Applied Materials (AMAT) 10-K risk factor changes: FY2023 vs FY2022

The following risk factors could materially and adversely affect [removed: Applied’s] [added: our] business, financial condition or results of operations and cause reputational harm, and should be carefully considered in evaluating [removed: the Company and its] [added: our] business, in addition to other information presented elsewhere in this report.

The industries [removed: that Applied serves] [added: we serve] can be volatile and difficult to predict.

[removed: As a supplier to the global semiconductor and display and related industries, Applied is subject to variable industry conditions, since] [added: Factors that impact] demand for [removed: manufacturing equipment] [added: our products] and services [removed: can change depending on several factors, including the nature and timing of] [added: include] technology inflections and advances in fabrication processes, [removed: the timing and requirements of] new and emerging technologies and market drivers, production capacity relative to demand for chips and display technologies, end-user demand, customers’ capacity utilization, production volumes, access to affordable capital, [added: business and] consumer buying patterns and general economic and political conditions.

[removed: Applied’s industries] [added: We are a supplier to the global semiconductor and display and related industries, which] historically have been [removed: cyclical,] [added: cyclical] and are subject to volatility and sudden changes in customer [removed: requirements for new manufacturing capacity and advanced technology.][added: demand.]

[removed: These changes] [added: Changes in demand] can affect the timing and amounts of customer investments in technology and manufacturing equipment and can [removed: have a significant] [added: significantly] impact [removed: on Applied’s net sales,] [added: our] operating [removed: expenses, gross margins and net income.][added: results.]

The amount and mix of [added: our customers’] capital equipment spending between different products and technologies can [removed: have a significant] [added: also significantly] impact [removed: on Applied’s results of operations.][added: our operating results.]

If [removed: Applied does] [added: we do] not effectively manage these [removed: challenges during periods of changing demand, its] [added: challenges, our] business performance and [added: operating] results [removed: of operations] may be adversely impacted.

Even with effective allocation of resources and management of costs, [removed: during periods of decreasing demand, Applied’s] [added: our] gross [added: and operating] margins, cash flows and earnings may be adversely [removed: impacted.][added: impacted during periods of changing demand.]

[removed: Applied is] [added: We are] exposed to risks associated with an uncertain global economy.

Uncertain or adverse economic and business conditions, including uncertainties and volatility in the financial markets, national debt, fiscal or monetary concerns, rising inflation and interest [removed: rates in various regions,] [added: rates, bank failures,] and economic recession, could materially [added: and] adversely impact [removed: Applied’s] [added: our] operating results.

[removed: Such decreases] [added: Decreases] in spending and demand have [removed: in the past] caused, and may in the future cause, our customers to push out, cancel or refrain from purchasing our equipment or services, which could negatively impact demand for our products and services, reduce our backlog, increase our inventory, and materially [added: and] adversely impact our operating results.

[removed: Similarly, changes that result in sudden] [added: Sudden] increases in [removed: consumer] demand for electronic products have [removed: resulted in,] [added: caused,] and may [removed: continue to result in,] [added: in the future cause,] a shortage of parts and materials needed to manufacture our products.

Such shortages, [removed: as well as] [added: and] shipment delays due to transportation capacity and interruptions, have adversely impacted, and may [removed: continue to] [added: in the future] adversely impact, our suppliers’ ability to meet our [removed: demand] requirements.

Accelerated digital transformation may further increase [removed: consumer] demand and exacerbate [removed: such] shortages and [removed: also] strain our manufacturing capacity, which may adversely impact our ability to meet customer [removed: demands] [added: demand] and [removed: thus] have an adverse impact on our revenues, [added: operating] results [removed: of operations] and financial condition.

Uncertain or adverse economic and market conditions, difficulties in obtaining capital, increased costs or reduced profitability may [removed: also] cause some customers to scale back operations, exit businesses, merge with other manufacturers, or file for bankruptcy protection and potentially cease operations, which can [removed: also] result in lower sales, additional inventory or bad debt [removed: expense for Applied.][added: expense.]

Economic and industry uncertainty may [removed: similarly affect suppliers, which could] impair [removed: their] [added: the] ability [added: of suppliers] to deliver parts and negatively affect [removed: Applied’s] [added: our] ability to manage operations and deliver [removed: its] [added: our] products.

These conditions may also lead to consolidation or strategic alliances among other equipment manufacturers, which could adversely affect [removed: Applied’s] [added: our] ability to compete effectively.

Uncertain economic and industry conditions and [removed: continued] supply chain [removed: disruptions also] [added: challenges] make it more [removed: challenging for Applied] [added: difficult] to [added: accurately] forecast [removed: its] operating results, make business decisions, and identify and prioritize the risks that may affect [removed: its] [added: our] businesses, sources and uses of cash, financial condition and results of operations.

If [removed: Applied does] [added: we do] not appropriately manage [removed: its] [added: our] business operations in response to changing economic and industry conditions, it could have a [removed: significant negative] [added: material and adverse] impact on [removed: its] [added: our] business performance and financial condition.

[removed: Applied] [added: We] may be required to implement additional cost reduction efforts, including restructuring activities, which may adversely [removed: affect Applied’s] [added: impact our] ability to capitalize on opportunities.

Even during periods of economic uncertainty or lower [removed: revenues, Applied] [added: demand, we] must continue to invest in research and development and maintain a global business infrastructure to compete effectively and support [removed: its] [added: our] customers, which can have a negative impact on [removed: its] [added: our] operating [removed: margins and earnings.][added: results.]

[removed: Applied maintains] [added: We maintain] an investment portfolio that is subject to general credit, liquidity, market and interest rate risks.

The risks to [removed: Applied’s] [added: our] investment portfolio may be exacerbated if financial market conditions deteriorate due to rising inflation, rising interest rates, [added: bank failures or] economic recession [removed: or impacts of the COVID-19 pandemic] and, as a result, the value and liquidity of the investment [removed: portfolio, as well as] [added: portfolio and] returns on pension assets, could be negatively impacted and lead to impairment charges.

[removed: Applied also maintains cash balances in various bank] accounts globally in order to fund normal operations.

If any of these financial institutions [removed: becomes] [added: become] insolvent, it could limit [removed: Applied’s] [added: our] ability to access cash in the affected accounts, which could affect [removed: its] [added: our] ability to manage [removed: its] [added: our] operations.

[removed: Applied is] [added: We are] exposed to the risks of operating a global business.

[removed: Applied has] [added: We have] product development, engineering, manufacturing, sales and other operations [removed: distributed throughout] [added: in] many countries, and some of [removed: its] [added: our] business activities are concentrated in certain geographic areas.

[removed: Moreover, in] [added: In] fiscal [removed: 2022,] [added: 2023,] approximately [removed: 88%] [added: 85%] of [removed: Applied’s] [added: our] net sales were to customers in regions outside the United States.

As a result of the global nature of [removed: its] [added: our] operations, [removed: Applied’s] [added: our] business performance and results of operations may be adversely affected by a number of factors, including:

- uncertain global [removed: economic and] [added: economic,] political [added: and] business conditions and [removed: demands;][added: demand;]

- global trade issues and changes in and uncertainties with respect to trade and export regulations, trade policies and sanctions, tariffs, [removed: and] international trade disputes, [removed: including] [added: and] new and changing [removed: export] regulations for [removed: certain] exports [added: of certain technologies] to [removed: China] [added: China, where a significant portion of our supply chain is located,] and any retaliatory [removed: measures;][added: measures, that adversely impact us or our direct or sub-tier suppliers;]

- positions taken by governmental agencies regarding possible national, commercial [removed: and/or] [added: or] security issues posed by the development, sale or export of certain [added: raw materials,] products and technologies;

- political instability, natural disasters, regional or global health epidemics, social unrest, terrorism, acts of war or other geopolitical turmoil, or cybersecurity incidents in locations where [removed: Applied has] [added: we have] operations, suppliers or sales, or that may influence the value chain of the industries [removed: that Applied serves;][added: we serve;]

- political and social attitudes, laws, rules, regulations and policies within [added: countries, including in China, the United States, and] countries [added: in Europe and Asia,] that favor domestic companies over non-domestic companies, including [removed: customer- or government-supported] efforts to promote the development and growth of local [removed: competitors;][added: competitors and reduce dependence on foreign semiconductor equipment and manufacturing capabilities through policies and financial incentives;]

- [removed: customer- or government-supported] efforts to influence [removed: Applied] [added: us] to conduct more or less of [removed: its] [added: our] operations and sourcing in a particular country;

- [removed: variations among,] [added: different] and [removed: changes in,] [added: changing] local, regional, national or international laws and regulations, including contract, intellectual property, cybersecurity, data privacy, labor, tax, and import/export laws, and the interpretation and application of [removed: such] laws and regulations;

- the availability [removed: or increasing costs of] [added: of, and increases and volatility of,] raw [removed: material,] [added: materials,] commodity, energy and shipping [removed: or volatility in such] costs;

- delays or restrictions on personnel travel and in shipping materials or [removed: finished products between and within countries;][added: products;]

- [removed: failure to] [added: challenges in hiring and integrating workers in different countries, and in] effectively [removed: manage] [added: managing] a diverse workforce with different experience levels, languages, cultures, customs, business practices and worker expectations, and differing employment practices and labor issues;

- [removed: variations in] the ability to develop relationships with local customers, suppliers and governments;

To meet rapidly changing demand, we must accurately forecast demand and effectively manage our resources, investments, production capacity, supply chain, workforce, inventory, and other components of our business.

We may incur unexpected or additional costs to align our business operations with changes in demand.

We also maintain cash balances in various bank

- interruptions to our or our suppliers’ supply chain;

The U.S. government may also revise or expand existing requirements or issue guidance clarifying the scope and application of these requirements, which could change the impact of these rules on our business and manufacturing operations.

The U.S. government may also continue to add customers to its “Entity List” and “Unverified List,” or take measures that could disrupt our product shipments to certain customers.

In November 2023, we received a subpoena from the U.S. Commerce Department’s Bureau of Industry and Security requesting the same information.

our business and operating results to greater volatility.

Cybersecurity incidents affecting our suppliers could impact our supply chain and may also cause difficulties and delays in our ability to obtain parts, materials and services needed to manufacture our products and provide services, and may adversely impact our manufacturing operations, our ability to meet customer demand, and our operating results.

Failure to timely recover from such delays could materially and adversely affect our business, financial condition and results of operations, and may also cause our business and financial outlook to be inaccurate.

- limited availability of feasible alternatives to per- and polyfluoroalkyl substances, which are found in parts, components, process chemicals and other materials supplied to us or used in the operations of our products;

- government incentives for local suppliers and domestic semiconductor research, development and manufacturing capabilities;

- the increasing role of machine learning and artificial intelligence with respect to semiconductor equipment and related services; and

- delays in installation of manufacturing equipment delivered to customers;

- the concentration of display manufacturer customers, and fluctuations in customer spending quarter over quarter and year over year for display manufacturing equipment; and

The display industry has experienced decreased levels of investment in manufacturing equipment.

- complete major infrastructure projects on schedule and on budget, and realize the anticipated benefits of those projects;

- effectively and timely implement artificial intelligence strategies for our product and service offerings, which may be costly or ineffective, introduce errors, cause loss of intellectual property, and raise complex regulatory compliance, intellectual property and other issues;

patent applications or related enforcement actions, and diminish the value and competitive advantage conferred by our intellectual property assets.

All information technology systems are subject to disruptions, outages, failures, and security breaches or incidents.

To the extent artificial intelligence capabilities improve and are increasingly adopted, they may be used to identify vulnerabilities and craft increasingly sophisticated cybersecurity attacks.

Vulnerabilities may be introduced from the use of artificial intelligence by us, our customers, suppliers and other business partners and third-party providers.

adversely impact our business and results of operations.

For example, several countries where we do business have announced plans to implement global minimum tax regimes based on the Organization for Economic Cooperation and Development Base Erosion and Profit Shifting Project.

