Applied Materials (AMAT) 10-K risk factor changes: FY2015 vs FY2014

For the fiscal year ended October [removed: 26, 2014][added: 25, 2015]

[added: | 21 | Subsidiaries of] Applied Materials, [removed: Inc.][added: Inc.† | | | | |]

Securities registered pursuant to Section 12(g) of the Act: [added: None]

Aggregate market value of the voting stock held by non-affiliates of the registrant as of April [removed: 27, 2014,] [added: 26, 2015,] based upon the closing sale price reported by the NASDAQ Global Select Market on that date: [removed: $22,617,248,500][added: $26,764,127,442]

Number of shares outstanding of the registrant’s Common Stock, $.01 par value, as of December [removed: 12, 2014: 1,221,471,983][added: 3, 2015: 1,149,133,389]

Portions of Part III will be provided in accordance with Instruction G(3) to Form 10-K no later than February [removed: 23, 2015.][added: 22, 2016.]

This Annual Report on Form 10-K [removed: (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, contains forward-looking statements that involve risks and uncertainties.

Examples of forward-looking statements include those regarding Applied’s future financial or operating results, 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, [removed: the proposed business combination with Tokyo Electron Limited,] growth opportunities, 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, general economic conditions, and other statements that are not historical facts, as well as their underlying assumptions.

FORM 10-K FOR THE FISCAL YEAR ENDED OCTOBER [removed: 26, 2014][added: 25, 2015]

| Item 1: | [removed: [Business](#sB02E12D6CF1B54CAA2EA661817B7A3A2)] [added: [Business](#s1BECAA42E6D15C9F995CAD9649EAF483)] | [removed: [4](#sB02E12D6CF1B54CAA2EA661817B7A3A2)] [added: [4](#s1BECAA42E6D15C9F995CAD9649EAF483)] |

| Item 1A: | [Risk [removed: Factors](#sE1CEAE0BF7A557C88DD65C11159D7E84)] [added: Factors](#sAD36F15646D051AB9EB29955E29165FF)] | [removed: [18](#sE1CEAE0BF7A557C88DD65C11159D7E84)] [added: [14](#sAD36F15646D051AB9EB29955E29165FF)] |

| Item 1B: | [Unresolved Staff [removed: Comments](#s84D14C11497E5CE1BEBDA5167029A207)] [added: Comments](#s1ECF47E2408B5100B0DBA7E13A3C3D8E)] | [removed: [28](#s84D14C11497E5CE1BEBDA5167029A207)] [added: [24](#s1ECF47E2408B5100B0DBA7E13A3C3D8E)] |

| Item 2: | [removed: [Properties](#s1130009DF0BA54419495B73141BE1B3E)] [added: [Properties](#sA3BEA9D09012517397EE0A5B5B4832BB)] | [removed: [29](#s1130009DF0BA54419495B73141BE1B3E)] [added: [25](#sA3BEA9D09012517397EE0A5B5B4832BB)] |

| Item 3: | [Legal [removed: Proceedings](#s072851B47AC65C46B38C1FE5D98EA7DD)] [added: Proceedings](#s6885E06696C85A169FCCE97D10346840)] | [removed: [30](#s072851B47AC65C46B38C1FE5D98EA7DD)] [added: [26](#s6885E06696C85A169FCCE97D10346840)] |

| Item 4: | [Mine Safety [removed: Disclosures](#sF33479B476DB5E529622F02908847AE1)] [added: Disclosures](#sE59BFFEA3D935E3086D406128AA6692C)] | [removed: [30](#sF33479B476DB5E529622F02908847AE1)] [added: [26](#sE59BFFEA3D935E3086D406128AA6692C)] |

| Item 5: | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#s0EF8091D3B2250118F81D8B94F532E31)] [added: Securities](#s79FC18074787514494F82DEF0932569C)] | [removed: [30](#s0EF8091D3B2250118F81D8B94F532E31)] [added: [26](#s79FC18074787514494F82DEF0932569C)] |

