Good afternoon, everyone, and thank you for joining Applied's fourth quarter of fiscal 2022 earnings call. Joining me are Gary Dickerson, our President and CEO, and Brice Hill, our Chief Financial Officer. Before we begin, I'd like to remind you that today's call contains forward-looking statements which are subject to risks and uncertainties that could cause our actual results to differ. Information concerning the risks and uncertainties is contained in Applied's most recent Form 10-Q and 8-K filings with the SEC. Today's call also includes non-GAAP financial measures. Reconciliations to GAAP measures are found in today's earnings press release and in our quarterly earnings materials, which are available on the I.R. page of our website at appliedmaterials.com. Before we begin, I have a calendar announcement. Applied plans to hold an eBeam technology and new product webcast on Wednesday, December 14th at 9:00 A.M. Pacific Time. Please stay tuned for an invitation to join our presenter, Keith Wells, who is Group Vice President and General Manager of our Imaging and Process Control Group. With that introduction, I'd like to turn the call over to Gary Dickerson. Thank you, Mike. Applied Materials delivered a strong finish to our fiscal year with record quarterly performance. Throughout two thousand twenty-two, the company has demonstrated solid execution while navigating COVID-related restrictions, supply chain shortages, and a challenging geopolitical and macroeconomic environment. I would like to recognize the hard work and commitment of our global team and our suppliers who are doing everything possible to meet our customers' needs. As this is our year-end call, I'll begin my prepared remarks with a quick review of our performance and progress over the past twelve months. I'll then give our latest outlook for two thousand twenty-three before describing our longer-term growth thesis for the industry and Applied. After that, Brice will provide more color on our financial performance and key areas of operational focus. Like many others in the technology sector, our performance and priorities in 2022 have been shaped by an unprecedented set of challenges. Our top priority has been mitigating supply chain constraints that prevented us from fully meeting customer demand. In Q4, we made incremental progress, and we expect to continue closing supply gaps over the next few quarters. As well as finding creative short-term solutions, our team has been addressing root causes and building a more resilient, scalable supply chain and stronger strategic relationships with our suppliers. In addition, we are strengthening our own manufacturing, logistics, and supply chain management. While I'm pleased with the recent improvements in supply chain performance, we are still supply chain limited across a number of key product lines, and our backlog grew in Q4. The biggest supply constraints are in our Metal Deposition business where customer demand is very strong. This is our largest business unit and where we have highly differentiated solutions for advanced foundry logic and DRAM. The market for these products, which enable next-generation wiring, is expanding considerably. In addition to supply shortages, we're also navigating a difficult geopolitical environment as reflected in the new export control regulations enacted by the U.S. government on October 7th. These new rules are complex and cover a broad range of semiconductor technology that includes wafer fabrication equipment and related parts and services. We have taken all the necessary actions to comply with these new rules, including suspending shipments and support where required. We estimate that the unmitigated impact to our fiscal 2023 revenues could be up to $2.5 billion. We believe the actual impact can be reduced to $1.5 billion-$2 billion. This will depend in part on how quickly the government provides licenses and approvals, as well as how impacted companies refocus their investments. We are also mindful of the macroeconomic headwinds, including inflation and softening consumer demand. To offset the inflationary cost increases we are facing, we are driving multiple initiatives that include re-engineering our products and implementing price adjustments. While it's too early to forecast 2023 with any precision, I can describe what we're currently seeing in the market and hearing from our customers. Starting with memory, spending is expected to be down year-on-year, as weakness in consumer electronics and P.C.s prompt some customers to defer capacity additions. In leading-edge foundry logic, demand looks strong, with customers racing for leadership and driving major technology inflections that determine their relative competitive positions. In ICAPS, chips for the IoT, communications, auto, power, and sensor markets, demand is mixed. Consumer-driven markets are clearly softer, while the automotive, industrial, and power markets remain robust. Those investments are underpinned by large inflections, including the transition to electric vehicles, accelerated adoption of industrial automation, and growing demand for renewable energy solutions, especially in Europe. While all this adds up to an expected pullback in overall wafer fab equipment spending next year, we believe that Applied's business will be more resilient than the underlying market for three key reasons. First, we have a significant backlog, the highest in our history, measured on both an absolute and percentage of revenue basis. Second, demand for some of our most differentiated product lines, where we have uniquely enabling technology, remains much higher than our capacity to fulfill that