If implemented, these global minimum tax regimes would change various aspects of the existing framework under which our global tax obligations are determined, which would unfavorably impact our existing tax incentives and effective tax rate.

As this framework is subject to further negotiation and implementation by each member country, the timing and ultimate impact of any such changes on our tax obligations are uncertain.

In some foreign jurisdictions, we must meet certain requirements to continue to qualify for tax incentives.

There is no assurance we will be able to meet such requirements in the future to fully realize benefits from these incentives.

Furthermore, the proposed plans to implement global minimum tax regimes could reduce or eliminate the benefits of our tax incentives.

We may not continue to declare cash dividends or repurchase our shares.

Our ability to continue to pay quarterly dividends and to repurchase our shares is subject to capital availability and periodic determinations by our Board of Directors that cash dividends and share repurchases are in the best interest of our stockholders and are in compliance with applicable laws and agreements.

Future dividends and share repurchases may be affected by, among other factors, our cash flow; potential future capital requirements for investments, acquisitions, infrastructure projects, and research and development; changes in applicable tax, corporate, or other laws; contractual restrictions, such as financial or operating covenants in our debt arrangements; and changes to our business model.

Our dividend payments and share repurchases may change from time to time, and we cannot provide assurance that we will continue to declare dividends or repurchase shares in any particular amounts or at all.

A reduction or suspension in our dividend payments or share repurchases could have a negative effect on the price of our common stock.

These strategies and targets, and their

To meet rapidly changing demand in the industries it serves, Applied must accurately forecast demand and effectively manage its resources and production capacity across its businesses, and may incur unexpected or additional costs to align its business operations.

During periods of increasing demand for its products, Applied must have sufficient manufacturing capacity and inventory to meet customer demand; effectively manage its supply chain; attract, retain and motivate a sufficient number of qualified employees; and continue to control costs.

During periods of decreasing demand, Applied must reduce costs and align its cost structure with prevailing market conditions; effectively manage its supply chain; and motivate and retain key employees.

- interruptions to Applied’s or its supplier’s supply chain;

- challenges in hiring and integration of an increasing number of workers in new countries;

Applied’s customer base is highly concentrated and has become increasingly so as a result of continued consolidation.

Difficulties in obtaining sufficient and timely supply of parts, materials or services, and delays in and unpredictability of shipments due to transportation interruptions, have adversely impacted, and may continue to adversely impact, Applied’s manufacturing operations and its ability to meet customer demand.

Moreover, lockdowns that may from time to time be imposed in various geographic regions in response to periodic spikes in COVID-19 cases and related travel and logistics restrictions may result in additional supply chain and transportation disruptions, production delays, capacity limitations and cost increases.

Our operating results may be adversely impacted if we are unable to obtain parts, materials or services needed to manufacture Applied’s products, or if we are unable to do so on a timely manner or on favorable terms.

Such increase in costs may lead to reduced demand for our products and materially adversely impact our operating results.

Some key parts are subject to long lead-times or available only from a single supplier or limited group of suppliers, and some sourcing or subassembly is provided by suppliers located in countries other than the countries where Applied conducts its manufacturing.

The continued effects of the COVID-19 pandemic and global measures taken in response have adversely impacted, and may continue to adversely impact, Applied’s operations and financial results.

The continued effects of the COVID-19 pandemic and measures taken in response by governments and businesses worldwide to contain its spread have adversely impacted and may continue to adversely impact Applied’s supply chain, manufacturing, logistics, workforce and operations, as well as the operations of Applied’s customers, suppliers and partners globally.

There is continued uncertainty regarding the duration, scope and severity of the pandemic, particularly with the emergence of new variants of COVID-19 and periodic spikes in COVID-19 cases in various geographic regions, and the impacts on our business and the global economy from the effects of the pandemic and response measures.

Travel and logistics restrictions, lockdowns, vaccine requirements and other measures from time to time implemented by foreign and domestic authorities have resulted in, and may continue to result in, supply chain and transportation disruptions, production delays and capacity limitations at Applied and some of its customers, suppliers and partners, as well as reduced workforce availability or productivity at Applied and customer sites, and additional data, information and cyber security risks associated with an extensive workforce working remotely.

As economic activity and business operations in certain regions recover, there have been and may continue to be periods of significant or sudden increases in demand for Applied’s products, as well as worldwide demand for electronic products.

Significant or sudden demand increases have resulted in, and may continue to result in, a shortage of parts, materials or services needed to manufacture Applied’s products.

We have also experienced, and may continue to experience, shipment delays due to transportation interruptions or capacity constraints.

Such shortages or delays have adversely impacted, and could continue to adversely impact, our suppliers’ ability to meet our demand requirements and do so on favorable terms, and our ability to meet our customer demand.

There can be no assurance that Applied or its suppliers will be able to maintain manufacturing operations at levels necessary to adequately address demand for Applied products.

In addition, the pandemic and measures taken in response thereto have had, and may continue to have, a significant adverse impact on the global economic activity and could also result in a reduced demand for our products, delayed deliveries or installation, cancelled orders or increase in logistics and operating costs, and materially and adversely affect Applied’s business, financial condition and results of operations.

The degree to which the pandemic ultimately impacts Applied’s business, financial condition and results of operations and the global economy will depend on future developments beyond our control, which are highly uncertain and difficult to predict, including the severity, duration and any resurgence of the pandemic, the extent, duration and effectiveness of periodic lockdowns and other containment actions, the availability, public adoption and efficacy of COVID vaccines, how quickly and to what extent normal economic and operating activity can resume, and the severity and duration of resulting global economic volatility.

- increasing government incentives for local suppliers;

In addition, a majority of the revenues of Applied Global Services is from sales to semiconductor manufacturers.

- customer investment in semiconductor manufacturing capabilities in China, which has been affected by changes in economic conditions and governmental regulations, including trade policies and export regulations;

All information technology systems are subject to disruption, breach or failure.

Some divestitures may take the form of Applied contributing assets to a joint venture, and thus are subject to the joint venture risks discussed above.

We have experienced, and may continue to experience, increasing costs to attract and retain needed talent, driven by macro-economic conditions and a highly competitive labor market.

Beginning in fiscal 2023, the Tax Cuts and Jobs Act enacted on December 22, 2017 eliminates the option to deduct research and development expenditures currently and requires taxpayers to capitalize and amortize them over five or fifteen years.

Although Congress is considering legislation that would defer the capitalization and amortization requirement, there is no assurance that the provision will be repealed or otherwise modified.

If the requirement is not modified, it may increase Applied’s provision for income taxes and effective tax rates beginning in fiscal 2023.

On August 16, 2022, the U.S. government enacted the Inflation Reduction Act, which introduces a new 15% corporate minimum tax and includes an excise tax that would impose a 1% surcharge on stock repurchases, and which may impact Applied’s financial results beginning in fiscal 2024 and 2023, respectively.

In certain foreign jurisdictions, conditional reduced income tax rates have been granted to Applied.

To obtain the benefit of these tax incentives, Applied must meet requirements relating to various activities.

Applied’s ability to realize benefits from these incentives could be materially affected if, among other things, applicable requirements are not met or Applied incurs net losses in these jurisdictions.

Applied may also enter into new financing arrangements.

Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to facilitate an understanding of [removed: Applied’s] [added: our] business and results of operations.

This MD&A should be read in conjunction with [removed: Applied’s] [added: our] Consolidated Financial Statements and the accompanying Notes to Consolidated Financial Statements included elsewhere in this Form 10-K.

*•Overview:* a summary of [removed: Applied’s] [added: our] business and measurements

*•Recent Accounting Pronouncements:* a discussion of new accounting pronouncements and its impact to [removed: Applied’s] [added: our] consolidated financial statements

[removed: Applied provides] [added: We provide] manufacturing equipment, services and software to the semiconductor, display, and related industries.

[removed: Applied’s] [added: Our] customers include manufacturers of semiconductor wafers and chips, liquid crystal and organic light-emitting diode (OLED) displays, and other electronic devices.

Each of [removed: Applied’s] [added: our] segments is subject to variable industry conditions, as demand for manufacturing equipment and services can change depending on supply and demand for chips, display technologies, and other electronic devices, as well as other factors, such as global economic, political and market conditions, and the nature and timing of technological advances in fabrication processes.

[removed: Applied operates] [added: We operate] in three reportable segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets.

A summary of financial information for each reportable segment is found in Note [removed: 17] [added: 16] of Notes to Consolidated Financial Statements.

A discussion of factors that could affect [removed: Applied’s] [added: our] operations is set forth under “Risk Factors” in Part I, Item 1A, which is incorporated herein by reference.

[removed: Applied’s] [added: Our] broad range of equipment and service products are highly technical and are sold primarily through a direct sales force.

[removed: Applied’s] [added: Our] results are driven primarily by customer spending on capital equipment and services to support key technology transitions or to increase production volume in response to worldwide demand for semiconductors and displays.

In light of these conditions, [removed: Applied’s] [added: our] results can vary significantly year-over-year, as well as quarter-over-quarter.

[removed: Applied’s] [added: Our] strategic priorities include developing products that help solve customers’ challenges at technology inflections; expanding [removed: its] [added: our] served market opportunities in the semiconductor and display industries; and growing [removed: its] [added: our] services business.

[removed: Applied’s] [added: Our] long-term growth strategy requires continued development of new materials engineering capabilities, including products and platforms that enable expansion into new and adjacent markets.

[removed: Applied’s] [added: Our] significant investments in research, development and engineering must generally enable [removed: it] [added: us] to deliver new products and technologies before the emergence of strong demand, thus allowing customers to incorporate these products into their manufacturing plans during early-stage technology selection.

[removed: Applied works] [added: We work] closely with [removed: its] [added: our] global customers to design systems and processes that meet their planned technical and production requirements.

| | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2022] [added: 2023] over [removed: 2021] [added: 2022] | | | | | | [removed: 2021] [added: 2022] over [removed: 2020] [added: 2021] | | |

| Net sales | | | $ | [removed: 25,785] [added: 26,517] | | | | | $ | [removed: 23,063] [added: 25,785] | | | | | $ | [removed: 17,202] [added: 23,063] | | | | | $ | [removed: 2,722] [added: 732] | | | | | $ | [removed: 5,861] [added: 2,722] | |

| Gross margin | | | [removed: 46.5] [added: 46.7] | | % | | | | [removed: 47.3] [added: 46.5] | | % | | | | [removed: 44.7] [added: 47.3] | | % | | | | [removed: (0.8)] [added: 0.2] points | | | | | | [removed: 2.6] [added: (0.8)] points | | |

| Operating income | | | $ | [removed: 7,788] [added: 7,654] | | | | | $ | [removed: 6,889] [added: 7,788] | | | | | $ | [removed: 4,365] [added: 6,889] | | | | | $ | [removed: 899] [added: (134)] | | | | | $ | [removed: 2,524] [added: 899] | |

| Operating margin | | | [removed: 30.2] [added: 28.9] | | % | | | | [removed: 29.9] [added: 30.2] | | % | | | | [removed: 25.4] [added: 29.9] | | % | | | | [removed: 0.3] [added: (1.3)] points | | | | | | [removed: 4.5] [added: 0.3] points | | |

| Net income | | | $ | [removed: 6,525] [added: 6,856] | | | | | $ | [removed: 5,888] [added: 6,525] | | | | | $ | [removed: 3,619] [added: 5,888] | | | | | $ | [removed: 637] [added: 331] | | | | | $ | [removed: 2,269] [added: 637] | |

| Earnings per diluted share | | | $ | [removed: 7.44] [added: 8.11] | | | | | $ | [removed: 6.40] [added: 7.44] | | | | | $ | [removed: 3.92] [added: 6.40] | | | | | $ | [removed: 1.04] [added: 0.67] | | | | | $ | [removed: 2.48] [added: 1.04] | |

Fiscal [removed: 2022] [added: 2023] and fiscal [removed: 2020] [added: 2022] each contained 52 weeks, while fiscal 2021 contained 53 weeks.

