Applied Materials (AMAT) 10-K risk factor changes: FY2014 vs FY2013

For the fiscal year ended October [removed: 27, 2013][added: 26, 2014]

Aggregate market value of the voting stock held by non-affiliates of the registrant as of April [removed: 26, 2013,] [added: 27, 2014,] based upon the closing sale price reported by the NASDAQ Global Select Market on that date: [removed: $16,956,394,267][added: $22,617,248,500]

Number of shares outstanding of the registrant’s Common Stock, $.01 par value, as of [removed: November 21, 2013: 1,204,183,467][added: December 12, 2014: 1,221,471,983]

[removed: Certain information in this] [added: This] Annual Report on Form 10-K (report or Form 10-K) of Applied Materials, Inc. and its subsidiaries (Applied or the Company), including “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7, [removed: is] [added: contains] forward-looking [removed: in nature.][added: statements that involve risks and uncertainties.]

Examples of forward-looking statements include [removed: statements] [added: those] regarding Applied’s future financial or operating results, [removed: as well as its plans or expectations regarding] cash flows and cash deployment strategies, declaration of dividends, share repurchases, business strategies and priorities, costs and cost controls, products, competitive positions, management's plans and objectives for future operations, research and development, strategic acquisitions and investments, the proposed business combination with Tokyo Electron Limited, growth opportunities, [removed: the nature and impact of] restructuring activities, backlog, working capital, liquidity, investment portfolio and policies, taxes, supply chain, manufacturing, properties, legal proceedings and claims, customer demand and spending, end-use demand, market and industry trends and outlooks, [removed: and] general economic [removed: conditions.][added: conditions, and other statements that are not historical facts, as well as their underlying assumptions.]

[removed: These forward-looking] [added: Forward-looking] statements are based on management’s estimates, projections and [removed: assumptions] [added: expectations] as of the date [removed: hereof] [added: hereof,] and [removed: include the assumptions that underlie] [added: Applied undertakes no obligation to revise or update any] such statements.

[removed: Any expectations based on these] [added: All] forward-looking statements are subject to risks and uncertainties and other important factors, including those discussed in Part I, Item 1A, “Risk Factors,” below and elsewhere in this report.

FORM 10-K FOR THE FISCAL YEAR ENDED OCTOBER [removed: 27, 2013][added: 26, 2014]

| Item 1: | [removed: [Business](#sAA56D1A0BF0EA0FBA733187D986DDA88)] [added: [Business](#sB02E12D6CF1B54CAA2EA661817B7A3A2)] | [removed: [4](#sAA56D1A0BF0EA0FBA733187D986DDA88)] [added: [4](#sB02E12D6CF1B54CAA2EA661817B7A3A2)] |

| Item 1A: | [Risk [removed: Factors](#sCAFEF8B2009D2A180834187DD8058697)] [added: Factors](#sE1CEAE0BF7A557C88DD65C11159D7E84)] | [removed: [18](#sCAFEF8B2009D2A180834187DD8058697)] [added: [18](#sE1CEAE0BF7A557C88DD65C11159D7E84)] |

| Item 1B: | [Unresolved Staff [removed: Comments](#sB8576048394B0C16984C187DD82D70EA)] [added: Comments](#s84D14C11497E5CE1BEBDA5167029A207)] | [removed: [28](#sB8576048394B0C16984C187DD82D70EA)] [added: [28](#s84D14C11497E5CE1BEBDA5167029A207)] |

| Item 2: | [removed: [Properties](#s3924C20C8E204FF5491F187D9E67F9FF)] [added: [Properties](#s1130009DF0BA54419495B73141BE1B3E)] | [removed: [29](#s3924C20C8E204FF5491F187D9E67F9FF)] [added: [29](#s1130009DF0BA54419495B73141BE1B3E)] |