demand. Third, our service business is positioned for steady growth with an increasingly large portion of this business being converted to subscriptions. Over the past 12 months, our installed base of systems grew 8%, and the number of tools under comprehensive long-term service contracts grew 16%. The renewal rate for these agreements is well over 90%, which demonstrates the value customers see in our subscription services. Looking further ahead, our long-term growth thesis for the industry and Applied Materials has not changed. Semiconductors are the foundation of digital transformation that will touch almost every sector of the economy over the coming years. This puts the semiconductor industry on a path to a trillion-dollar market by the end of the decade. While every year will not be an up year, the overall trajectory is clear. We also like where Applied Materials plays within the ecosystem. As technology complexity is increasing, we expect equipment intensity to remain at today's levels or rise further. This means wafer fab equipment is likely to grow faster than the overall semiconductor market. Within equipment spending, major technology inflections are enabled by materials engineering, shifting more dollars to Applied's available markets over time. We think about the industry's future roadmap in terms of power, performance, area, cost, and time to market. The PPACt playbook has five pillars, new architectures, new 3D structures, new materials, new ways to shrink, and advanced packaging, with each pillar made up of multiple technology inflections. For example, new 3D structures like Gate-All-Around transistors and Backside Power Distribution Networks are materials engineering-enabled inflections that grow Applied's total available market. As I referenced earlier, wiring is a key bottleneck for chip performance and power at advanced nodes, and this is driving significant innovation in new materials. Between the seven and three-nanometer node, contact metallization steps are growing more than 50%, and our total available market is expanding almost 80%. For interconnect layers, process steps are being added even faster, and we expect our revenue opportunity to approximately triple through these node transitions. Advanced packaging represents a new era for integrated circuit design that opens major new vectors of innovation for chip designers. Advanced packaging is also enabled by new materials engineering solutions. Although the industry is still in the early stages of adoption, we have already grown our packaging equipment business to nearly a billion dollars. Our Process Diagnostics and Controls business also has broad exposure to these inflections and delivered significant growth in 2022. Our progress and opportunities in eBeam will be the focus of our December technology briefing. Given our positive long-term view of the semiconductor market, the outsized opportunities for Applied Materials within the market, and favorable global government incentives, we are making investments in R&D and infrastructure to support industry growth and position the company for future success. We will provide more details about our specific plans in the coming months. At the same time, with the current macroeconomic conditions, we are carefully managing discretionary spending and limiting hiring to only strategic positions. Before I hand the call over to Brice, I'll quickly summarize. Applied Materials ended the year strong with record performance. In the past quarter, we made incremental progress overcoming the supply challenges that have constrained our performance in fiscal 2022. However, there is still work to do, and our backlog continues to grow. We expect 2023 to be a down year for wafer fab equipment spending, but we believe that Applied's business will be more resilient, thanks to our large backlog, growing service business, and strong customer demand for our leadership products that enable key technology inflections. Longer-term secular trends create opportunities for Applied to outgrow the semiconductor market by enabling the PPACt roadmap with our differentiated portfolio of materials engineering solutions. We are making strategic investments for the future while slowing spending growth in the near term. Now, I'll hand over to Brice. Thank you, Gary. I'd like to start by thanking our team and our supply chain partners for helping to further increase our output for our customers. On today's call, I'll summarize our results for the fiscal year and Q4, as well as provide our guidance for Q1. I'll also discuss the impact of recent U.S. export regulations on our revenue and gross margin. Before going into the results, I'd like to make three points. First, despite a weaker customer demand outlook, we generated strong orders in Q4 and ended the year with record backlog, particularly in some of our leadership product areas. Combined with the resiliency of our AGS business, the strong backlog puts us in a good position to offset some of the market weakness expected next year. Second, we have not changed our view of a $1 trillion semiconductor market by 2030, with a high single-digit CAGR for semiconductors and similar or faster growth for equipment due to added process complexity. We grew our headcount and R&D spending significantly in 2022 to develop new leadership products and further expand our broad portfolio. While we are slowing our spending growth in the current environment, we remain committed to research and development in enabling critical inflections that support our customers' roadmaps. Third, we returned nearly $7 billion to shareholders this past year, including buybacks equivalent to 6% of shares