Semiconductor equipment customers continued to make strategic investments in new [removed: technology transitions] [added: capacity] and new [removed: capacity] [added: technology transitions] during fiscal [removed: 2022.][added: 2023.]

Foundry and logic spending increased in fiscal [removed: 2022] [added: 2023] compared to fiscal [removed: 2021] [added: 2022] driven by customer investments in [removed: both advanced and] mature [removed: nodes.][added: manufacturing nodes to serve demand across a wide range of products.]

[removed: Applied’s] [added: Our] Display and Adjacent Markets [removed: revenue] [added: net sales] decreased in fiscal [removed: 2022] [added: 2023] compared to fiscal [removed: 2021] [added: 2022] primarily due to [removed: decreased investment] [added: lower customer investments] in display manufacturing equipment for TVs [removed: and mobile] [added: as a result of weakness in demand for consumer electronic] products.

[removed: Although] [added: We experienced supply chain and logistics constraints in fiscal 2022, and although] there have been [added: significant] improvements in supply chain [removed: performance, Applied expects] [added: performance in fiscal 2023, we expect] some shortages to [removed: persist into fiscal 2023] [added: persist,] and managing these supply chain constraints to increase shipments to customers remains a top priority.

[removed: In fiscal 2023, Applied expects memory] [added: Memory] customers’ spending [removed: to be] [added: in fiscal 2023 was] lower as compared to fiscal 2022 due to [removed: some customers deferring] [added: deferred] capacity additions [added: primarily] as a result of weakness in [added: demand for] consumer [removed: electronics and personal computer markets.][added: electronic products.]

[removed: *See also “Risk Factors –] [added: For a description of risks associated with global trade, see the risk factor entitled *“Business and Industry Risks -] Global trade issues and changes in and uncertainties with respect to trade policies and export regulations, including import and export license requirements, trade sanctions, tariffs and international trade disputes, have adversely impacted and could further adversely impact our business and operations, and reduce the competitiveness of our products relative to local and global competitors”* [removed: *for further details.*][added: in Part I, Item 1A, “Risk Factors.*”*]

| | | | [removed: 2022] [added: 2023] | | | | | | | | | | | | | | | | | | [removed: 2021] [added: 2022] | | | | | | | | | | | | | | | | | | [removed: 2020] [added: 2021] | | | | | | | | | | | | [removed: 2022] [added: 2023] over [removed: 2021] [added: 2022] | | | | | | [removed: 2021] [added: 2022] over [removed: 2020] [added: 2021] | | |

| Semiconductor Systems | | | $ | [removed: 18,797] [added: 19,698] | | | | | [removed: 73%] [added: 74%] | | | | | | | | | | | | $ | [removed: 16,286] [added: 18,797] | | | | | [removed: 71%] [added: 73%] | | | | | | | | | | | | $ | [removed: 11,367] [added: 16,286] | | | | | [removed: 66%] [added: 71%] | | | | | | [removed: 15] [added: 5] | | % | | | | [removed: 43] [added: 15] | | % |

| Applied Global Services | | | [removed: 5,543] [added: 5,732] | | | | | | 22% | | | | | | | | | | | | [removed: 5,013] [added: 5,543] | | | | | | 22% | | | | | | | | | | | | [removed: 4,155] [added: 5,013] | | | | | | [removed: 24%] [added: 22%] | | | | | | [removed: 11] [added: 3] | | % | | | | [removed: 21] [added: 11] | | % |

| Display and Adjacent Markets | | | [removed: 1,331] [added: 868] | | | | | | [removed: 5%] [added: 3%] | | | | | | | | | | | | [removed: 1,634] [added: 1,331] | | | | | | [removed: 7%] [added: 5%] | | | | | | | | | | | | [removed: 1,607] [added: 1,634] | | | | | | [removed: 9%] [added: 7%] | | | | | | [removed: (19)] [added: (35)] | | % | | | | [removed: 2] [added: (19)] | | % |

| Corporate and Other | | | [removed: 114] [added: 219] | | | | | | [removed: —%] [added: 1%] | | | | | | | | | | | | [removed: 130] [added: 114] | | | | | | —% | | | | | | | | | | | | [removed: 73] [added: 130] | | | | | | [removed: 1%] [added: —%] | | | | | | [removed: (12)] [added: 92] | | % | | | | [removed: 78] [added: (12)] | | % |

| Total | | | $ | [removed: 25,785] [added: 26,517] | | | | | 100% | | | | | | | | | | | | $ | [removed: 23,063] [added: 25,785] | | | | | 100% | | | | | | | | | | | | $ | [removed: 17,202] [added: 23,063] | | | | | 100% | | | | | | [removed: 12] [added: 3] | | % | | | | [removed: 34] [added: 12] | | % |

[removed: Net sales] [added: The increases] in [removed: fiscal 2022 compared] [added: net sales] to [removed: fiscal 2021] [added: customers in the U.S.] and [added: Europe for] fiscal [removed: 2021] [added: 2023] compared to fiscal [removed: 2020 increased] [added: 2022] primarily [removed: due to] [added: reflected] increased [removed: customer investments] [added: investment by customers] in semiconductor equipment [removed: as well as] [added: and increased] customer spending on [removed: spares] [added: legacy systems] and comprehensive service agreements.

| China | | | $ | [removed: 7,254] [added: 7,247] | | | | | [removed: 28%] [added: 27%] | | | | | | | | | | | | $ | [removed: 7,535] [added: 7,254] | | | | | [removed: 33%] [added: 28%] | | | | | | | | | | | | $ | [removed: 5,456] [added: 7,535] | | | | | [removed: 32%] [added: 33%] | | | | | | [removed: (4)] [added: —] | | % | | | | [removed: 38] [added: (4)] | | % |

| Korea | | | [removed: 4,395] [added: 4,609] | | | | | | [removed: 17%] [added: 18%] | | | | | | | | | | | | [removed: 5,012] [added: 4,395] | | | | | | [removed: 22%] [added: 17%] | | | | | | | | | | | | [removed: 3,031] [added: 5,012] | | | | | | [removed: 18%] [added: 22%] | | | | | | [removed: (12)] [added: 5] | | % | | | | [removed: 65] [added: (12)] | | % |

Our Applied Global Services net sales in fiscal 2023 increased compared to fiscal 2022 primarily due to an increase in sales associated with long-term service agreements and higher customer spending on legacy systems, partially offset by a decrease in net sales due to additional export regulations issued by the United States government in 2022 and lower customer utilization rates.

In fiscal 2024, we expect advanced foundry and logic demand to be stronger as compared to fiscal 2023 due to increased customer spending in PC, cloud and Artificial Intelligence (AI) data centers as well as customers’ continued investments in new technology.

Demand for mature manufacturing nodes is expected to be lower as compared to fiscal 2023, primarily due to decreased customer spending in the industrial automation and automotive markets.

We expect memory customers’ spending to be higher as compared to fiscal 2023 as customers continue to invest in new technology.

In the past two years, the United States government announced additional export regulations for U.S. semiconductor technology sold in China.

Net sales in fiscal 2023 compared to fiscal 2022 and fiscal 2022 compared to fiscal 2021 increased primarily due to continued customer investment in semiconductor equipment, partially offset by the reduction in customer investment in display manufacturing equipment.

The increase in net sales in fiscal 2023 compared to fiscal 2022 was also due to improvements in our supply chain performance enabling us to better fulfill demand.

| Total | | | $ | 26,517 | | | | | 100% | | | | | | | | | | | | $ | 25,785 | | | | | 100% | | | | | | | | | | | | $ | 23,063 | | | | | 100% | | | | | | 3 | | % | | | | 12 | | % |

The increase in net sales to customers in Japan for fiscal 2023 compared to fiscal 2022 primarily reflected increased investment in display manufacturing equipment, partially offset by decreased investment by customers in semiconductor equipment.

Net sales to customers in China for 2023 compared to fiscal 2022 remained flat and primarily reflected increased investment in semiconductor equipment, offset by decreased in customer spending on long-term service agreements due to the impact of additional export regulations issued by the United States government in 2022 and decreased investment in display manufacturing equipment.

Gross Margin

| Gross margin | | | 46.7 | | % | | | | 46.5 | | % | | | | 47.3 | | % | | | | 0.2 points | | | | | | (0.8) points | | |

In addition, the increases in RD&E expenses in fiscal 2023 compared to fiscal 2022 also included a $30 million impairment of fixed assets.

| | | | 2023 | | | | | | 2022 | | | | | | 2021 | | | | | | 2023 over 2022 | | | | | | 2022 over 2021 | | |

| | | | 2023 | | | | | | 2022 | | | | | | 2021 | | | | | | 2023 over 2022 | | | | | | 2022 over 2021 | | |

| | | | 2023 | | | | | | 2022 | | | | | | 2021 | | | | | | 2023 over 2022 | | | | | | 2022 over 2021 | | |

| | | | 2023 | | | | | | 2022 | | | | | | 2021 | | | | | | 2023 over 2022 | | | | | | 2022 over 2021 | | |

The effective tax rate for fiscal 2023 was lower than fiscal 2022 primarily due to a reduction of deferred tax assets that occurred in fiscal 2022, related to a new tax incentive in Singapore.

Beginning in our fiscal 2023, the Tax Cuts and Jobs Act (Tax Act), enacted on December 22, 2017, eliminates the option to deduct research and development expenditures currently and requires taxpayers to capitalize and amortize them over five years for activities performed in the U.S. or fifteen years for activities performed outside of the U.S. This capitalization requirement increases our effective tax rates, deferred tax assets and cash tax liabilities beginning in fiscal 2023.

Spending can also depend on customer facility readiness and timeline for installation of capital equipment at customer sites.

| | | | 2023 | | | | | | 2022 | | | | | | 2021 | | | | | | 2023 over 2022 | | | | | | | | | | | | 2022 over 2021 | | | | | | | | |

Semiconductor equipment customers continued to make strategic investments in new capacity and new technology transitions during fiscal 2023.

Spending by memory customers decreased in fiscal 2023 compared to fiscal 2022 due to deferred capacity additions primarily as a result of weakness in demand for consumer electronic products.

Operating margin for fiscal 2023 decreased compared to fiscal 2022, primarily driven by increased RD&E expenses, higher inventory charges, the impact of export regulations, partially offset by favorable changes in customer and product mix, an increase in average selling prices and lower freight and logistics costs.

| | | | 2023 | | | | | | 2022 | | | | | | 2021 | | | | | | 2023 over 2022 | | | | | | | | | | | | 2022 over 2021 | | | | | | | | |

Net sales for fiscal 2023 increased compared to fiscal 2022 primarily due to an increase in sales associated with long-term service agreements and higher customer spending on legacy systems, partially offset by a decrease in net sales due to additional export regulations issued by the United States government in 2022 and lower customer utilization rates.

| | | | 2023 | | | | | | 2022 | | | | | | 2021 | | | | | | 2023 over 2022 | | | | | | | | | | | | 2022 over 2021 | | | | | | | | |

Operating margin for fiscal 2023 decreased compared to fiscal 2022 primarily due to lower net sales, partially offset by a reduction in headcount related costs as headcount moved to open positions within Semiconductor Systems and Applied Global Services segments.

| | | | 2023 | | | | | | 2022 | | | | | | 2021 | | |

The proceeds from the issuances of commercial paper are used for general corporate purposes.

At October 29, 2023, we had $100 million of commercial paper notes outstanding.

We recognize this investment tax credit when there is reasonable assurance that we will qualify for the credit and the benefit will be received.

We will evaluate the effect of the corporate minimum tax as more guidance becomes available.

The excise tax is included in our direct cost of stock repurchases and is recorded in equity.

We do not expect the excise tax to have a significant impact on our financial results.