| Item 6: | [Selected Financial [removed: Data](#s21A20236B360572081BDA7FD3A475AF8)] [added: Data](#sEF0A5C8D49BF55308E2AD7C773590386)] | [removed: [32](#s21A20236B360572081BDA7FD3A475AF8)] [added: [28](#sEF0A5C8D49BF55308E2AD7C773590386)] |

| Item 7: | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#sA79ADBE5480C58978FD8CDC42D6D94A4)] [added: Operations](#s66B73DADC6055624848F962C4D5BEB96)] | [removed: [33](#sA79ADBE5480C58978FD8CDC42D6D94A4)] [added: [29](#s66B73DADC6055624848F962C4D5BEB96)] |

| Item 7A: | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#sFFF94DCB33225FC5B8BE112409E3BC49)] [added: Risk](#s01CD2706D56F59AC9CE9DE2DC9EDDDAC)] | [removed: [58](#sFFF94DCB33225FC5B8BE112409E3BC49)] [added: [55](#s01CD2706D56F59AC9CE9DE2DC9EDDDAC)] |

| Item 8: | [Financial Statements and Supplementary [removed: Data](#s92CFD01A4ABA5A97BAB3E2D254EA5E21)] [added: Data](#s6C0370951EE75494B10B25AD906B6BC3)] | [removed: [58](#s92CFD01A4ABA5A97BAB3E2D254EA5E21)] [added: [55](#s6C0370951EE75494B10B25AD906B6BC3)] |

| Item 9: | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#sF1AD4113BFBE56F3AA0030CA19ABF7A7)] [added: Disclosure](#sA508B44DAF215124AF6CC26106756F61)] | [removed: [58](#sF1AD4113BFBE56F3AA0030CA19ABF7A7)] [added: [55](#sA508B44DAF215124AF6CC26106756F61)] |

| Item 9A: | [Controls and [removed: Procedures](#s201889602DA655D0A195360C2E65A7A5)] [added: Procedures](#s11D2F02A4782590AAB5BDB86641A373A)] | [removed: [59](#s201889602DA655D0A195360C2E65A7A5)] [added: [56](#s11D2F02A4782590AAB5BDB86641A373A)] |

| Item 9B: | [Other [removed: Information](#s9E5C7AA1339A5B2B8E651032F2165266)] [added: Information](#s927EA1FE88D45304B1655E3A8C1CC5EE)] | [removed: [59](#s9E5C7AA1339A5B2B8E651032F2165266)] [added: [56](#s927EA1FE88D45304B1655E3A8C1CC5EE)] |

| Item 10: | [Directors, Executive Officers and Corporate [removed: Governance](#s61CF50B029BA596198459DE802019F0E)] [added: Governance](#sF38AAB4E3B6C58EA9561D9FF4B2D1E55)] | [removed: [60](#s61CF50B029BA596198459DE802019F0E)] [added: [57](#sF38AAB4E3B6C58EA9561D9FF4B2D1E55)] |

| Item 11: | [Executive [removed: Compensation](#s5D9074C3BF7A5BABB46D27275C232191)] [added: Compensation](#s62D7400CD0905E1A936E4CFB781A1305)] | [removed: [60](#s5D9074C3BF7A5BABB46D27275C232191)] [added: [57](#s62D7400CD0905E1A936E4CFB781A1305)] |

| Item 12: | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#s59DA8BF75B095939B666760F09B3070A)] [added: Matters](#sADC10C04A59E5031A65BF90DCADFE8C6)] | [removed: [60](#s59DA8BF75B095939B666760F09B3070A)] [added: [58](#sADC10C04A59E5031A65BF90DCADFE8C6)] |