outstanding at the beginning of the period. With record demand and financial results in 2022, a strong growth opportunity through 2030, and our broad and unique portfolio of systems and services, we're confident in our financial position and our future. Next, I'll summarize our fiscal year results. Although supply chain constraints impacted our output all year, we delivered record annual revenue and EPS. On a year-over-year basis, revenue increased nearly 12% to $25.8 billion. Non-GAAP gross margin decreased by around 90 basis points to 46.6%. Non-GAAP operating profit grew by over 7% to $7.86 billion. Non-GAAP operating margin decreased by 120 basis points to 30.5%. Non-GAAP EPS increased nearly 13% to $7.70. We generated about $5.4 billion in operating cash flow this past year and over $4.6 billion in free cash flow. We returned 151% of free cash flow to shareholders, including $873 million in dividends and $6.1 billion in share repurchases. Our cash returns for the past three years were equivalent to over 100% of free cash flow. In the year, demand for our products and services was very strong, with record annual bookings in Semiconductor Systems and AGS. On a year-over-year basis, our total ending backlog increased 62% to $19 billion. Our Semiconductor Systems backlog increased 90% to nearly $12.7 billion. We expect to reduce our Semiconductor Systems backlog as supply chain performance improves. Our AGS backlog increased 30% to over $5.6 billion. The strong AGS backlog reflects a large increase in long-term service agreements, which gives us confidence in the continued growth of this business. Moving to our Q4 results, we delivered record quarterly net sales of nearly $6.75 billion and record non-GAAP EPS of $2.03. Non-GAAP gross margin declined 20 basis points sequentially to 46%. Non-GAAP OpEx grew 3.5% sequentially to nearly $1.1 billion, with most of the increase in R&D. Turning to the segments, Semiconductor Systems revenue grew more than 6% sequentially to $5.04 billion. Segment non-GAAP operating margin increased 80 basis points sequentially to 36.9%. AGS revenue was flat quarter-over-quarter at $1.42 billion. Segment non-GAAP operating margin declined to 28.3%. AGS key performance indicators continue to be positive, with strong year-over-year growth in installed base systems, service intensity, and subscription agreements. As a result, AGS continues to grow faster than the pace needed to achieve our long-term revenue targets. Moving on to display, revenue declined as expected to $251 million. Segment non-GAAP operating margin also declined to 13.5%. Turning to our cash flows, we generated $857 million in operating cash flow during the quarter, which was 13% of revenue. We returned over $1.72 billion to shareholders, including $223 million in dividends and $1.5 billion in buybacks. We repurchased 17 million shares at an average price of $88.05. Next, I'll discuss the impact of the new U.S. export regulations to Applied Materials. We currently expect that the unmitigated revenue impact of the new rules could be up to $2.5 billion in fiscal 2023. We continue to work through the regulatory requirements, including seeking licenses and approvals where appropriate. We hope to reduce the revenue impact by between $500 million and $1 billion to a net impact of $1.5 billion-$2 billion. We also expect the rules to reduce our non-GAAP gross margin by up to one percentage point. While this creates a headwind to meeting our gross margin targets for 2024, we remain committed to our goals and believe we can achieve and exceed them over time. In Q4, the new rules reduced our Semiconductor Systems and AGS revenue by approximately $280 million, which is in the range of our expectation on October 12th. Inventory charges in Q4 were lower than our preliminary assessment. In Q1, we expect the new rules to reduce Semiconductor Systems and AGS revenue by approximately $490 million combined and reduce our gross margin by around one percentage point, both on an unmitigated basis. Now I'll share our guidance for Q1. We expect revenue to be $6.7 billion, ± $400 million, and we expect non-GAAP EPS of $1.93, ± $0.18. Within this outlook, we expect Semiconductor Systems revenue to be about $5.15 billion, which is up nearly 13% year-over-year. We expect AGS revenue to be about $1.33 billion, which is slightly up year-over-year. Display revenue should be around $170 million. We expect non-GAAP gross margin to be approximately 46.1%, and we expect non-GAAP operating expenses to be $1.16 billion. We are modeling a tax rate of 13%, which is up from 11.8% last year, primarily due to mandatory capitalization of R&D expenses effective in our new fiscal year. Before we begin the Q&A, I'd like to summarize our company's position in the current environment. We have record backlog, notably in the highly enabling technologies for next-generation nodes. Our supply chain and manufacturing output are incrementally improving. We expect our services business will continue to grow and generate strong recurring revenue and free cash flow. The longer-term growth outlook for the semiconductor industry remains strong. Applied is in a great position to invest in future growth and deliver strong profitability, free cash flow, and shareholder returns. Now, Mike, please begin the Q&A. Thanks, Brice. To help us reach as many people as we can, please ask just one question on today's call. If you have another question, please re-queue, and we'll do our best to come back to you later in the session. Operator, let's please begin. Thank you. Ladies and gentlemen, to ask a question, you will need to press star one one on your telephone. Once again, to ask a