As of October 29, 2023, our operating lease obligation was $370 million related to various operating lease arrangements for certain facilities and equipment and our finance lease obligation was $106 million related to lease arrangements that contain a purchase option which we are reasonably certain to exercise at the end of the lease term.

Our provision for income taxes and effective tax rate are affected by the geographical composition of pre-tax income which includes jurisdictions with differing tax rates, conditional reduced tax rates and other income tax incentives.

Deferred tax assets and liabilities are measured based on enacted tax rates that are expected to apply in the period in which the assets are realized or the liabilities are settled.

Deferred tax assets and liabilities are adjusted for the effect of a change in tax rates, laws, or status when the change is enacted.

*•Applied's Pandemic Response*

- *Non-GAAP Adjusted Results:* a presentation of results reconciling GAAP to non-GAAP adjusted measures

Applied’s Pandemic Response

As the COVID-19 pandemic emerged in 2020, Applied Materials responded quickly to put in place precautionary measures to keep its workplaces healthy and safe, while ensuring compliance with orders and restrictions imposed by government authorities, everywhere Applied operates in the world.

Applied’s top priority remains protecting the health and safety of its employees and their families, customers, suppliers and community.

Applied continues to support workplace flexibility and will work to respond appropriately to the impact of COVID-19 on its business, its customers’ and suppliers’ businesses and its communities.

While certain existing technologies may be adapted to new requirements, some applications create the need for an entirely different technological approach.

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

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

| | | | | | | | | | | | | | | | | | | | | | Change | | | | | | | | |

Overall spending by memory customers was flat in fiscal 2022 compared to fiscal 2021 as they continued to maintain balance between supply and demand and invested in new technology.

Applied saw continued growth in its services business in fiscal 2022 compared to fiscal 2021 driven by an increase in the installed base of equipment, the rate of customer equipment utilization, long-term service agreements and spares and legacy systems sales.

While customer demand increased during fiscal 2022 compared to fiscal 2021, supply chain and logistics constraints impacted Applied’s ability to fulfill demand in fiscal 2022.

Advanced foundry and logic demand is expected to remain strong in fiscal 2023 as customers continue to invest in new technology.

On October 7, 2022, the United States government announced new export regulations for U.S. semiconductor technology sold in China, including wafer fabrication equipment and related parts and services, that require export licenses and authorizations.

These new export regulations resulted in lower net sales in China than expected for fiscal 2022.

Applied is pursuing additional export licenses and authorizations where needed.

While Applied currently estimates lower net sales to China of up to $2.5 billion and lower overall gross margin of up to 1% in fiscal 2023, Applied is continuing to assess the implication of these complex regulations to its business.

In response to the ongoing COVID-19 pandemic and evolving conditions and worldwide response, Applied made adjustments to its global operations and is actively managing its responses in collaboration with its employees, customers and suppliers.

However, the situation remains fluid and uncertain.

For additional risks associated with the ongoing COVID-19 pandemic, see the risk factor entitled “*The continued effects of COVID-19 pandemic and global measures taken in response have adversely impacted, and may continue to adversely impact, Applied’s operations and financial results*” in Part I, Item 1A, “Risk Factors.”

| | | | (In millions) | | | | | | | | | | | | | | | | | | | | | | | | | | |

Severance and Related Charges

| Severance and related charges | | | $ | (4) | | | | | $ | 157 | | | | | $ | — | | | | | $ | (161) | | | | | $ | 157 | |

In the first quarter of fiscal 2021, Applied enacted a severance plan (Fiscal 2021 Severance Plan) to realign its workforce.

Under this plan, Applied implemented a one-time voluntary retirement program and other workforce reduction actions.

The voluntary retirement program was available to certain U.S. employees who met minimum age and length of service requirements, as well as other business-specific criteria.

In addition, Applied implemented other workforce reduction actions globally across the Display and Adjacent Markets business.

Deal Termination Fee

Operating income (loss) for fiscal 2021 included a $154 million deal termination fee associated with the termination of a Share Purchase Agreement with Kokusai Electric Corporation and KKR HKE Investment L. P. during the second quarter of

fiscal 2021.

Interest expense and interest and other income (loss), net for the periods indicated were as follows:

Applied’s effective tax rate for fiscal 2021 was slightly lower than fiscal 2020 primarily due to higher proportion of pre-tax income in lower tax jurisdictions, partially offset by resolutions of prior years’ income tax filings.

Applied is currently evaluating the effect the CHIPS Act and the Inflation Reduction Act will have on its consolidated financial statements.

In fiscal 2022, three customers each accounted for at least 10 percent of this segment’s total net sales, and together they accounted for approximately 49 percent of this segment’s total net sales.

Spending by memory customers also increased in fiscal 2021 compared to the prior year.

Operating margin for fiscal 2021 increased compared to fiscal 2020, primarily reflecting higher net sales and favorable changes in customer and product mix, partially offset by higher personnel costs due to the hiring of additional headcount to provide manufacturing capacity and flexibility, and higher freight costs.

There was no single region that accounted for at least 30 percent of total net sales for the Semiconductor Systems segment for any of the past three fiscal years.

In fiscal 2022, one customer accounted for at least 10 percent of this segment’s total net sales.

Net sales for fiscal 2021 increased compared to fiscal 2020 primarily due to higher customer spending on comprehensive service agreements and spares, and the impact of an additional one week during fiscal 2021.

[removed: Applied is] [added: We are] exposed to financial market risks, including fluctuations in interest rate and foreign currency exchange rates.

*Available-for-sale Debt Securities.* The market value of [removed: Applied’s] [added: our] investments in available-for-sale securities was approximately [removed: $1.8] [added: $2.1] billion at October [removed: 30, 2022.][added: 29, 2023.]

An immediate hypothetical 100 basis point increase in interest rates would result in a decrease in the fair value of investments as of October [removed: 30, 2022] [added: 29, 2023] of approximately [removed: $23] [added: $27] million.

*Debt.* At October [removed: 30, 2022,] [added: 29, 2023,] the aggregate principal of long-term senior unsecured notes issued by [removed: Applied] [added: us] was $5.5 billion with an estimated fair value of [removed: $4.8] [added: $4.7] billion.

A hypothetical decrease in interest rates of 100 basis points would result in an increase in the fair value of [removed: Applied’s] [added: our] long-term senior notes issuances of approximately [removed: $454] [added: $398] million at October [removed: 30, 2022.][added: 29, 2023.]

From time to [removed: time Applied uses] [added: time, we use] interest rate swaps or rate lock agreements to mitigate the potential impact of changes in benchmark interest rates on interest expense and cash flows.

Certain [removed: operations] of [removed: Applied] [added: our operations] are conducted in foreign currencies, such as Japanese yen, Israeli shekel, euro and Taiwanese dollar.

[removed: Applied uses] [added: We use] primarily foreign currency forward contracts to offset the impact of foreign exchange movements on non-U.S. dollar denominated monetary assets and liabilities.

The foreign exchange gains and losses on the assets and liabilities are recorded in interest and other income [removed: (net)] [added: (expense), net] and are offset by the gains and losses on the hedges.

[removed: Applied uses] [added: We use] foreign currency forward and option contracts to hedge a portion of anticipated non-U.S. dollar denominated revenues and expenses expected to occur within the next 24 months.

Gains and losses on these hedging contracts generally mitigate the effect of currency movements on [removed: Applied’s] [added: our] net sales, cost of products sold, and operating expenses.

A hypothetical 10% adverse change in foreign currency exchange rates relative to the U.S. Dollar would result in a decrease in the fair value of these hedging contracts of [removed: $196] [added: $163] million at October [removed: 30, 2022.][added: 29, 2023.]

[removed: Applied does] [added: We do] not use foreign currency forward or option contracts for trading or speculative purposes.

Incorporated in 1967, Applied Materials, Inc. [removed: (Applied or the Company)] [added: (Applied, we, us and our)] is a Delaware corporation.

A global company with a broad set of capabilities in materials engineering, [removed: Applied provides] [added: we provide] manufacturing equipment, services and software to the semiconductor, display and related industries.

With [removed: its] [added: our] diverse technology capabilities, [removed: Applied delivers] [added: we deliver] products and services that improve device performance, power, yield and cost.

[removed: Applied’s] [added: Our] customers include manufacturers of semiconductor chips, liquid crystal and organic light-emitting diode (OLED) displays, and other electronic devices.

[removed: Applied’s] [added: Our] fiscal year ends on the last Sunday in October.

[removed: Applied operates] [added: We operate] in three reportable segments: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets.

A summary of financial information for each reportable segment is found in Note [removed: 17] [added: 16] of Notes to Consolidated Financial Statements.

[removed: Applied’s] [added: Our] Semiconductor Systems segment develops, manufactures and sells a wide range of manufacturing equipment used to fabricate semiconductor chips, also referred to as integrated circuits (ICs).

[removed: Applied’s] [added: Our] patterning systems and technologies address challenges resulting from shrinking pattern dimensions and the growing complexity in vertical stacking found in today’s most advanced semiconductor devices.

[removed: Applied’s] [added: Our] transistor and interconnect products and technologies enable continued power and performance improvements of 3D transistors.

[removed: Applied’s] [added: Our] metrology, inspection and review systems’ imaging capabilities and algorithms employ optical and e-beam technologies to meet the most advanced technical demands in areas including self-aligned double and quad patterning, extreme ultraviolet layers, measurement-intensive optimal proximity correction mask qualification, and new 3D architectures.

[removed: Applied’s] [added: Our] packaging technologies address challenges resulting from the increasing heterogeneous integration of multiple IC dies in a single package.

[removed: Applied delivers] [added: We deliver] leading-edge capabilities that enable chipmakers to establish accurate statistical process control, ramp up production runs rapidly, and achieve consistently high production yields.

[removed: Applied] [added: We] also [removed: provides] [added: provide] manufacturing equipment that helps improve performance, power, yield and cost of semiconductor devices that use mature process technologies and serve specialty markets such as the Internet of Things, Communications, Automotive, Power and Sensors.

[removed: Applied’] [added: Our] Semiconductor Systems equipment is sold to integrated device manufacturers and foundries worldwide.

| Oxidation/Nitridation [removed: Applied’s] [added: These] 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. [removed: Applied’s single-wafer] [added: Single-wafer] RTP systems are also used for growing [removed: high quality] [added: high-quality] oxide and oxynitride films. | | | | | | Vantage Systems | | |

| Etch Etching is used many times throughout the IC manufacturing process to selectively remove material from the surface of a wafer. [removed: Applied offers] [added: We offer] systems for etching dielectric, metal, and silicon films to meet the requirements of advanced processing. | | | | | | [removed: Centris and] [added: Centris, Centura,] Producer [added: and Vistara] Systems | | |

| Metrology and Inspection Metrology and inspection tools are used to locate, measure, and analyze defects and features on the wafer during various stages of the fabrication processes. [removed: Applied enables] [added: We enable] customers to characterize and control critical dimension (CD) and defect issues, especially at advanced generation technology nodes. | | | | | | SEMVision eBeam Review PROVision eBeam Metrology [added: PrimeVision eBeam Inspection] Enlight Optical Inspection UVision Optical Inspection VeritySEM CD-SEM Metrology Aera Mask Inspection | | |

Customer demand for products and services is fulfilled through a global distribution system in more than [removed: 170] [added: 195] locations and trained service engineers located in close proximity to customer sites to support over [removed: 49,000] [added: 52,000] installed Applied semiconductor, display and other manufacturing systems worldwide.

[removed: Applied offers] [added: We offer] the following general types of services and products under the Applied Global Services segment.

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

| Legacy Equipment and Upgrades Comprehensive 200mm equipment and upgrades portfolio to address a full spectrum of production needs and extend tool lifetime. [removed: Applied] [added: Our] 200mm equipment supports market inflections and new technology for a broad variety of devices including analog, power, and MEMS. | | |

| Automation Software [removed: Applied] [added: Our] SmartFactory® automation software portfolio coordinates and streamlines every aspect of a factory (the processes, equipment and people) to provide competitive advantage to customers. | | |

[removed: Applied manufactures] [added: We manufacture] systems to meet demand represented by order backlog and customer commitments.