| Item 3: | [Legal [removed: Proceedings](#s12B8735E5745AAE51516187DD85FC4E8)] [added: Proceedings](#s072851B47AC65C46B38C1FE5D98EA7DD)] | [removed: [30](#s12B8735E5745AAE51516187DD85FC4E8)] [added: [30](#s072851B47AC65C46B38C1FE5D98EA7DD)] |

| Item 4: | [Mine Safety [removed: Disclosures](#s47C492ED4244614EEC61187DD8912BD8)] [added: Disclosures](#sF33479B476DB5E529622F02908847AE1)] | [removed: [30](#s47C492ED4244614EEC61187DD8912BD8)] [added: [30](#sF33479B476DB5E529622F02908847AE1)] |

| Item 5: | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#sCE4568DE26AC1155AEDA187D92F4E5D1)] [added: Securities](#s0EF8091D3B2250118F81D8B94F532E31)] | [removed: [30](#sCE4568DE26AC1155AEDA187D92F4E5D1)] [added: [30](#s0EF8091D3B2250118F81D8B94F532E31)] |

| Item 6: | [Selected Financial [removed: Data](#s6F89B7CC027BCF9A9E34187D8AA2C0F9)] [added: Data](#s21A20236B360572081BDA7FD3A475AF8)] | [removed: [33](#s6F89B7CC027BCF9A9E34187D8AA2C0F9)] [added: [32](#s21A20236B360572081BDA7FD3A475AF8)] |

| Item 7: | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#sA64EE539708F6E7685B6187D8A7ACC62)] [added: Operations](#sA79ADBE5480C58978FD8CDC42D6D94A4)] | [removed: [34](#sA64EE539708F6E7685B6187D8A7ACC62)] [added: [33](#sA79ADBE5480C58978FD8CDC42D6D94A4)] |

| Item 7A: | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#sF971C0FDCB7BC33B99A3187DDA7BACEB)] [added: Risk](#sFFF94DCB33225FC5B8BE112409E3BC49)] | [removed: [59](#sF971C0FDCB7BC33B99A3187DDA7BACEB)] [added: [58](#sFFF94DCB33225FC5B8BE112409E3BC49)] |

| Item 8: | [Financial Statements and Supplementary [removed: Data](#s9E1C98140259D1EA1855187DDA854477)] [added: Data](#s92CFD01A4ABA5A97BAB3E2D254EA5E21)] | [removed: [59](#s9E1C98140259D1EA1855187DDA854477)] [added: [58](#s92CFD01A4ABA5A97BAB3E2D254EA5E21)] |

| Item 9: | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#sBD00C5D000D67887BE93187DDAA3BDB8)] [added: Disclosure](#sF1AD4113BFBE56F3AA0030CA19ABF7A7)] | [removed: [59](#sBD00C5D000D67887BE93187DDAA3BDB8)] [added: [58](#sF1AD4113BFBE56F3AA0030CA19ABF7A7)] |

| Item 9A: | [Controls and [removed: Procedures](#s0CF51283E5C335F38C35187DDAD5CF10)] [added: Procedures](#s201889602DA655D0A195360C2E65A7A5)] | [removed: [60](#s0CF51283E5C335F38C35187DDAD5CF10)] [added: [59](#s201889602DA655D0A195360C2E65A7A5)] |

| Item 9B: | [Other [removed: Information](#sAE23BC1EAA271823FA90187DDAFD6B45)] [added: Information](#s9E5C7AA1339A5B2B8E651032F2165266)] | [removed: [60](#sAE23BC1EAA271823FA90187DDAFD6B45)] [added: [59](#s9E5C7AA1339A5B2B8E651032F2165266)] |

| Item 10: | [Directors, Executive Officers and Corporate [removed: Governance](#s60667E3FBDFFDF22ABBF187DDB7F7A54)] [added: Governance](#s61CF50B029BA596198459DE802019F0E)] | [removed: [61](#s60667E3FBDFFDF22ABBF187DDB7F7A54)] [added: [60](#s61CF50B029BA596198459DE802019F0E)] |