question, please press star one one. Our first question comes from the line of C.J. Muse with Evercore ISI. Yeah, good afternoon. Thank you for taking the question. I was hoping to clarify one thing first on China. Really the question is, you know, what changed between October 12th with your press release and October 30th, where, you know, it looks like there really wasn't much of an impact at all. Then my, I guess, real question is, as you think about calendar 2023 WFE, you know, it sounds like companies are providing kind of a top-down view that things for WFE, you know, look weak and declining. However, you know, every company bottoms up, you know, based on deferred revenues and backlogs are, you know, much more optimistic on the outlook. Can you kind of talk through the moving parts there and, you know, what kind of range or outcome you see today for year-over-year silicon declines in calendar 2023? Thanks so much. Sure. Hi, C.J., it's Brice. I'll start on this one. Relative to the pre-announcement that we did, we talked about a $400 million impact, ± $150 million for the China trade change. As we worked through it, that impact ended up being less, around $280 million. It's just, you know, estimating the transactional elements at the end of the quarter. It was an initial estimate, so we did a little bit better from that perspective. The other thing that really happened was execution in the end of the quarter was, you know, almost flawless from a logistics perspective. We got more supply chain parts in at the end of the quarter. Over $200 million of, you know, good news from execution and delivery perspective, finishing product and completions in the field. It was really those two things. It was a little bit better than our initial estimate, and execution was excellent in the last couple of weeks of the quarter. On 2023, the WFE question for 2023, we think that, you know, it's preliminary. It's too early to give an estimate of 2023, so what we're trying to share is what we're seeing in our order patterns and in our business for Q1 and Q2. We talked about, you know, in the script how in Q1 or in our bookings for Q4, they were really solid. We did see pushouts, we did see weakness in the memory business, but our backlog has grown to, you know, a record level of backlog. When we think about our Q1 and Q2, we're still supply constrained. We still have a number of different equipment lines that we have significant backlog. We're trying to catch up to customer orders. The signals to us really are that we have to work on supply chain, work on improving our output, and work on catching up with our customers. Beyond that, you know, we're just not able to make a call yet on WFE for 2023. Yeah, C.J., this is Gary. You know, as Brice said, we can certainly give a perspective on our business. We're not going to guide on overall WFE for 2023, but we're in a very strong position. If you look at the kind of profile of the business, it's more weighted towards foundry logic versus memory. We have some very strong products where we have significant backlog, and we're still working to close the supply-demand gaps in those areas. You know, from Applied's standpoint, as you know, it's all about the race for power and performance for all of our customers, and we're really well-positioned with leading products in those big inflections. Again, our number one focus is on closing the supply chain gaps. Thank you. Thank you. Our next question comes from the line of Stacy Rasgon with Bernstein. Hi, guys. Thanks for taking my question. I wanted to ask about the mitigated versus unmitigated impact from China. You gave the numbers $2.5 billion and hoping to bring that down to like, you know, $1.5 billion. I gathered that a big element of that was getting licenses. Where do you expect those licenses to be gotten? Is that only to the multinationals? Do you guys expect licenses to be given to some of the Chinese folks? I mean, how could that happen? What is the mechanism by which you come into the mitigated number versus the unmitigated number? Hi, Stacy. It's Brice. Yeah, it's important probably to say that this unmitigated versus mitigated, it has everything to do with the impact to the China shipments and Chinese customers. In other words, it's not referring to whether we can ship, you know, product we are making for those customers to non-China customers. The unmitigated, the way we calculated this is we looked at the orders that we have for the affected customers, and that's what you see as the total $2.5 billion. In order to mitigate that. Does that include multinationals too? Say again? I'm sorry, does that include multinationals too, or is that just the local Chinese guys in that unmitigated number? It does not. It does not. Just local Chinese, okay. Yeah. The way we looked at that, there are some customers that we're trying to clarify that we can apply for licenses for, or we can get authorizations for once they establish that their technology is, you know, within the guidelines. We have a process to do that. On the other side, we expect some customers may decide to change their plan or change their technology, so it does not go, you know, above the threshold that's, you know, affected by the rules at this point. It's really those two elements that we'll be able to clarify that some customers we're able to ship with or ship to, or some customers changing their plans on the technology side that would allow them to, you know, qualify for shipments. What would that mean, though? Would that suck up like supply that would have ordinarily gotten built by somebody else, though? 