Backlog by reportable segment as of October [removed: 30, 2022] [added: 29, 2023] and October [removed: 31, 2021] [added: 30, 2022] was as follows:

| | | | [removed: | | |] [added: 2023] | | | | | | 2022 | | | | | | [removed: | | | | | |] 2021 | | | [removed: | | | | | | | | | | | |]

| Semiconductor Systems | | | | | | | | | | | | | | | | | | $ | [removed: 12,691] [added: 11,127] | | | | | [removed: 67] [added: 65] | | % | | | | $ | [removed: 6,679] [added: 12,691] | | | | | [removed: 57] [added: 67] | | % |

| Applied Global Services | | | | | | | | | | | | | | | | | | [removed: 5,643] [added: 5,162] | | | | | | 30 | | % | | | | [removed: 4,335] [added: 5,643] | | | | | | [removed: 37] [added: 30] | | % |

| Display and Adjacent Markets | | | | | | | | | | | | | | | | | | [removed: 581] [added: 833] | | | | | | [removed: 3] [added: 5] | | % | | | | [removed: 735] [added: 581] | | | | | | [removed: 6] [added: 3] | | % |

| Corporate and Other | | | | | | | | | | | | | | | | | | [removed: 96] [added: 49] | | | | | | — | | % | | | | [removed: 9] [added: 96] | | | | | | — | | % |

| Total | | | | | | | | | | | | | | | | | | $ | [removed: 19,011] [added: 17,171] | | | | | 100 | | % | | | | $ | [removed: 11,758] [added: 19,011] | | | | | 100 | | % |

Of the total backlog as of October [removed: 30, 2022,] [added: 29, 2023,] approximately [removed: 32%] [added: 30%] is not reasonably expected to be filled within the next 12 months.

[removed: Applied’s] [added: Our] backlog on any particular date is not necessarily indicative of actual sales for any future periods, due to the potential for customer changes [removed: in delivery schedules] [added: such as new orders] or [removed: order] cancellations.

Delays in delivery schedules or a reduction of backlog during any particular period could have a material adverse effect on [removed: Applied’s] [added: our] business and results of operations.

[removed: Applied’s] [added: Our] worldwide manufacturing activities consist primarily of assembly, integration and test of various proprietary and commercial parts, components and subassemblies that are used to manufacture systems.

[removed: Applied has implemented] [added: We utilize] a distributed manufacturing model under which manufacturing and supply chain activities are conducted in various countries, primarily including China, Israel, [added: Japan, Korea,] Singapore, Taiwan, the United States and other countries in [removed: Asia.][added: Asia and Europe.]

[removed: Applied uses] [added: We use] qualified vendors, including contract manufacturers, to supply parts, services and product support.

[removed: Applied’s] [added: Our] supply chain strategy commits to adhere to ethical labor practices, responsible minerals sourcing, Responsible Business Alliance and SEMI guidelines, and the Applied Materials Standards of Business Conduct as defined in [removed: Applied’s] [added: our] Environmental, Social and Governance (ESG) commitment.

Although [removed: Applied makes] [added: we make] reasonable efforts to assure that parts are available from multiple qualified suppliers, this is not always possible.

| | | | | | | | | | | | | 2023 | | | | | | | | | | | | 2022 | | | | | | | | | | | | | | |

Our People

Employee Engagement

We have historically measured employee engagement through surveys to gain insight into employees’ experiences, levels of workplace satisfaction, and key drivers for engagement, inclusion and overall well-being.

In fiscal 2023, we conducted an all-employee survey anonymously through an external partner to encourage maximal participation and elicit candid responses.

We also benchmarked the survey results against a large and standardized data set involving large technology companies globally.

The survey results and the benchmarking data allowed us to better understand enterprise-wide trends, gauge effectiveness of interventions, and define targeted employee populations (e.g., early tenure employees).

They also provided leaders and people managers with actionable insights tailored to their own groups that can further enhance employee engagement and inclusion.

These actionable insights are then integrated with the people strategy process and cadence within the Company.

| Charles W. Read(7) | | | Corporate Vice President, Business Units and Operations Chief Financial Officer | | |

He also oversees Global Information Services for Applied.

Prior to Applied, Mr. Read worked at Brocade Communications Systems, Inc., a provider of semiconductor and software-based network solutions, since October 2002, where he most recently served as Vice President, Corporate Controller.

Prior to Brocade, Mr. Read worked at KPMG LLP, an audit, tax and advisory firm, from 1996 to 2002.

New export rules and regulations issued in December 2022 are expected to reduce backlog that was not reasonably expected to be filled within 12 months by approximately $989 million.

| | | | 2022 | | | | | | 2021 | | | | | | 2020 | | |

Applied’s People

Employee Engagement, Organizational Health and Pandemic Response

Applied has historically managed and measured employee engagement and organizational health with a view to gaining insight into employees’ experiences, levels of workplace satisfaction, and feelings of engagement and inclusion.

Since the onset of the COVID-19 pandemic, Applied’s top priority remains protecting the health and safety of its employees and their families, customers, suppliers and community.

This includes an understanding of its employees’ engagement and experiences during the pandemic and developing a return to work and future of work strategy.

In fiscal 2020 and fiscal 2021, Applied conducted surveys focused on employee engagement and productivity and on the future of work.

Applied continues to support workplace flexibility such as remote working where possible, and follow enhanced safety and health protocols—including screenings, social distancing, and use of personal protective equipment.

In fiscal 2022, the focus of the employee survey was on engagement and identifying actionable insights to enable a segmented talent strategy to address engagement and retention in targeted employee populations (e.g., early tenure employees).

Prior to joining Applied, Mr. Bodner served as Chief Accounting Officer since July 2021 and as Vice President, Accounting since April 2021 at ESS Tech, Inc., a company that designs, builds and deploys iron flow batteries for commercial and energy storage applications.

Prior to joining ESS Tech, Mr. Bodner served for almost 17 years at Intel Corporation in a variety of finance leadership roles, including Vice President of Finance and Director of Internal Audit.

Mr. Bodner also worked nearly 12 years at PwC in its assurance practice.

The information set forth under “Legal Matters” in Note [removed: 16] [added: 15] of Notes to Consolidated Financial Statements is incorporated herein by reference.

*See also “Risk Factors – Risks Related to Legal, Compliance, and Other Risks –* [removed: *Applied is] [added: *We are] exposed to [removed: various] risks related to legal proceedings, claims and investigations.”*

For the fiscal year ended October [removed: 30, 2022][added: 29, 2023]

[removed: Santa] [added: 3050 Bowers Avenue, P.O. Box 58039, Santa] Clara, California 95052-8039

*(Address of principal executive [removed: offices)*][added: offices) (Zip Code)*]

[removed: *(Registrant’s] [added: *Registrant’s] telephone number, including area [removed: code)*][added: code:* (408) 727-5555]

| [removed: Non-accelerated] [added: Large accelerated] filer | | | [added: ☑ | | | Accelerated filer | | |] ☐ | | | Smaller reporting company | | | ☐ | | | [added: Non-accelerated filer | | | ☐ | | |] Emerging growth company | | | ☐ | | |

Aggregate market value of the voting stock held by non-affiliates of the registrant as of [removed: May 1, 2022,] [added: April 30, 2023,] based upon the closing sale price reported by the NASDAQ Global Select Market on that date: [removed: $95,725,229,751][added: $94,685,528,382]

Number of shares outstanding of the registrant’s Common Stock, $0.01 par value, as of December [removed: 9, 2022: 844,139,722][added: 8, 2023: 831,067,105]

Portions of Part III will be provided in accordance with Instruction G(3) to Form 10-K no later than February [removed: 27, 2023.][added: 26, 2024.]

Examples of forward-looking statements include those regarding [removed: Applied’s] [added: our] future financial or operating results, customer demand and spending, end-user demand, [removed: Applied’s] [added: our] and market and industry trends and outlooks, [removed: the impact of new export regulations on our ability to export products and provide services to customers and on our results of operations, our intent to seek additional licenses pursuant to new export regulations, the impact of the ongoing COVID-19 pandemic and responses thereto on Applied’s operations and financial 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, acquisitions, investments and divestitures, growth opportunities, restructuring and severance activities, backlog, working capital, liquidity, investment portfolio and policies, taxes, supply chain, manufacturing, properties, legal [removed: proceedings] [added: matters, claims] and [removed: claims,] [added: proceedings,] and other statements that are not historical facts, as well as their underlying assumptions.

These and many other factors could affect [removed: Applied’s] [added: our] future financial condition and operating results and could cause actual results to differ materially from expectations based on forward-looking statements made in this document or elsewhere by [removed: Applied] [added: us] or on [removed: its] [added: our] behalf.

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

FORM 10-K FOR THE FISCAL YEAR ENDED OCTOBER [removed: 30, 2022][added: 29, 2023]

| Item 1: | | | [removed: [Business](#i3ccedc1bc7c14d6e98cf15823a2e0db8_16)] [added: [Business](#ie2b691bf111b412b887a517a90c136da_16)] | | | [removed: [4](#i3ccedc1bc7c14d6e98cf15823a2e0db8_16)] [added: [4](#ie2b691bf111b412b887a517a90c136da_16)] | | |

| Item 1A: | | | [Risk [removed: Factors](#i3ccedc1bc7c14d6e98cf15823a2e0db8_19)] [added: Factors](#ie2b691bf111b412b887a517a90c136da_19)] | | | [removed: [16](#i3ccedc1bc7c14d6e98cf15823a2e0db8_19)] [added: [16](#ie2b691bf111b412b887a517a90c136da_19)] | | |

| Item 1B: | | | [Unresolved Staff [removed: Comments](#i3ccedc1bc7c14d6e98cf15823a2e0db8_22)] [added: Comments](#ie2b691bf111b412b887a517a90c136da_22)] | | | [removed: [30](#i3ccedc1bc7c14d6e98cf15823a2e0db8_22)] [added: [29](#ie2b691bf111b412b887a517a90c136da_22)] | | |

| Item 2: | | | [removed: [Properties](#i3ccedc1bc7c14d6e98cf15823a2e0db8_25)] [added: [Properties](#ie2b691bf111b412b887a517a90c136da_25)] | | | [removed: [31](#i3ccedc1bc7c14d6e98cf15823a2e0db8_25)] [added: [30](#ie2b691bf111b412b887a517a90c136da_25)] | | |

| Item 3: | | | [Legal [removed: Proceedings](#i3ccedc1bc7c14d6e98cf15823a2e0db8_28)] [added: Proceedings](#ie2b691bf111b412b887a517a90c136da_28)] | | | [removed: [32](#i3ccedc1bc7c14d6e98cf15823a2e0db8_28)] [added: [31](#ie2b691bf111b412b887a517a90c136da_28)] | | |

| Item 4: | | | [Mine Safety [removed: Disclosures](#i3ccedc1bc7c14d6e98cf15823a2e0db8_31)] [added: Disclosures](#ie2b691bf111b412b887a517a90c136da_31)] | | | [removed: [32](#i3ccedc1bc7c14d6e98cf15823a2e0db8_31)] [added: [31](#ie2b691bf111b412b887a517a90c136da_31)] | | |

| Item 5: | | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#i3ccedc1bc7c14d6e98cf15823a2e0db8_37)] [added: Securities](#ie2b691bf111b412b887a517a90c136da_37)] | | | [removed: [33](#i3ccedc1bc7c14d6e98cf15823a2e0db8_37)] [added: [32](#ie2b691bf111b412b887a517a90c136da_37)] | | |

| Item 6: | | | [removed: [\[Reserved\]](#i3ccedc1bc7c14d6e98cf15823a2e0db8_40)] [added: [\[Reserved\]](#ie2b691bf111b412b887a517a90c136da_40)] | | | [removed: [34](#i3ccedc1bc7c14d6e98cf15823a2e0db8_40)] [added: [33](#ie2b691bf111b412b887a517a90c136da_40)] | | |

