they can address.
Yeah. You might know better than me. I know logic a little bit better than the memory side. But, you know, using logic as an analogy and I don't know if this will be fair for memory. But in logic, you can find different ways to extend the performance of a node. You know, you can improve your design for several cycles and get more performance from it. So I don't view it as at least I personally don't view it as a brick wall for the China memory customers. They'll innovate. And they'll find ways to use that technology and extend the performance of that technology. That would be my perspective. It may be different than what the other DRAM customers are doing, as they move their nodes forward.
Mm-hmm. Okay. Great. So, you speaking of DRAM, and you guys have had a great progression of DRAM revenue. You've talked about gaining 10 points of share. Can you talk about the drivers of that share and how you see that playing out going forward?
Yeah. The big drivers so Applied, you know, I think we've said about 10 years ago, we were 13% market share in DRAM. And today, we're closer to 23%. And that's really because as the technology has become, you know, more and more complex, it's deployed some of the same techniques that are used in leading logic. So advanced and much faster I/O capabilities, what's required for capacitor scaling, that requires some of the same techniques that we're using on leading logic for DRAM. And some of the same types of equipment and equipment modules, including our E-beam capabilities, you know, to give high-resolution and fast-speed examination of, you know, different structures in the devices. So, really, it's leveraging some of the same developments that have been used on the logic side.
Okay. Great. And maybe if you could talk about NAND a little bit. You know, the NAND business spending is down a lot. Your revenues are down a lot. And the economics are improving. They're still not probably where they need to be to see a big re-acceleration. But can you just talk to the NAND business? Do you still see a large opportunity there over time?
We do see an opportunity in NAND. It's an important market. It's hard to explain why it's been as low as it has been, at least personally. You know, I don't see an architectural reason why we would need less storage memory than we have in the past. It doesn't have the same, you know, explosive sort of demand driver that we've seen just recently on DRAM, which is this HBM. On the DRAM side, you have a lot of excitement around artificial intelligence. And, you know, the companies that are building systems, high-performance systems, are searching for ways to use advanced packaging to add a lot of different devices, CPUs, GPUs, accelerators, stacks of high-bandwidth memory. That's been a big driver on the DRAM side. You don't have that same driver yet on the NAND side.
But there's nothing, you know, that has changed the system architectures that means we need less storage, at least from my perspective. So we would expect the NAND market to normalize over time. And new investments will be required in NAND to advance those technologies. Just one more thing I would say. For both NAND and DRAM, you know, at least my perspective is, every year, you have more bit demand. You need to provide more bits, in order to serve the memory demand that's growing. That growth has been delivered by new process technologies. So when we sell equipment to DRAM and NAND customers, it's really equipment to upgrade the nodes. And those nodal upgrades are providing more bit density. And that bit density is what's giving you the, you know, the memory bits to serve demand.
I say that just to say that I think it's been going on for several years that we haven't been adding a lot of wafer starts.
Mm-hmm.
In either memory technology. It's really driving the roadmap. So you advance the technology, get more bits on every square millimeter. That's really what's been driving both memories. And what we expect will continue to drive it for us going forward. So it's both of those are still very important opportunities just like leading-edge opportunities where there'll be a lot of innovation going forward.
Yeah. I mean, it looks like, by contrast, you know, you've talked about DRAM being driven by, by China and HBM. But it seems like there's a pretty healthy underlying DRAM spend as well.
There has been. And that's why when I highlight that the incremental over the last couple of quarters has been $500 million incremental.
Yeah.
Underneath that incremental, if you subtract that from our DRAM, there's still a very healthy DRAM market, both, you know, normal China and in the rest of the world, of course.
Great. So, maybe we could talk a little bit about AI and advanced packaging. I think you've talked about a $1.5 billion of revenue this year, of which DRAM's gonna be $500 million. Can you talk about those opportunities and the visibility that you have?