| Item 11: | [Executive [removed: Compensation](#sE778553AF91E4CFD1DC1187DDB9D0F38)] [added: Compensation](#s5D9074C3BF7A5BABB46D27275C232191)] | [removed: [61](#sE778553AF91E4CFD1DC1187DDB9D0F38)] [added: [60](#s5D9074C3BF7A5BABB46D27275C232191)] |

| Item 12: | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s6DB28114AA63F644921F187D8D68C478)] [added: Matters](#s59DA8BF75B095939B666760F09B3070A)] | [removed: [61](#s6DB28114AA63F644921F187D8D68C478)] [added: [60](#s59DA8BF75B095939B666760F09B3070A)] |

| Item 13: | [Certain Relationships and Related Transactions, and Director [removed: Independence](#sDE8630D65D8486630F9C187DDBF717B3)] [added: Independence](#s98E1C21F83B556F3844413A49503D616)] | [removed: [63](#sDE8630D65D8486630F9C187DDBF717B3)] [added: [62](#s98E1C21F83B556F3844413A49503D616)] |

| Item 14: | [Principal Accounting Fees and [removed: Services](#s57FC54F1F52C3A680C7C187DDC296769)] [added: Services](#sCBB5C6DE1CE450BFAD0A9424B64801C0)] | [removed: [63](#s57FC54F1F52C3A680C7C187DDC296769)] [added: [62](#sCBB5C6DE1CE450BFAD0A9424B64801C0)] |

| Item 15: | [Exhibits, Financial Statement [removed: Schedules](#sFCE8AD11C5FA2693FEA8187DDC79A862)] [added: Schedules](#sBE30EB8C47435180A71BB3DF0150B28F)] | [removed: [64](#sFCE8AD11C5FA2693FEA8187DDC79A862)] [added: [63](#sBE30EB8C47435180A71BB3DF0150B28F)] |

| | [removed: 2013] [added: 2014] | | | | | | [removed: 2012] [added: 2013] | | | | | | [removed: 2011] [added: 2012] | | | | |

| Silicon Systems Group | $ | [removed: 4,775] [added: 5,978] | | | [removed: 64%] [added: 66%] | | $ | [removed: 5,536] [added: 4,775] | | | 64% | | $ | [removed: 5,415] [added: 5,536] | | | [removed: 51%] [added: 64%] |

| Applied Global Services | [removed: 2,023] [added: 2,200] | | | | [removed: 27%] [added: 24%] | | [removed: 2,285] [added: 2,023] | | | | [removed: 26%] [added: 27%] | | [removed: 2,413] [added: 2,285] | | | | [removed: 23%] [added: 26%] |

| Display | [removed: 538] [added: 615] | | | | 7% | | [removed: 473] [added: 538] | | | | [removed: 5%] [added: 7%] | | [removed: 699] [added: 473] | | | | [removed: 7%] [added: 5%] |

| Energy and Environmental Solutions | [removed: 173] [added: 279] | | | | [removed: 2%] [added: 3%] | | [removed: 425] [added: 173] | | | | [removed: 5%] [added: 2%] | | [removed: 1,990] [added: 425] | | | | [removed: 19%] [added: 5%] |

| Total | $ | [removed: 7,509] [added: 9,072] | | | 100% | | $ | [removed: 8,719] [added: 7,509] | | | 100% | | $ | [removed: 10,517] [added: 8,719] | | | 100% |

Applied offers systems that perform various processes used in chip fabrication, including [removed: atomic layer deposition (ALD),] chemical vapor deposition (CVD), physical vapor deposition (PVD), [added: etch,] electrochemical deposition (ECD), rapid thermal processing (RTP), ion implantation, chemical mechanical planarization (CMP), [added: epitaxy (Epi),] wet cleaning, [removed: and] [added: atomic layer deposition (ALD),] wafer metrology and inspection, [removed: as well as] [added: and] systems that etch or inspect circuit patterns on masks used in the photolithography process.