| Item 7: | | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#i3ccedc1bc7c14d6e98cf15823a2e0db8_43)] [added: Operations](#ie2b691bf111b412b887a517a90c136da_43)] | | | [removed: [35](#i3ccedc1bc7c14d6e98cf15823a2e0db8_43)] [added: [34](#ie2b691bf111b412b887a517a90c136da_43)] | | |

| Item 7A: | | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#i3ccedc1bc7c14d6e98cf15823a2e0db8_64)] [added: Risk](#ie2b691bf111b412b887a517a90c136da_64)] | | | [removed: [56](#i3ccedc1bc7c14d6e98cf15823a2e0db8_64)] [added: [50](#ie2b691bf111b412b887a517a90c136da_64)] | | |

| Item 8: | | | [Financial Statements and Supplementary [removed: Data](#i3ccedc1bc7c14d6e98cf15823a2e0db8_67)] [added: Data](#ie2b691bf111b412b887a517a90c136da_67)] | | | [removed: [56](#i3ccedc1bc7c14d6e98cf15823a2e0db8_67)] [added: [50](#ie2b691bf111b412b887a517a90c136da_67)] | | |

| Item 9: | | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#i3ccedc1bc7c14d6e98cf15823a2e0db8_70)] [added: Disclosure](#ie2b691bf111b412b887a517a90c136da_70)] | | | [removed: [56](#i3ccedc1bc7c14d6e98cf15823a2e0db8_70)] [added: [50](#ie2b691bf111b412b887a517a90c136da_70)] | | |

| Item 9A: | | | [Controls and [removed: Procedures](#i3ccedc1bc7c14d6e98cf15823a2e0db8_73)] [added: Procedures](#ie2b691bf111b412b887a517a90c136da_73)] | | | [removed: [57](#i3ccedc1bc7c14d6e98cf15823a2e0db8_73)] [added: [51](#ie2b691bf111b412b887a517a90c136da_73)] | | |

| Item 9B: | | | [Other [removed: Information](#i3ccedc1bc7c14d6e98cf15823a2e0db8_76)] [added: Information](#ie2b691bf111b412b887a517a90c136da_76)] | | | [removed: [57](#i3ccedc1bc7c14d6e98cf15823a2e0db8_76)] [added: [51](#ie2b691bf111b412b887a517a90c136da_76)] | | |

| Item 9C: | | | [Disclosure Regarding Foreign Jurisdictions that Prevent [removed: Inspections](#i3ccedc1bc7c14d6e98cf15823a2e0db8_1413)] [added: Inspections](#ie2b691bf111b412b887a517a90c136da_79)] | | | [removed: [57](#i3ccedc1bc7c14d6e98cf15823a2e0db8_1413)] [added: [51](#ie2b691bf111b412b887a517a90c136da_79)] | | |

| Item 10: | | | [Directors, Executive Officers and Corporate [removed: Governance](#i3ccedc1bc7c14d6e98cf15823a2e0db8_85)] [added: Governance](#ie2b691bf111b412b887a517a90c136da_88)] | | | [removed: [58](#i3ccedc1bc7c14d6e98cf15823a2e0db8_85)] [added: [52](#ie2b691bf111b412b887a517a90c136da_88)] | | |

| Item 11: | | | [Executive [removed: Compensation](#i3ccedc1bc7c14d6e98cf15823a2e0db8_88)] [added: Compensation](#ie2b691bf111b412b887a517a90c136da_91)] | | | [removed: [58](#i3ccedc1bc7c14d6e98cf15823a2e0db8_88)] [added: [52](#ie2b691bf111b412b887a517a90c136da_91)] | | |

| Item 12: | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#i3ccedc1bc7c14d6e98cf15823a2e0db8_91)] [added: Matters](#ie2b691bf111b412b887a517a90c136da_94)] | | | [removed: [59](#i3ccedc1bc7c14d6e98cf15823a2e0db8_91)] [added: [53](#ie2b691bf111b412b887a517a90c136da_94)] | | |

| Item 13: | | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#i3ccedc1bc7c14d6e98cf15823a2e0db8_94)] [added: Independence](#ie2b691bf111b412b887a517a90c136da_97)] | | | [removed: [60](#i3ccedc1bc7c14d6e98cf15823a2e0db8_94)] [added: [54](#ie2b691bf111b412b887a517a90c136da_97)] | | |

| Item 14: | | | [Principal Accounting Fees and [removed: Services](#i3ccedc1bc7c14d6e98cf15823a2e0db8_97)] [added: Services](#ie2b691bf111b412b887a517a90c136da_100)] | | | [removed: [60](#i3ccedc1bc7c14d6e98cf15823a2e0db8_97)] [added: [54](#ie2b691bf111b412b887a517a90c136da_100)] | | |

| Item 15: | | | [Exhibits, Financial Statement [removed: Schedules](#i3ccedc1bc7c14d6e98cf15823a2e0db8_103)] [added: Schedules](#ie2b691bf111b412b887a517a90c136da_106)] | | | [removed: [61](#i3ccedc1bc7c14d6e98cf15823a2e0db8_103)] [added: [55](#ie2b691bf111b412b887a517a90c136da_106)] | | |

| Item 16: | | | [Form 10-K [removed: Summary](#i3ccedc1bc7c14d6e98cf15823a2e0db8_103)] [added: Summary](#ie2b691bf111b412b887a517a90c136da_106)] | | | [removed: [61](#i3ccedc1bc7c14d6e98cf15823a2e0db8_103)] [added: [55](#ie2b691bf111b412b887a517a90c136da_106)] | | |


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

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

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b).

As used herein, the terms “we,” “us,” and “our” refer to Applied Materials, Inc. and its subsidiaries.

| | | | [Signatures](#ie2b691bf111b412b887a517a90c136da_187) | | | [102](#ie2b691bf111b412b887a517a90c136da_187) | | |

3050 Bowers Avenue

P.O. Box 58039

(408) 727-5555

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

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

| Large accelerated filer | | | ☑ | | | Accelerated filer | | | ☐ | | | | | | | | |

| | | | [Signatures](#i3ccedc1bc7c14d6e98cf15823a2e0db8_187) | | | [109](#i3ccedc1bc7c14d6e98cf15823a2e0db8_187) | | |

Information concerning [removed: Applied’s] [added: our] properties is set forth below:

Because of the interrelation of [removed: Applied’s] [added: our] operations, properties within a country may be shared by the segments operating within that country.

[removed: The Company’s] [added: Our] headquarters offices are in Santa Clara, California.

[removed: Applied] [added: We] also [removed: owns] [added: own] and [removed: leases] [added: lease] facilities throughout the world for use as offices, plants and warehouses, and research and development centers, primarily in the United States, Taiwan, China, Israel and Singapore.

[removed: Applied] [added: We] also [removed: owns] [added: own] a total of approximately 279 acres of buildable land in the United States, Israel, Italy and India that could accommodate additional building space.

[removed: Applied considers] [added: We consider] the properties that [removed: it owns] [added: we own] or [removed: leases] [added: lease] as adequate to meet [removed: its] [added: our] current and future requirements.

[removed: Applied] [added: We] regularly [removed: assesses] [added: assess] the size, capability and location of [removed: its] [added: our] global infrastructure and periodically [removed: makes] [added: make] adjustments based on these assessments.

| Owned | | | 5,627 | | | | | | 2,931 | | | | | | 8,558 | | |

| Leased | | | 2,733 | | | | | | 1,909 | | | | | | 4,642 | | |

| Total | | | 8,360 | | | | | | 4,840 | | | | | | 13,200 | | |

| Owned | | | 5,500 | | | | | | 2,652 | | | | | | 8,152 | | |

| Leased | | | 2,466 | | | | | | 1,801 | | | | | | 4,267 | | |

| Total | | | 7,966 | | | | | | 4,453 | | | | | | 12,419 | | |

[removed: Applied’s] [added: Our] common stock is traded on the NASDAQ Global Select Market under the symbol AMAT.

As of December [removed: 9, 2022,] [added: 8, 2023,] there were [removed: 2,825] [added: 2,755] registered holders of [removed: Applied] [added: our] common stock.

Information regarding quarterly cash dividends declared on [removed: Applied Materials’] [added: our] common stock during fiscal [removed: 2022, 2021] [added: 2023, 2022] and [removed: 2020] [added: 2021] may be found under “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Financial Condition, Liquidity and Capital Resources”.

The performance graph below shows the five-year cumulative total stockholder return on [removed: Applied] [added: our] common stock during the period from October [removed: 29, 2017] [added: 28, 2018] through October [removed: 30, 2022.][added: 29, 2023.]

The comparison assumes $100 was invested on October [removed: 29, 2017] [added: 28, 2018] in [removed: Applied] [added: our] common stock and in each of the foregoing indices and assumes reinvestment of dividends, if any.

The graph below assumes that the value of the investment in [removed: Applied’s] [added: our] common stock and in each of the indexes was $100 at October [removed: 29, 2017,] [added: 28, 2018,] and that all dividends were reinvested.

[removed: ][added: ]

Copyright© [removed: 2022] [added: 2023] Standard & Poor’s, a division of S&P global.

| | | | [removed: 10/29/2017] [added: 10/28/2018] | | | | | | [removed: 10/28/2018] [added: 10/27/2019] | | | | | | [removed: 10/27/2019] [added: 10/25/2020] | | | | | | [removed: 10/25/2020] [added: 10/31/2021] | | | | | | [removed: 10/31/2021] [added: 10/30/2022] | | | | | | [removed: 10/30/2022] [added: 10/29/2023] | | |

In March [removed: 2022, Applied’s] [added: 2023, our] Board of Directors approved a common stock repurchase program authorizing [removed: $6.0] [added: $10.0] billion in repurchases, which supplemented the previously existing [removed: $7.5] [added: $6.0] billion authorization approved in March [removed: 2021.][added: 2022.]

The following table provides information as of October [removed: 30, 2022] [added: 29, 2023] with respect to the shares of common stock repurchased by [removed: Applied] [added: us] during the fourth quarter of fiscal [removed: 2022] [added: 2023] pursuant to the foregoing Board authorization.

| Period | | | Total Number of Shares Purchased | | | | | | [removed: Average Price Paid per Share] [added: Average Price Paid per Share*] | | | | | | [removed: Aggregate Price Paid] [added: Aggregate Price Paid*] | | | | | | Total Number of Shares Purchased as Part of Publicly Announced Programs | | | | | | Maximum [removed: Dollar Value] [added: Dollar Value] of [removed: Shares That] [added: Shares That] May Yet [removed: be Purchased Under the Programs] [added: be Purchased Under the Programs*] | | |

| Applied Materials | | | 100.00 | | | | | | 175.74 | | | | | | 194.93 | | | | | | 440.65 | | | | | | 291.76 | | | | | | 431.02 | | |

| S&P 500 Index | | | 100.00 | | | | | | 116.03 | | | | | | 135.57 | | | | | | 182.86 | | | | | | 157.30 | | | | | | 168.81 | | |

| PHLX Semiconductor Index | | | 100.00 | | | | | | 145.93 | | | | | | 212.58 | | | | | | 314.91 | | | | | | 225.17 | | | | | | 302.44 | | |

At October 29, 2023, approximately $12.7 billion remained available for future stock repurchases under the repurchase program.

| (July 31, 2023 to August 27, 2023) | | | 0.3 | | | | | | $ | 147.17 | | | | | $ | 50 | | | | | 0.3 | | | | | | $ | 13,375 | |

| (August 28, 2023 to September 24, 2023) | | | 1.6 | | | | | | $ | 144.00 | | | | | 226 | | | | | | 1.6 | | | | | | $ | 13,149 | |

| (September 25, 2023 to October 29, 2023) | | | 3.2 | | | | | | $ | 136.43 | | | | | 429 | | | | | | 3.2 | | | | | | $ | 12,720 | |

| Total | | | 5.1 | | | | | | $ | 139.50 | | | | | $ | 705 | | | | | 5.1 | | | | | | | | |

*Effective January 1, 2023, amounts include the 1% surcharge on stock repurchases under the Inflation Reduction Act’s excise tax.