Yeah. So the advanced packaging business, another important one for Applied, we put a number on it and said it was approximately $1.1 billion in 2023. It should grow to approximately $1.5 billion in 2024. And most of that growth, at least, this year, is gonna be driven by the high-bandwidth memory application and solution. So you've got, you know, on the order of $400 million of growth, driven by HBM. For HBM, the way I think about it is, or the way I've been, people help have me understand is there's approximately 700 steps in a normal DRAM process. And you add 15-20 additional steps to give a sense of scale in order to add the HBM high-bandwidth memory capabilities, onto a DRAM line. For those additional steps, Applied, is providing the majority, over 50%, of the equipment for those, additional steps.
I won't walk through it. You know, it's through-silicon vias. It's filling. It's plating. Gap fill. Different films. Different technologies. If you think about the micro-bumps that connect those devices and the through-silicon vias that allow the connection through the devices, Applied is providing a significant amount of the capability to produce those.
And I assume, you know, we've had this kind of rush to catch up to the demand for AI. You know, any change in that visibility going forward?
It's interesting for both HBM and AI in general. When we think of WFE, we would say that only about 6% or so of wafer starts are actually today directed towards AI, in the WFE. But it's gonna grow at a 30+% CAGR. So pretty significant growth. And even when we drill into DRAM, DRAM has been underloaded, lower utilization. There's probably only about 5% of DRAM starts that are allocated towards HBM memories. But customers have said that that's growing at 50%-60%. So, you know, today, it's not an overwhelming portion of the wafer starts driven by AI. But it's growing quickly. On the logic side, it'll quickly eat up utilization and start pushing for new investment on leading edge because all these devices, GPUs, CPUs, accelerators, they're all leading edge devices.
On the DRAM side, we think it'll help drive much higher utilizations and more healthy marketplace. Then, of course, for Applied, it'll be both the DRAM equipment, the leading edge equipment, and then, the HBM equipment that goes along with DRAM.
Great. That 6% number's kind of interesting. So that's 6% of today where you are today.
Yeah.
One rate. Yeah. Okay. And that's including both wafers for memory and wafers for, for logic?
It's AI-specific. No. It's just, I would say that's a logic number. That's a logic number. Yeah.
Right. Great. Thank you. So maybe if we talk about the arms race on logic, you talked about Gate-All-Around, Backside Power. You've, you've talked about Applied capturing 50% of kinda incremental spending. Can you just walk us through the math there and talk about the opportunity that you have?
For Gate-All-Around,
Sure.
So a FinFET transistor, there's a certain amount of equipment that we sell for to make a FinFET transistor. As we switch to the Gate-All-Around transistor, it's more complex. It's a more complex device. It requires extra steps. The way we've described that is it's a billion-dollar incremental equipment requirement on top of what's already required for FinFET. So $1 billion of extra SAM, if you will, available market for Applied. And we should sell, you know, 50% or more of that capability, to produce that. That's $1 billion per 100,000 wafer start per month capacity just to orient that from a size perspective. And then it's much the same equipment types that are used for FinFET transistors. It's different epitaxial deposition. It's selective removal. It's materials modifications. And also E-beam technologies to help analyze those devices as they're being made.
Yeah. I mean, it can be difficult for us to validate this 'cause every company's telling us they're gonna pick up share. But.
Yep.
Certainly, some of these epitaxial steps particularly come up again and again as being, you know, most critical. You know, when you talk about, I could think last year was right after you had introduced the Sculpta tool. Maybe if you could talk a little bit about that and the opportunity that that provides.
So Sculpta, new tool for Applied. It's a materials modification tool. And if you were looking at a patterning diagram where you saw circles, ovals, lines that represent the patterns to, you know, building a transistor, what the Sculpta tool allows you to do is sort of elongate a circle or elongate an oval. Or if you have two lines, you can elongate those lines and have them be closer together. And so it actually, where you don't have the imaging technology to get something closer together or change its shape, this tool helps you change the shape, which can improve quality. And it can improve the density of your design. What we have right now, our leading edge customers experimenting essentially with the tool and finding different ways to use it. And I sort of alluded.
I think some customers are finding ways that those tools will improve or that the Sculpta tool will improve their quality. And others are, you know, actual steps in the process where they'll be able to use that to advance the density of the design. And, I think Gary said in our earnings call, we expect that to be a $200 million, you know, tool sale for us this year. We said conservatively last year when we launched it, it would be over $1 billion, you know, tool for us, on the roadmap. And I think that was very conservative. We see a lot of experimentation, for that equipment going forward and even with the customers today.
