What Can We Expect From Applied Materials’ Q3’16 Earnings?

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Applied Materials

Leading semiconductor equipment manufacturer, Applied Materials (NYSE:AMAT) is set to report its Q3’16 earnings on August  18th. (Fiscal years end with October.)  We can expect the company to report strong sales growth for  Q3, due to the surge in orders it witnessed in the previous quarter. Applied booked orders worth $3.5 billion in Q2, which was highest in any given quarter in the last 15 years. However, the company’s operating expenditure has likely increased sequentially in Q3 by around $10 million to support new projects.

The growth in the number of orders for Applied is being driven by its silicon systems segment, which contributed to more than half of its orders in Q2.  Driving the surge was investment in manufcaturing capacity to satisfy anticipated strong  demand for 3D NAND Flash memory products. Furthermore, the company registered a record number of orders in its display segment too.

Applied Uniquely Positioned To Tap The 3D NAND And OLED Display Opporunity

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Inflection driven investments such as the 3D NAND transition and a shift to OLED display have been major factors driving growth for Applied Materials in the last few quarters We expect the trend to continue in the near term. 3D-NAND increases storage capacity through higher density circuit structures, which lowers the cost per gigabyte and yields higher performance for use in solid-state storage devices. Applied expects both 3D-NAND market and OLED display opportunities to be three times larger than the planar NAND market and the LCD opportunities, respectively.

Building 3D-NAND chips require depositing, removing and modifying materials with a lot of precision. The thin film encapsulation in OLED display also requires an equally high precision. We believe Applied’s expertise in material engineering positions it uniquely in the market, which will benefit it going ahead as major technology inflections come into play.

In the table below we present the key consensus metrics as expected for the company in Q3’16:

AMAT_Q2'16_Earnings

For more details, please refer to our complete analysis for Applied Materials

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