This excise tax is recorded in equity and reduces the amount available under the repurchase program, as applicable.

| Applied Materials | | | 100.00 | | | | | | 57.78 | | | | | | 101.54 | | | | | | 112.63 | | | | | | 254.61 | | | | | | 168.58 | | |

| S&P 500 Index | | | 100.00 | | | | | | 105.01 | | | | | | 121.84 | | | | | | 142.35 | | | | | | 192.01 | | | | | | 165.18 | | |

| PHLX Semiconductor Index | | | 100.00 | | | | | | 92.86 | | | | | | 135.50 | | | | | | 197.40 | | | | | | 292.41 | | | | | | 209.08 | | |

| (August 1, 2022 to August 28, 2022) | | | 2.2 | | | | | | $ | 106.73 | | | | | $ | 230 | | | | | 2.2 | | | | | | $ | 6,192 | |

| (August 29, 2022 to September 25, 2022) | | | 5.4 | | | | | | $ | 90.52 | | | | | 493 | | | | | | 5.4 | | | | | | $ | 5,699 | |

| (September 26, 2022 to October 30, 2022) | | | 9.4 | | | | | | $ | 82.36 | | | | | 777 | | | | | | 9.4 | | | | | | $ | 4,922 | |

| Total | | | 17.0 | | | | | | $ | 88.05 | | | | | $ | 1,500 | | | | | 17.0 | | | | | | | | |

As of the end of the period covered by this report, [added: our] management [removed: of Applied] conducted an evaluation, under the supervision and with the participation of [removed: Applied’s] [added: our] Chief Executive Officer and Chief Financial Officer, of the effectiveness of [removed: Applied’s] [added: our] disclosure controls and procedures, as such term is defined in Rule 13a-15(e) of the Securities Exchange Act of 1934 (the Exchange Act).

Based upon that evaluation, [removed: Applied’s] [added: our] Chief Executive Officer and Chief Financial Officer concluded that [removed: Applied’s] [added: our] disclosure controls and procedures were effective as of the end of the period covered by this report in ensuring that information required to be disclosed was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and to provide reasonable assurance that information required to be disclosed by [removed: Applied] [added: us] in such reports is accumulated and communicated to [removed: the Company’s] [added: our] management, including [removed: its] [added: our] Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

[removed: Applied’s] [added: Our] management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act.

Under the supervision and with the participation of [removed: Applied’s] [added: our] Chief Executive Officer and Chief Financial Officer, [added: our] management [removed: of Applied] conducted an evaluation of the effectiveness of [removed: Applied’s] [added: our] internal control over financial reporting based upon the framework in “Internal Control — Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on that evaluation, [removed: Applied’s] [added: our] management concluded that [removed: Applied’s] [added: our] internal control over financial reporting was effective as of October [removed: 30, 2022.][added: 29, 2023.]

KPMG LLP, an independent registered public accounting firm, has audited the consolidated financial statements included in this Form 10-K and, as part of the audit, has issued a report, included herein, on the effectiveness of [removed: Applied’s] [added: our] internal control over financial reporting as of October [removed: 30, 2022.][added: 29, 2023.]

During the fourth quarter of fiscal [removed: 2022,] [added: 2023,] there were no changes in the internal control over financial reporting that materially affected, or are reasonably likely to materially affect, [removed: Applied’s] [added: our] internal control over financial reporting.

During the three months ended October 29, 2023, no director or officer, as defined in Rule 16a-1(f), adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” each as defined in Regulation S-K Item 408.

None.

Except for the information regarding executive officers required by Item 401 of Regulation S-K (which is included in Part I, Item 1 of this Annual Report on Form 10-K, under “Information about our Executive Officers”) and code of ethics (which is set forth below), the information required by this item will be provided in accordance with Instruction G(3) to Form 10-K no later than February [removed: 27, 2023.][added: 26, 2024.]

[removed: Applied has] [added: We have] implemented the Standards of Business Conduct, a code of ethics with which every person who works for [removed: Applied] [added: us] and every member of the Board of Directors is expected to comply.

If any substantive amendments are made to the Standards of Business Conduct or any waiver is granted, including any implicit waiver, from a provision of the code to [removed: Applied’s] [added: our] Chief Executive Officer, Chief Financial Officer or Chief Accounting Officer, [removed: Applied] [added: we] will disclose the nature of such amendment or waiver on [removed: its] [added: our] website or in a report on Form 8-K.

The above information, including the Standards of Business Conduct, is available on [removed: Applied’s] [added: our] website under the [removed: Corporate] Governance [added: Documents] section at *https://www.appliedmaterials.com/us/en/about/corporate-governance.html.* This website address is intended to be an inactive, textual reference only.

The information required by this Item will be provided in accordance with Instruction G(3) to Form 10-K no later than February [removed: 27, 2023.][added: 26, 2024.]

Except for the information regarding securities authorized for issuance under equity compensation plans (which is set forth below), the information required by this Item will be provided in accordance with Instruction G(3) to Form 10-K no later than February [removed: 27, 2023.][added: 26, 2024.]

The following table summarizes information with respect to equity awards under [removed: Applied’s] [added: our] equity compensation plans as of October [removed: 30, 2022:][added: 29, 2023:]

| Equity compensation plans approved by security holders | | | [removed: 11] [added: 12] | | | | | | | | | $ | — | | | | | [removed: 45] [added: 37] | | | (3) | | |

| Total | | | [removed: 11] [added: 12] | | | | | | | | | $ | — | | | | | [removed: 45] [added: 37] | | | | | |

(1)Includes only restricted stock units and performance share units outstanding under [removed: Applied’s] [added: our] equity compensation plans, as no options, stock warrants or other rights were outstanding as of October [removed: 30, 2022.][added: 29, 2023.]

(3)Includes [removed: 14] [added: 12] million shares of [removed: Applied] [added: our] common stock available for future issuance under the Applied Materials, Inc. Omnibus Employees’ Stock Purchase Plan.

Of these [removed: 14] [added: 12] million shares, 1 million are subject to purchase during the purchase period in effect as of October [removed: 30, 2022.][added: 29, 2023.]

[removed: Applied has] [added: We have] the following equity compensation plan that has not been approved by stockholders:

The Applied Materials Profit Sharing Scheme was adopted effective July 3, 1996 to enable employees of Applied Materials Ireland Limited and its participating subsidiaries to purchase [removed: Applied] [added: our] common stock at 100% of fair market value on the purchase date.

Under this plan, eligible employees may elect to forego a certain portion of their base salary and certain bonuses they have earned and that otherwise would be payable in cash to purchase shares of [removed: Applied] [added: our] common stock at full fair market value.

The information required by this Item will be provided in accordance with Instruction G(3) to Form 10-K no later than February [removed: 27, 2023.][added: 26, 2024.]

[removed: Applied’s] [added: Our] independent registered public accounting firm is KPMG LLP, Santa Clara, California, Auditor Firm ID: 185.

The information required by this Item will be provided in accordance with Instruction G(3) to Form 10-K no later than February [removed: 27, 2023.][added: 26, 2024.]

| | | | [Reports of Independent Registered Public Accounting [removed: Firm](#i3ccedc1bc7c14d6e98cf15823a2e0db8_106)] [added: Firm](#ie2b691bf111b412b887a517a90c136da_109)] | | | [removed: [62](#i3ccedc1bc7c14d6e98cf15823a2e0db8_106)] [added: [56](#ie2b691bf111b412b887a517a90c136da_109)] | | |

| | | | [Consolidated Statements of [removed: Operations](#i3ccedc1bc7c14d6e98cf15823a2e0db8_112)] [added: Operations](#ie2b691bf111b412b887a517a90c136da_115)] | | | [removed: [65](#i3ccedc1bc7c14d6e98cf15823a2e0db8_112)] [added: [59](#ie2b691bf111b412b887a517a90c136da_115)] | | |

| | | | [Consolidated Statements of Comprehensive [removed: Income](#i3ccedc1bc7c14d6e98cf15823a2e0db8_115)] [added: Income](#ie2b691bf111b412b887a517a90c136da_118)] | | | [removed: [66](#i3ccedc1bc7c14d6e98cf15823a2e0db8_115)] [added: [60](#ie2b691bf111b412b887a517a90c136da_118)] | | |

| | | | [Consolidated Balance [removed: Sheets](#i3ccedc1bc7c14d6e98cf15823a2e0db8_118)] [added: Sheets](#ie2b691bf111b412b887a517a90c136da_121)] | | | [removed: [67](#i3ccedc1bc7c14d6e98cf15823a2e0db8_118)] [added: [61](#ie2b691bf111b412b887a517a90c136da_121)] | | |

| | | | [Consolidated Statements of Stockholders’ [removed: Equity](#i3ccedc1bc7c14d6e98cf15823a2e0db8_121)] [added: Equity](#ie2b691bf111b412b887a517a90c136da_124)] | | | [removed: [68](#i3ccedc1bc7c14d6e98cf15823a2e0db8_121)] [added: [62](#ie2b691bf111b412b887a517a90c136da_124)] | | |

| | | | [Consolidated Statements of Cash [removed: Flows](#i3ccedc1bc7c14d6e98cf15823a2e0db8_124)] [added: Flows](#ie2b691bf111b412b887a517a90c136da_127)] | | | [removed: [69](#i3ccedc1bc7c14d6e98cf15823a2e0db8_124)] [added: [63](#ie2b691bf111b412b887a517a90c136da_127)] | | |

| | | | [Notes to Consolidated Financial [removed: Statements](#i3ccedc1bc7c14d6e98cf15823a2e0db8_127)] [added: Statements](#ie2b691bf111b412b887a517a90c136da_130)] | | | [removed: [70](#i3ccedc1bc7c14d6e98cf15823a2e0db8_127)] [added: [64](#ie2b691bf111b412b887a517a90c136da_130)] | | |

| | | | [The exhibits listed in the accompanying Index to Exhibits are filed or incorporated by reference as part of this Annual Report on Form [removed: 10-K](#i3ccedc1bc7c14d6e98cf15823a2e0db8_184)] [added: 10-K](#ie2b691bf111b412b887a517a90c136da_184)] | | | [removed: [106](#i3ccedc1bc7c14d6e98cf15823a2e0db8_184)] [added: [99](#ie2b691bf111b412b887a517a90c136da_184)] | | |

We have audited the accompanying consolidated balance sheets of Applied Materials, Inc. and subsidiaries (the Company) as of October [removed: 30, 2022] [added: 29, 2023] and October [removed: 31, 2021,] [added: 30, 2022,] the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended October [removed: 30, 2022,] [added: 29, 2023,] and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of October [removed: 30, 2022] [added: 29, 2023] and October [removed: 31, 2021,] [added: 30, 2022,] and the results of its operations and its cash flows for each of the years in the three-year period ended October [removed: 30, 2022,] [added: 29, 2023,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of October [removed: 30, 2022,] [added: 29, 2023,] based on criteria established in [removed: *Internal] [added: Internal] Control [removed: -] [added: –] Integrated Framework [removed: (2013)*] [added: (2013)] issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated December [removed: 16, 2022] [added: 15, 2023] expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

As discussed in notes 1 and 8 to the consolidated financial statements, the Company has inventories with a carrying value of [removed: $5,932] [added: $5,725] million as of October [removed: 30, 2022.][added: 29, 2023.]