Great. Great. So I have a couple more questions. I'll open it up for the audience. Maybe you could talk a little bit about the services business. You guys were the first company to really break this out and talk about it. You had very good numbers last year in the services business despite some of the utilization headwinds. Can you talk about some of the opportunities there?
Well, we're very excited about the services business. I like it financially. I've tried to tie our dividend, you know, conceptually to our services business because it's a very stable business. You know, the equipment business grow or goes up and down with whatever the industry is doing. We talked about that a lot. The services business, every day we ship a new tool, that grows the installed base for us to sell spares and to offer services. That's sort of a constant growing base that you can serve. I like to joke that we have more, you know, tools in place to potentially serve than McDonald's has franchises. You have all that in the field. A lot of that business, on the recurring side, more than two-thirds of that business is under contract, subscription contract. Those are long-term contracts. They average over two years.
There's a high renewal rate. So it has some, a lot of constancy to it. We signaled last year that we were gonna raise our dividend, significantly. Our intent is to double it over the four-year period. That's our intent. We have a board meeting, coming up where we'll decide this next, you know, next dividend payment. And what I tried to articulate was that, the services business, the consistency there, if you look at the profits from that business, that those recurring revenues and that stable will kind of conceptually, tie to our dividend, not tying it directly but just saying, "It will cover our dividend. And that will provide the payments for that." And then the equipment business will use the buybacks, to return and distribute profits, to investors as that business goes going forward. And the services business is very exciting.
The installed base is constantly growing. And then because the tools are more complex, the company is creating new service capabilities for those tools. Of course, some of the most interesting are in the AI space where we're able to use data that we can collect across our entire tool base to help customers ramp those tools quickly and ramp them to high yield. And you have Applied offering capabilities that help the customers do that. So it's the installed base. It's the tools becoming more complex. And it's our ability to identify new valuable services to help the customers ramp. Those will grow that business, we think, in the low double digits for the foreseeable future. And that's been our forecast. And so it's just it's very exciting for the company and a source of, you know, stable growth for us.
Low 20% of sales, I should have mentioned upfront. I mean, and that and that's a number that should have some utilization, probably tailwinds in some of the more cutting edge markets over time.
That's right. It's a great point. If you look at our most recent quarter, that business, I think, grew at 7.8% year-over-year. And this is with, you know, sort of globally low utilization levels. As utilization starts to pick up, that will be a tailwind for our services business. That's what we expect to see as we move forward. And we highlighted in the earnings call that we actually see our utilizations across the entire semiconductor ecosystem: ICAPS, NAND, DRAM, leading logic. In this quarter that we're in right now, all of those utilizations are starting to improve.
Great. So I'll ask one more and then turn to the audience. Can you talk about uses of cash? You mentioned a little bit how you think about dividend versus buyback. You know, in the past, you've tried M&A. It's been tricky, not for anything that Applied did wrong. But, you know, so how do you think about the uses of cash going forward?
Yeah. I think it probably won't be surprising to anybody. But first, reinvest in the business. We have, I talked about $3 billion R&D. We think we have a growing roadmap. We've got growing opportunities for us to invest in new technologies. We've highlighted that we're building the EPIC Center here in Sunnyvale. And that is to increase collaboration with our customers. So that'll be, on the outside, it'll look like a fab. It's, it's, you know, fab technology, a leading edge, facility from that perspective. But on the inside, it's a customer collaboration vehicle. It's where we develop our latest technologies. And we work with the customers in order to prove those for their roadmaps and for their utilizations and to develop new materials innovations. So that's a big investment for the company.
After we invest internally, and it's a high cash flow business, our business averages over 20% of revenue as free cash flow. Free cash flow for the business, I think, grew over 30% over the last 10 years. It's significant cash producing business. We have limited M&A opportunities. All of that cash, all of those profits will be distributed to shareholders over time in a limited M&A environment. We'll use the dividends and buybacks to do that.