| Item 13: | [Certain Relationships and Related Transactions, and Director [removed: Independence](#s98E1C21F83B556F3844413A49503D616)] [added: Independence](#s7DCA63578EAD551C9B3580AD2738F264)] | [removed: [62](#s98E1C21F83B556F3844413A49503D616)] [added: [59](#s7DCA63578EAD551C9B3580AD2738F264)] |

| Item 14: | [Principal Accounting Fees and [removed: Services](#sCBB5C6DE1CE450BFAD0A9424B64801C0)] [added: Services](#s19E8944F9CD255DDA9EC060B6038F0E1)] | [removed: [62](#sCBB5C6DE1CE450BFAD0A9424B64801C0)] [added: [59](#s19E8944F9CD255DDA9EC060B6038F0E1)] |

| Item 15: | [Exhibits, Financial Statement [removed: Schedules](#sBE30EB8C47435180A71BB3DF0150B28F)] [added: Schedules](#sDDB07B3F810D5616BF634AE870CD6C3F)] | [removed: [63](#sBE30EB8C47435180A71BB3DF0150B28F)] [added: [60](#sDDB07B3F810D5616BF634AE870CD6C3F)] |

[removed: Incorporated in 1967, Applied, a Delaware corporation,] [added: Applied] provides manufacturing equipment, services and software to the global semiconductor, [removed: flat panel] display, solar photovoltaic (PV) and related industries.

Applied’s customers include manufacturers of semiconductor wafers and chips, [removed: flat panel] liquid crystal and other displays, solar PV cells and modules, and other electronic devices.

Applied operates in four reportable segments: Silicon [removed: Systems Group,] [added: Systems,] Applied Global Services, Display, and Energy and Environmental Solutions.

Net sales by reportable segment for [removed: the past three] [added: each] fiscal [removed: years] [added: year] were as follows:

| | [removed: 2014] [added: 2015] | | | | | | [removed: 2013] [added: 2014] | | | | | | [removed: 2012] [added: 2013] | | | | |

| Silicon Systems [removed: Group] | $ | [removed: 5,978] [added: 6,135] | | | [removed: 66%] [added: 64%] | | $ | [removed: 4,775] [added: 5,978] | | | [removed: 64%] [added: 66%] | | $ | [removed: 5,536] [added: 4,775] | | | 64% |

| Applied Global Services | [removed: 2,200] [added: 2,531] | | | | [removed: 24%] [added: 26%] | | [removed: 2,023] [added: 2,200] | | | | [removed: 27%] [added: 24%] | | [removed: 2,285] [added: 2,023] | | | | [removed: 26%] [added: 27%] |

| Display | [removed: 615] [added: 780] | | | | [removed: 7%] [added: 8%] | | [removed: 538] [added: 615] | | | | 7% | | [removed: 473] [added: 538] | | | | [removed: 5%] [added: 7%] |

| Energy and Environmental Solutions | [removed: 279] [added: 213] | | | | [removed: 3%] [added: 2%] | | [removed: 173] [added: 279] | | | | [removed: 2%] [added: 3%] | | [removed: 425] [added: 173] | | | | [removed: 5%] [added: 2%] |

| Total | $ | [removed: 9,072] [added: 9,659] | | | 100% | | $ | [removed: 7,509] [added: 9,072] | | | 100% | | $ | [removed: 8,719] [added: 7,509] | | | 100% |

Silicon Systems [removed: Group] Segment

10-K 1 amat10252015-10xkdoc.htm 10-K

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Incorporated in 1967, Applied is a Delaware corporation.

With its diverse technology capabilities, Applied delivers products and services that improve device performance, yield and cost.

Applied’s customers include manufacturers of semiconductor chips, liquid crystal and other displays, solar PV cells, and other electronic devices.

The majority of Applied's new equipment sales are to leading integrated device manufacturers and foundries worldwide.

Transistor and Interconnect

Applied’s transistor and interconnect products and technologies have enabled multiple generations of device scaling from planar transistors to today’s 3D multi-gate FinFET transistors.