We have audited Applied Materials, Inc. and subsidiaries’ (the Company) internal control over financial reporting as of October [removed: 30, 2022,] [added: 29, 2023,] based on criteria established in [removed: *Internal] [added: Internal] Control [removed: -] [added: –] Integrated Framework [removed: (2013)*] [added: (2013)] issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of October [removed: 30, 2022,] [added: 29, 2023,] based on criteria established in [removed: *Internal] [added: Internal] Control [removed: - Integrated] [added: –Integrated] Framework [removed: (2013)*] [added: (2013)] issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of October [removed: 30, 2022] [added: 29, 2023] and October [removed: 31, 2021,] [added: 30, 2022,] the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended October [removed: 30, 2022,] [added: 29, 2023,] and the related notes (collectively, the consolidated financial statements), and our report dated December [removed: 16, 2022] [added: 15, 2023] expressed an unqualified opinion on those consolidated financial statements.

| Fiscal Year | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | |

| Net sales | | | $ | [removed: 25,785] [added: 26,517] | | | | | $ | [removed: 23,063] [added: 25,785] | | | | | $ | [removed: 17,202] [added: 23,063] | |

| Cost of products sold | | | [removed: 13,792] [added: 14,133] | | | | | | [removed: 12,149] [added: 13,792] | | | | | | [removed: 9,510] [added: 12,149] | | |

| Gross profit | | | [removed: 11,993] [added: 12,384] | | | | | | [removed: 10,914] [added: 11,993] | | | | | | [removed: 7,692] [added: 10,914] | | |

| Research, development and engineering | | | [removed: 2,771] [added: 3,102] | | | | | | [removed: 2,485] [added: 2,771] | | | | | | [removed: 2,234] [added: 2,485] | | |

| Marketing and selling | | | [removed: 703] [added: 776] | | | | | | [removed: 609] [added: 703] | | | | | | [removed: 526] [added: 609] | | |

| General and administrative | | | [removed: 735] [added: 852] | | | | | | [removed: 620] [added: 735] | | | | | | [removed: 567] [added: 620] | | |

| Severance and related charges | | | [removed: (4)] [added: —] | | | | | | [removed: 157] [added: (4)] | | | | | | [removed: —] [added: 157] | | |

| Deal termination fee | | | — | | | | | | [removed: 154] [added: —] | | | | | | [removed: —] [added: 154] | | |

| Total operating expenses | | | [removed: 4,205] [added: 4,730] | | | | | | [removed: 4,025] [added: 4,205] | | | | | | [removed: 3,327] [added: 4,025] | | |

| Income from operations | | | [removed: 7,788] [added: 7,654] | | | | | | [removed: 6,889] [added: 7,788] | | | | | | [removed: 4,365] [added: 6,889] | | |

| Interest expense | | | [removed: 228] [added: 238] | | | | | | [removed: 236] [added: 228] | | | | | | [removed: 240] [added: 236] | | |

| Interest and other [removed: income,] [added: income (expense),] net | | | [removed: 39] [added: 300] | | | | | | [removed: 118] [added: 39] | | | | | | [removed: 41] [added: 118] | | |

| Income before income taxes | | | [removed: 7,599] [added: 7,716] | | | | | | [removed: 6,771] [added: 7,599] | | | | | | [removed: 4,166] [added: 6,771] | | |

| Provision for income taxes | | | [removed: 1,074] [added: 860] | | | | | | [removed: 883] [added: 1,074] | | | | | | [removed: 547] [added: 883] | | |

| Net income | | | $ | [removed: 6,525] [added: 6,856] | | | | | $ | [removed: 5,888] [added: 6,525] | | | | | $ | [removed: 3,619] [added: 5,888] | |

| Basic | | | $ | [removed: 7.49] [added: 8.16] | | | | | $ | [removed: 6.47] [added: 7.49] | | | | | $ | [removed: 3.95] [added: 6.47] | |

| Diluted | | | $ | [removed: 7.44] [added: 8.11] | | | | | $ | [removed: 6.40] [added: 7.44] | | | | | $ | [removed: 3.92] [added: 6.40] | |

| Basic | | | [removed: 871] [added: 840] | | | | | | [removed: 910] [added: 871] | | | | | | [removed: 916] [added: 910] | | |

| Diluted | | | [removed: 877] [added: 845] | | | | | | [removed: 919] [added: 877] | | | | | | [removed: 923] [added: 919] | | |

[added: | 2023 | | |] (In millions) [added: | | | | | | | | | | | | | | |]

| Change in unrealized gain (loss) on available-for-sale investments | | | [removed: (74)] [added: 25] | | | | | | [removed: (21)] [added: (74)] | | | | | | [removed: 9] [added: (21)] | | |

| Change in unrealized net loss on derivative instruments | | | [removed: 51] [added: (66)] | | | | | | [removed: 30] [added: 51] | | | | | | [removed: (117)] [added: 30] | | |

| Change in defined and postretirement benefit plans | | | [removed: 81] [added: 26] | | | | | | [removed: 30] [added: 81] | | | | | | [removed: (11)] [added: 30] | | |

| Other comprehensive income (loss), net of tax | | | [removed: 58] [added: (15)] | | | | | | [removed: 39] [added: 58] | | | | | | [removed: (119)] [added: 39] | | |

| Comprehensive income | | | $ | [removed: 6,583] [added: 6,841] | | | | | $ | [removed: 5,927] [added: 6,583] | | | | | $ | [removed: 3,500] [added: 5,927] | |

| | | | October [removed: 30, 2022] [added: 29, 2023] | | | | | | October [removed: 31, 2021] [added: 30, 2022] | | |

| Cash and cash equivalents | | | $ | [removed: 1,995] [added: 6,132] | | | | | $ | [removed: 4,995] [added: 1,995] | |

| Short-term investments | | | [removed: 586] [added: 737] | | | | | | [removed: 464] [added: 586] | | |

| Accounts receivable, net | | | [removed: 6,068] [added: 5,165] | | | | | | [removed: 4,953] [added: 6,068] | | |

| Inventories | | | [removed: 5,932] [added: 5,725] | | | | | | [removed: 4,309] [added: 5,932] | | |

| Other current assets | | | [removed: 1,344] [added: 1,388] | | | | | | [removed: 1,386] [added: 1,344] | | |

| Total current assets | | | [removed: 15,925] [added: 19,147] | | | | | | [removed: 16,107] [added: 15,925] | | |

| Fiscal Year | | | 2023 | | | | | | 2022 | | | | | | 2021 | | |

| Net income | | | $ | 6,856 | | | | | $ | 6,525 | | | | | $ | 5,888 | |

| Short-term debt | | | $ | 100 | | | | | $ | — | |

(In millions, except per share amounts)

| Balance at October 29, 2023 | | | 833 | | | | | | $ | 8 | | | | | $ | 9,131 | | | | | $ | 43,726 | | | | | 1,191 | | | | | | $ | (36,299) | | | | | $ | (217) | | | | | $ | 16,349 | |

| Fiscal Year | | | 2023 | | | | | | 2022 | | | | | | 2021 | | |

| Net income | | | $ | 6,856 | | | | | $ | 6,525 | | | | | $ | 5,888 | |

| Proceeds from commercial paper | | | 991 | | | | | | — | | | | | | — | | |

| Repayments of commercial paper | | | (900) | | | | | | — | | | | | | — | | |

| Repayments of principals on finance leases | | | (7) | | | | | | — | | | | | | — | | |

In connection with our periodic review of estimated useful lives of the property, plant, and equipment subsequent to the end of fiscal 2023, we will increase the estimated useful lives of certain assets.

The estimated useful lives of certain buildings and improvements will increase by 5 years.

The estimated range of useful lives of demonstration and manufacturing equipment will increase to between 5 to 8 years.

This change in accounting estimate will be effective beginning fiscal year 2024 and will be applied on a prospective basis to the assets on our balance sheet as of October 29, 2023, as well as to future asset purchases.

Based on the carrying amount of the assets included in property, plant and equipment, net in our Consolidated Balance Sheet as of October 29, 2023, we currently estimate this change will increase income from operations before income taxes in fiscal 2024 by approximately $128 million as a result of the reduction in depreciation expense.

*Government Assistance*

We receive government assistance from various domestic and foreign governments in the form of cash grants or refundable tax credits.

These arrangements incentivize us to continue growing our capital investments and research and development activities.

Government incentives generally contain conditions that must be met in order for the assistance to be earned.

We recognize the incentives when there is reasonable assurance that we will comply with all conditions specified in the incentive arrangement and the incentive will be received.

We record capital expenditure related incentives as an offset to the associated property, plant and equipment, net within our Consolidated Balance Sheets and recognize a reduction to depreciation expense over the useful life of the corresponding acquired asset.

We record incentives related to operating activities as a reduction to expense in the same line item on the Consolidated Statements of Operations as the expenditure for which the grant is intended to compensate.

Capital expenditure related incentives reduced gross property, plant and equipment, net by $154 million in fiscal 2023.

Contra-depreciation expense was not material in fiscal 2023.

Operating incentives recognized as a reduction to research, development and engineering expense was $53 million in fiscal 2023.

Capital expenditure related incentives reduced our income taxes payable by $149 million as of October 29, 2023, of which $140 million is in accounts payable and accrued expenses and $9 million is in income taxes payable, in our Consolidated Balance Sheets.

Deferred tax assets and liabilities are measured based on enacted tax rates that are expected to apply in the period in which the assets are realized or the liabilities are settled.

Deferred tax assets and liabilities are adjusted for the effect of a change in tax rates, laws, or status when the change is enacted.

*Disclosures by Business Entities about Government Assistance.* In November 2021, the Financial Accounting Standards Board (FASB) issued an accounting standard update which requires annual disclosures related to certain government assistance received by business entities (Topic 832) including (1) the types of assistance, (2) the entity’s accounting for the assistance, and (3) the effect of the assistance on an entity’s financial statements.

We adopted this guidance for our fiscal 2023 Form 10-K.

The adoption of this authoritative guidance only impacted the disclosures in our notes to consolidated financial statements.

*Improvements to Reportable Segment Disclosures*.

In November 2023, the FASB issued an accounting standard update to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses (Topic 280).

The standard requires interim and annual disclosure of significant segment expenses that are regularly provided to the chief operating decision-maker (CODM) and included within the reported measure of a segment’s profit or loss, requires interim disclosures about a reportable segment’s profit or loss and assets that are currently required annually, requires disclosure of the position and title of the CODM, clarifies circumstances in which an entity can disclose multiple segment measures of profit or loss and contains other disclosure requirements.

We are currently evaluating the effect of this new guidance on our consolidated financial statements.

The impact of the adoption depends on the facts and circumstances of future acquisitions.

| Fiscal Year | | | 2023 | | | | | | 2022 | | | | | | 2021 | | |

| Net income | | | $ | 6,856 | | | | | $ | 6,525 | | | | | $ | 5,888 | |

| Bank certificates of deposit and time deposits | | | $ | 18 | | | | | $ | — | | | | | $ | — | | | | | $ | 18 | |

| Municipal securities | | | 438 | | | | | | — | | | | | | 11 | | | | | | 427 | | |

December 16, 2022

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

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

| Balance at October 27, 2019 | | | 916 | | | | | | $ | 9 | | | | | $ | 7,595 | | | | | $ | 24,386 | | | | | 1,079 | | | | | | $ | (23,596) | | | | | $ | (180) | | | | | $ | 8,214 | |

| Debt borrowings, net of issuance costs | | | — | | | | | | — | | | | | | 2,979 | | |

| Debt repayments | | | — | | | | | | — | | | | | | (2,882) | | |

As of October 30, 2022, the COVID-19 pandemic and worldwide response remains fluid.

As a result, many of Applied’s estimates and assumptions are subject to increased judgment and volatility.

These estimates may differ materially in future periods as the pandemic continues to evolve and additional information becomes available.

Applied assesses these assets for impairment based on estimated future cash flows from these assets.

*Simplifying the Accounting for Income Taxes.* In December 2019, the Financial Accounting Standard Board (FASB) issued an accounting standard update to simplify the accounting for income taxes (Topic 740).