The majority of the Company's new equipment sales are for leading-edge technology for advanced [removed: nodes using 28] [added: 2X] nanometer (nm) [added: nodes] and smaller dimensions.

Applied has [removed: technically advanced] [added: technically-advanced] products for building smaller and faster transistors.

These solutions include an integrated [removed: dielectric] gate stack tool that combines [removed: four] [added: multiple] critical [removed: processes] [added: steps] in a single system, [added: including] a portfolio of metallization technologies using [added: CVD,] ALD and [removed: PVD, and an innovative high temperature etch system.][added: PVD processes.]

Applied has production-proven systems and processes required for advanced [removed: packaging manufacturing,] [added: packaging,] including etch, CVD, PVD, ECD, wafer cleaning and CMP systems.

Applied sells most of its single-wafer, multi-chamber systems on [removed: six] [added: eight] basic platforms: the Endura®,, Centura®, Producer®, [added: CentrisTM, Reflection®,] Raider®, VIISta® and Vantage® platforms.

10-K 1 amat10262014-10kdoc.htm 10-K

Portions of Part III will be provided in accordance with Instruction G(3) to Form 10-K no later than February 23, 2015.

| | [Signatures](#s13F120365B865E3091EEB69070D9A01B) | [120](#s13F120365B865E3091EEB69070D9A01B) |

3D NAND and FinFET Films — 3D NAND requires deposition technology for vertical gate formation and complex patterning applications.

Applied offers products for FinFET and 3D NAND fabrication, including the Applied Producer XP PrecisionTM CVD system released in 2014, which addresses the deposition challenges presented by vertical 3D architectures.

Designed for high-volume manufacturing, the XP Precision system combines production-proven Producer CVD technology with more efficient, faster processing chamber technology.

Copper Interconnect Encapsulation Solutions — In 2014, Applied introduced its Endura VoltaTM CVD Cobalt system for encapsulating copper interconnects in logic chips smaller than the 28nm node.

The system deposits a conformal cobalt liner and selective cobalt capping layer to provide complete enclosure of copper lines, improving reliability while reducing yield-limiting issues.

In 2014, Applied introduced the Endura VenturaTM PVD system, incorporating the latest industry-leading PVD technologies.

The Ventura system supports the use of titanium in volume manufacturing as an alternative barrier material and expands Applied's comprehensive toolset for wafer level packaging applications, including through silicon vias, redistribution layers, and bump technology used to connect the die to the substrates.

Applied's latest CMP product, the Applied Reflexion LK PrimeTM, is a critical enabler for FinFET gate and 3D NAND staircase structures.

Solar equipment applications include:

These include the SmartWEBTM system, a modular platform for sputtering multiple thin layers on flexible roll-to-roll plastic substrates for manufacturing flexible touch panels, flexible displays, and other applications, at high throughput.

In addition, a significant driver in the semiconductor and display industries is end-demand for mobile consumer products, which is characterized by seasonality that impacts the timing of customer investments in manufacturing equipment and, in turn, Applied's business.

Demand for larger LCD TVs continues to drive investment in display equipment, although the TV manufacturing sector remains susceptible to cyclical conditions.

| Ginetto Addiego(4) | Senior Vice President, Engineering |

| (4) | Dr. Addiego, age 55, has been Senior Vice President, Engineering since rejoining Applied in March 2014. He previously was with Applied from 1996 to 2005, leading various product groups as well as global organizations, including Global Operations, Manufacturing, Foundation Engineering, and Information Technology. From March 2011 to March 2014, Dr. Addiego was President and Chief Operating Officer of Ultra Clean Technology Corp., a supplier of critical subsystems for the semiconductor capital equipment, medical device, energy, research, and flat panel industries. From February 2005 to March 2011, Dr. Addiego worked at Novellus Systems, Inc., a provider of advanced process equipment for the semiconductor industry, where he served as Executive Vice President and Chief Administrative Officer and Executive Vice President of Corporate Operations. |

Under the agreement, which was amended February 14, 2014, the closing of the transaction is subject to customary conditions, including regulatory approvals.