Applied offers products and technologies for transistor and interconnect fabrication, including epitaxy, ion implantation, oxidation and nitridation, rapid thermal processing, chemical vapor deposition, physical vapor deposition, chemical mechanical planarization and electrochemical deposition.

Many of these process steps are used multiple times throughout the semiconductor chip fabrication process.

| Transistor and Interconnect Technologies | | Product(s) |

| Oxidation/Nitridation Applied’s systems provide critical oxidation steps - like memory gate oxide, shallow trench isolation and liner oxide - for advanced device scaling. | | Vantage, Radiance and Centura Systems |

| Rapid Thermal Processing (RTP) RTP is used primarily for annealing, which modifies the properties of deposited films. Applied’s single-wafer RTP systems are also used for growing high quality oxide and oxynitride films. | | Vantage Systems |

| Physical Vapor Deposition (PVD) PVD is used to deposit high quality metal films with low resistivity for contact and interconnect devices. Applications include metal gate, silicides, contact liner/barrier, interconnect copper barrier seed and metal hard mask. | | Endura Systems |

| Chemical Vapor Deposition (CVD) CVD is used to deposit dielectric and metal films on a wafer. During the CVD process, gases that contain atoms of the material to be deposited react on the wafer surface, forming a thin film of solid material. | | Endura and Centura Systems |

Patterning and Packaging

Applied offers patterning and packaging products and systems that enable the transfer of patterns onto device structures, making it possible to etch masks used for photolithography, and perform deposition, etching, and related processes.

These systems and technologies address challenges resulting from shrinking pattern dimensions and the complexity in vertical stacking found in today’s most advanced semiconductor devices.

| Patterning and Packaging Technologies | | Product(s) |

Imaging and Process Control

Applied offers a suite of metrology, inspection and review systems for front- and back-end-of-line applications.

These systems’ imaging capabilities and algorithms employ optical and e-beam technologies to meet the most advanced technical demands, such as self-aligned double and quad patterning, extreme ultraviolet layers, measurement-intensive optimal proximity correction mask qualification, and emerging 3D architectures.

Applied delivers leading-edge capabilities that enable chipmakers to establish accurate statistical process control, ramp up production runs rapidly, and achieve consistently high production yields.

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

| Imaging and Process Control Technologies | | Product(s) |

| Metrology and Inspection Metrology and inspection tools are used to locate, measure, and analyze critical defects and features on the wafer during various stages of the fabrication processes. Applied enables customers to characterize and control critical dimension (CD) and defect issues, especially at advanced generation technology nodes. | | SEMVision G6 Defect Analysis UVision 7 Inspection VeritySEM 5i Metrology Aera4 Mask Inspection |

The Applied Global Services (AGS) segment provides integrated solutions to optimize equipment and fab performance and productivity, including spares, upgrades, services, remanufactured earlier generation equipment and factory automation software for semiconductor, display and solar products.

| AGS Solutions and Technology |

| Certified Services A comprehensive service product portfolio that combines service technology and tool specific performance commitments in order to optimize customer factory productivity. |

| Fab Consulting Experts using advanced analytical tools to solve production problems that have the greatest impact on customer fab productivity. |

| Parts Programs Spare parts portfolio targets key manufacturing challenges and balances inventory cost and risk to efficiently meet customer fab requirements. |

| Subfab Equipment Applied SubFab solutions lower costs, save energy, reduce environmental impact, and meet Environmental Protection Agency reporting regulations for greenhouse gas emissions. |

| Legacy Equipment Comprehensive 200mm equipment and upgrades portfolio to address a full spectrum of production needs and extend tool lifetime. Applied legacy equipment supports new technology for a broad variety of devices including analog, power, and MEMS. |

| Automation Software Automation software coordinates and streamlines every aspect of a factory-the processes, equipment and people-to provide competitive advantage to customers. |

Substrates used to manufacture display panels are typically glass, although newer flexible materials are entering the market.

