Sector: Information Technology | Focus: Semiconductor Materials & Equipment
HQ: Santa Clara, California
Financial Risks
Applied Materials faces risks from volatile semiconductor and display industries, including fluctuating customer demand, global economic uncertainty, supply chain disruptions, and shortages of parts. Geopolitical risks, like export regulations (especially with China), and concentrated customer bases increase vulnerability. Credit risk from customers and suppliers, and potential legal proceedings (including export compliance issues) are also significant concerns. The company's reliance on complex information systems and potential impairment of goodwill and long-lived assets are additional risks. Finally, changes in tax laws and debt covenants pose financial risks.
Financial Upside
The company's Applied Global Services segment shows revenue growth from long-term service agreements and customer spending on spares. Increased customer investment in display manufacturing equipment for IT products (laptops, monitors, tablets) is a positive for the Display and Adjacent Markets segment. Strong customer spending on new semiconductor capacity and technology transitions in the Semiconductor Systems segment is also a positive. The company has a large investment portfolio and significant cash on hand, which can be used to fund operations and investments.