As of October 26, 2014, Applied intends to permanently reinvest approximately $2.1 billion of these funds outside of the U.S. and does not plan to repatriate these funds.

| First quarter | $ | 18.01 | | | $ | 16.50 | |

| Second quarter | $ | 20.84 | | | $ | 16.72 | |

| Third quarter | $ | 23.27 | | | $ | 18.67 | |

| Fourth quarter | $ | 23.11 | | | $ | 18.92 | |

| Applied Materials | 100.00 | | | 97.43 | | | 101.85 | | | 88.54 | | | 151.43 | | | 183.29 | |

| S&P 500 Index | 100.00 | | | 116.52 | | | 125.94 | | | 145.09 | | | 184.52 | | | 216.39 | |

| RDG Semiconductor Composite Index | 100.00 | | | 121.00 | | | 132.42 | | | 124.95 | | | 163.20 | | | 207.93 | |

During the fourth quarter of fiscal 2014, there were no shares of common stock repurchased by Applied.

| (2) | Fiscal 2014 amount differs from the unaudited consolidated financial statements included in Applied’s press release issued on November 13, 2014, reflecting an increase to provision for income taxes of $34 million and a decrease to earnings per diluted share of $0.03. This adjustment is not considered material and does not affect Applied’s previously announced Non-GAAP Adjusted Results. |

In addition, a significant driver in the semiconductor and display industries is end-demand for mobile consumer products, which is characterized by seasonality that impacts the timing of customer investments in manufacturing equipment and, in turn, Applied's business.

In June 2014, the shareholders of Applied and TEL approved the proposed business combination.

Under the agreement, which was amended February 14, 2014, the closing of the transaction is subject to customary conditions, including regulatory approvals.

| (1) | Fiscal 2014 amount differs from the unaudited consolidated financial statements included in Applied’s press release issued on November 13, 2014, reflecting an increase to provision for income taxes of $34 million and a decrease to earnings per diluted share of $0.03. This adjustment is not considered material and does not affect Applied’s previously announced Non-GAAP Adjusted Results. |

During the year, demand for advanced mobile chips drove continued demand for semiconductor equipment by foundry customers.

In addition, demand for semiconductor equipment from memory customers improved as manufacturers invested in technology upgrades.

Mobility also represents a significant driver of display industry spending, which has resulted in continued manufacturing capacity expansion for mobile applications.

Demand for larger LCD TVs is also driving investment in display equipment, although the TV manufacturing sector remains susceptible to cyclical conditions.

Investment in solar equipment remained low during fiscal 2014, despite continued end-market growth, due to ongoing excess manufacturing capacity in the industry.

The growth in the semiconductor manufacturing equipment industry is expected to be driven by foundry and memory spending.

Applied also expects display equipment investment to remain healthy in 2015.

New orders increased in fiscal 2014 from fiscal 2013 across all segments, primarily due to higher demand for semiconductor equipment, semiconductor spares and services, and display equipment.

10-K 1 amat10272013-10kdoc.htm FORM 10-K

Portions of the definitive Proxy Statement for Applied Materials, Inc.’s 2014 Annual Meeting of Stockholders are incorporated by reference into Part III of this Form 10-K.

All statements in this report and those made by the management of Applied, other than statements of historical fact, are forward-looking statements.

Applied undertakes no obligation to revise or update any forward-looking statements.

| | [Signatures](#s7C900F3783B40704B4B8187DE2CD83D5) | [121](#s7C900F3783B40704B4B8187DE2CD83D5) |

In November 2011, Applied completed the acquisition of Varian Semiconductor Equipment Associates, Inc. (Varian), a leading supplier of ion implantation equipment to the semiconductor and solar industries.

