AMAT See Display Revenues Dropping by 20% Y/Y in 2019
November 19, 2018
With the semi equipment industry under significant pressure, Gary Dickerson, President & CEO of Applied Materials opened their quarterly Earnings call with a positive statement:
“We expect company revenue to be between $3.56 billion and $3.86 billion but the outlook for fiscal Q1; expect silicon systems revenue to be down by about 21%, display revenue to be up by about 10%, and services revenue should be up by about 7%.” He also hinted at their technological challenges in the semi industry: “As classic Moore's Law scaling slows down, the semiconductor industry's traditional playbook is not providing the necessary improvements in power, performance, area and cost. As a result, a new playbook is needed, which includes the development of entirely new chip architectures, new 3D structures within the chip, the integration of new exotic materials, new ways to shrink feature geometries, including EUV lithography and self-aligned patterning, and advanced packaging techniques to connect chips together in new ways.”
In terms of business segments, we will cover only the display segment, whererevenue was $702 million, slightly above their target. Over the past 6 years, the display business has more than a 25% CAGR. But the display growth trajectory is no longer linear, and revenues could be down around 20% in 2019. In the TV segment, their customers are transitioning to Gen 10.5 technology, because it's strategically important for them to deliver lower costs for large screen TVs. And recent discussions with customers, they don't see any change in plans, even as Foxconn, HKC and CEC Panda have backed off their Gen 10.5 commitments.In the smartphone area, demand is expected to be flat Y/Y. But they continue to see OLED as the best technology for the future. And they believe that OLED will recover as more suppliers are able to produce at a higher yield. Overall, they see a lot of good opportunities that continue to drive the display business, despite the 2019 decline, after 7 years of continuous growth.