Okay. Great. Let me pause there and see if we have any questions from the audience.
Microphone coming.
Thank you. Thank you. Just on the China strength and sustainability, do you see risk of any future restrictions? Or do you think that that's now been established, in terms of the, you know, rules of the road going forward? Thanks.
Yep. Thank you. So most of the business for us in China or all of the business has either been the DRAM side or this mature logic capability. And, you know, we don't speculate on new rules. But we think that we've already been, you know, the business has already adjusted to the rules that are put in place. And it's the mature technologies that are driving the business for us in China. So we're not expecting significant changes from that perspective. And, you know, we would go back to what we highlighted that we think with the device growth that and the roadmaps that we see from our customers, that that'll be a significant market for Applied going forward.
Any other questions? Have one in the front.
Thanks. Can you comment on the evolving capabilities of Chinese semicap vendors in this environment?
Yeah. I think that's good. So I think we're talking about local, Chinese equipment vendors. They are growing share. The way that Applied thinks about it is, the TAM is growing. So the way we think about it is we have to innovate at sort of the leading edge of the roadmap, whether it be ICAPS, DRAM, NAND, or leading edge logic. We think that TAM is growing fast enough that Applied will be able to grow share over the foreseeable future even when or while some of the local Chinese vendors or other competitors are able to gain share in some of the lesser differentiated, you know, longer-term solution components. And that's what's happening. So we do think there are successful vendors in the market there. We think they gain share in some of the places where there's, you know, more well-known technologies.
Our job is to continue to innovate, Gate-All-Around, or backside power, or CFET would be places where we're pushing the edge of the envelope. It's growing the number of steps and requirements for our business as we go forward.
You have to lose some share just mathematically because there are companies on the entity list that are spending money that you can't do business with.
Well, we'll see.
We'll see what you can do about that.
We'll see.
Yeah.
I think it's AI, you know, it's a matter of what grows faster, competitors' share or new markets, for us, at least in the current time frame. We see the new TAM and new SAM that's being created by complexity as growing faster than, you know, obviously, we've been gaining share. So that's what's allowing us to gain share.
Yeah. All right. Maybe, oh, we got one more?
Thank you. You've mentioned GAA and CFET technology. What about hybrid bonding and, in particular, your relationship with Besi?
Yes. Thank you. So advanced packaging of all types, huge focus, for Applied. I kind of described the, you know it's a little bit of an arms race going on for customers right now to find ways to build high-performance systems with these different, chip types. Hybrid bonding will be a focus for the company. And we expect, in general, for the advanced packaging capabilities that Applied will have, significant share in all of those new, areas. And we're exploring other areas in packaging too. We have partnerships with customers or sorry, partners. Besi is a good example where we have a strong partnership to provide, you know, an optimized, manufacturing flow. And there are other places where we have partnerships, with other companies where we're developing new capabilities for packaging. And so I think, you know, we view it as an extension of Moore's Law, if you will.
It's another place where there'll be rapid advances in the capabilities to combine, you know, hundreds of chiplets and be able to do that in a high yield, high performance way. And it's an important part of our roadmap. And we go back to advanced packaging. We talked about it'll be a $1.5 billion business. Gary has highlighted in our earnings calls that it should double over several years. So that's, you know, gives you a sense of the amount of growth that we expect to see in that business.
Great. Any other questions from the audience?
Hi. This is a high-level question. So it seems like, there is this memory wall that the industry is going through that, memory bandwidths on these GPUs in this AI cycle are lagging when it comes to speed compared with the processor. So sitting in your vantage point, when you think about high bandwidth memory over the over this cycle to a few years from now, do you think that memory wall can be bridged?
So I'm not a system architect. But I do see roadmaps that continue to advance, both the I/O speeds and the memory capabilities themselves. So I would say that we are not at a memory wall, at this point, that our roadmap shows advances across both speed and memory capabilities. I think it is probably, you know it's a wall from a system designer perspective, meaning in each generation, you only have so much capability. But I think that's increasing in speed and capability over the, you know, next five years.
Great. Brice, thank you very much.
Thank you, Joe. I appreciate it.
Thank you.
Good to see you. Thank you.