The acquisition expanded Applied's technologies for chip and solar module manufacturing.

The acquired business is primarily included in consolidated results of operations and the results of the Silicon Systems Group and Applied Global Services segments.

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

Applied’s latest CMP product, the Applied Reflexion GT system, has an innovative dual-wafer design that increases performance while lowering system cost of ownership in fabricating copper interconnects and tungsten contacts.

The system delivers a 30% resolution improvement over the previous SEMVision generation, making it the highest available in the industry.

These CVD systems are available for a range of display substrate sizes to enable manufacturers to achieve economies of scale.

The solar equipment products offered under this segment include:

| | | | | | | | | | | | |

| Intel Corporation | * | | * | | 10% |

________________________

| * | Less than 10%. |

Global solar PV production capacity exceeds end-demand, resulting in a continued challenging environment and causing solar cell and wafering customers to defer purchases of new capacity to preserve capital.

| Mary Humiston(5) | Senior Vice President, Human Resources, Communications and Public Affairs |

| Jay Kerley(9) | Group Vice President, Chief Information Officer |

| (5) | Ms. Humiston, age 48, has been Senior Vice President, Human Resources, Communications and Public Affairs since February 2013. She served as Senior Vice President, Global Human Resources from July 2011 to February 2013; Group Vice President, Global Human Resources from July 2010 to July 2011; and Corporate Vice President, Global Human Resources from June 2009 to June 2010. Prior to June 2009, she served as the Corporate Vice President of Human Resources for both the Energy and Environmental Solutions and Display groups. Prior to joining Applied, Ms. Humiston was Vice President of Human Resources at Honeywell International Inc. (Honeywell), a diversified global technology and manufacturing company, from October 2002 to June 2008, with responsibility for various corporate and international organizations. |

| (9) | Mr. Kerley, age 47, has been Group Vice President, Chief Information Officer since March 2013. Mr. Kerley joined Applied in 2006, and has served as Chief Information Officer since October 2011. Mr. Kerley has more than 20 years of information technology (IT) experience in various industries, leading IT transformation and globalization. |

Several semiconductor customers have invested in another wafer fabrication equipment supplier to help fund development of 450mm and other new technologies, which may influence the timing of technology transitions, funding allocations or other matters.

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| Fiscal 2012 | | | | | | | |

| First quarter | $ | 12.73 | | | $ | 10.13 | |

| Second quarter | $ | 13.21 | | | $ | 11.49 | |

| Third quarter | $ | 11.99 | | | $ | 10.01 | |

| Fourth quarter | $ | 12.05 | | | $ | 10.65 | |

| Applied Materials | 100.00 | | | 116.07 | | | 113.08 | | | 118.21 | | | 102.77 | | | 175.76 | |

| S&P 500 Index | 100.00 | | | 109.80 | | | 127.94 | | | 138.29 | | | 159.32 | | | 202.61 | |

| RDG Semiconductor Composite Index | 100.00 | | | 124.98 | | | 153.98 | | | 166.89 | | | 149.81 | | | 200.47 | |

| Period | Total Number of Shares Purchased | | | Average Price Paid per Share | | | | Aggregate Price Paid | | | | Total Number of Shares Purchased as Part of Publicly Announced Program | | | Maximum Dollar Value of Shares That May Yet be Purchased Under the Program | | |

| | (In millions, except per share amounts) | | | | | | | | | | | | | | | | |

| Month #1 | | | | | | | | | | | | | | | | | |

| (July 29, 2013 to August 25, 2013) | 0.8 | | | $ | 15.78 | | | $ | 13 | | | 0.8 | | | $ | 1,619 | |

| Month #2 | | | | | | | | | | | | | | | | | |

| (August 26, 2013 to September 22, 2013) | 2.1 | | | $ | 15.58 | | | 33 | | | | 2.1 | | | $ | 1,586 | |