Display industry growth depends primarily on consumer demand for increasingly larger and more advanced TVs and high resolution displays for mobile devices.

The Display segment offers a variety of technologies and products, including:

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

| Display Technologies | | Product(s) |

| Array Test LCD display substrates are inspected at many stages of production to maximize yield, minimize scrap, optimize equipment utilization, and monitor manufacturing processes. At the completion of the array stage, the performance of the millions of individual pixels on each display is tested. | | Electron Beam Array Tester |

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None

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

Applied manages its business based upon these segments.

Most chips are built on a silicon wafer base and include a variety of circuit components, such as transistors and other devices, that are connected by multiple layers of wiring (interconnects).

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

Applied’s semiconductor manufacturing systems are used by integrated device manufacturers and foundries to build and package memory, logic and other types of chips.

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

To build a chip, the transistors, capacitors and other circuit components are first created on the surface of the wafer by performing a series of processes to deposit and selectively remove portions of successive film layers.

Similar processes are then used to build the layers of wiring structures on the wafer.

As the density of the circuit components increases to enable greater computing capability in the same or smaller physical area, the complexity of building the chip also increases, necessitating more process steps to form smaller transistor structures and more intricate wiring schemes.

Advanced chip designs require more than 500 steps involving these and other processes to complete the manufacturing cycle.

Today's advanced interconnects are made using copper as the main wiring material.

Copper has low resistance and can carry a large amount of current in a small area, which allows signals to travel quickly.

Applied is a leading supplier of systems for manufacturing copper-based interconnects, including equipment for depositing, etching and planarizing these multi-layer structures.

To increase the speed of interconnect signals even further, low dielectric constant (low k) films are used to insulate the copper wiring.

Applied provides systems for depositing low k dielectric films that enable higher device performance and longer battery life.

The transistor is another key area of the chip where semiconductor manufacturers are improving their device designs to enhance performance.

Applied has technically-advanced products for building smaller and faster transistors.

One method of enhancing chip performance is strain engineering, a technique that stretches or compresses the space between atoms, allowing electrical current to flow more quickly.

Multiple strain films are typically used in advanced devices since they have an additive effect on increasing transistor speed.

Applied has systems to enable these applications using CVD and epitaxial deposition technologies.

Major chipmakers are integrating high dielectric constant (high-k) and metal materials and processes in their transistor gate structures to increase chip performance and reduce power consumption.

Applied has fully characterized processes for building these high-k/metal gates.

These solutions include an integrated gate stack tool that combines multiple critical steps in a single system, including a portfolio of metallization technologies using CVD, ALD and PVD processes.

To address the need for higher performance in a smaller space driven by new consumer products, a new type of chip packaging at wafer level is emerging, which enables three-dimensional (3D) ICs.

Providing greater functionality in a smaller footprint, 3D ICs stack multiple chips together and electrically connect them using deep holes, called through-silicon via (TSV) structures.

Applied has production-proven systems and processes required for advanced packaging, including etch, CVD, PVD, ECD, wafer cleaning and CMP systems.

Most of Applied’s semiconductor equipment products are single-wafer systems with multiple process chambers attached to a base platform.

This enables each wafer to be processed separately in its own environment, allowing precise process control, while the system’s multiple chambers enable simultaneous, high productivity manufacturing.

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

These platforms support ALD, CVD, ECD, PVD, etch, ion implantation, and RTP technologies.

Over time, the semiconductor industry has migrated to increasingly larger wafers to build chips.

The predominant or common wafer size used today for volume production of advanced chips is 300 millimeter (mm), or 12-inch, wafers.

Applied offers 300mm systems through its Silicon Systems Group segment.

In addition, Applied offers earlier-generation 200mm systems, as well as products and services to support all of its systems, which are reported under its Applied Global Services segment.

The following discusses in more detail the portfolio of products and their associated process technology areas reported under the Silicon Systems Group segment.

Deposition