'Cause otherwise you're just adding like lagging edge supply into a vacuum essentially. Like, how do we think about like the second order effects here? Yeah, we don't think so. We expect all that equipment to be utilized, and so if that equipment is moved to a different use, then we expect it will be backfilled somewhere else for its original, you know, demand purpose, if that makes sense. Got it. Just one last one. Right now, I guess you're running at the unmitigated level. When do you think? Yeah. You'll be at the mitigated level? Like, how likely do you think it'll be that you end up at the mitigated level at some point? It's hard to say. It's a process. You can imagine there's a large number of people working on this. In fact, the whole industry is working on this. You know, it's job two at this point behind increasing output. I would say it's still a good estimate today, and we'll be working throughout the year on improving the number of customers and plants that we can ship to. Mm-hmm. Got it. Okay. Thank you, guys. Yep. Thank you. Our next question comes from the line of Vivek Arya with Bank of America. Thanks for taking my question. I just wanted to clarify. I thought, Brice, you said somewhere that you provided some look for Q2. I don't think I caught that. Several of your memory customers have said that their spending could be down over 50% next year. You know, recently, Micron said it could be down even more than that. Have you noticed almost a 50% cancellation of orders, you know, from them? Because I'm just trying to reconcile your commentary that sounds, you know, outside of China, of course, you know, more benign and more supportive versus, you know, just the very horrific guidance that your memory customers are providing. I understand, you know, you're less exposed to memory versus foundry logic, but still, it's a reasonable-sized exposure. I'm curious, you know, has that 50% cut in CapEx translated to any reduction in your backlog or any change in your thinking about memory for next year? Okay. Thanks, Vivek. We're not giving a guide for Q2. We are highlighting, you know, the record backlog and the fact that we're constrained and the fact that, you know, in several equipment lines we're behind on customer orders, so we're going to try to increase output. I'd say that comment is true for both Q1 and Q2. That's as much shaping as we're providing for Q2. On the memory side, you know, just to kind of click back and think about the overall demand environment, we positioned last quarter that we had a significant amount more demand than we have the ability to supply for 2023. What did happen during the course of this quarter is there was a significant amount of push-outs and reductions in that demand. Now, you can see the end result. We still had solid bookings in Q4. We created a record backlog that's now disclosed. I would say that, you know, some of those push-outs and some of those reductions were definitely in the memory space. I'm not gonna characterize, you know, what% it was, but I would say that that's the most affected area in the business in terms of push-outs and reductions for 2023. You are seeing a 50%, you know, type reduction? I'm just trying to align what we are hearing from those customers versus, you know, what you are seeing on the ground in your business. Yeah, sorry. I can't quantify exactly what it is. I'll just say, you know, it's biased. The reductions were biased in that area. Okay. Thank you. Yep. Thank you. Our next question comes from the line of Krish Sankar with Cowen. Yeah, hi. Thanks for taking my question. Brice or Gary, I just wanted to find out, you know, you mentioned how lagging edge is still pretty strong, especially auto analog in China. I wonder like, do you ever think that auto analog could be the next shoe to drop? In other words, if memory is down, gonna be down next year, but lagging edge holds up, what is the risk that lagging edge rolls over in 2024, and you have two years of lackluster WFE? Thank you. Okay, I'll start. Maybe Gary wants to say something. You know, we don't have a specific guide for what we call ICAPS, our mature node businesses. What we would say is there was significant growth in 2022, and when we think about all the end markets, we think the end markets are mixed. We know some of the consumer markets and even industrial have seen some weakening. On the positive side, automotive and, you know, the power market that feeds EV and solar and other areas has been really strong. For us, this is a critical market. We're continuing to invest and continuing to focus in this area. We would just highlight to investors that the growth has been very strong. Yeah, Krish, the other thing I would add is that we made a change in our organization more than three years ago forming our ICAPS group, and we have just very deep engagements with our customers both on a technical and a support side of our business. We have the broadest set of innovative products for ICAPS. If I look at where we're at today, those are some of the areas where we have significant backlog. MDP and implant in F.Y. 2023 are very strong for us. Those are areas where we have significant demand from customers. ICAPS is similar in that to all of the rest of our business. This is always a race for all of these customers relative to power, performance, and cost. ICAPS is really materials enabled. We have a really strong team there. We have a great pipeline of products. I will guarantee you every year will not be up, that's for sure. We're not gonna guide 2024, but we are in a very good position in ICAPS relative to enabling technology for future inflections. Thanks a lot, Gary. Thanks, guys. Thank you. Thank you. Our next question comes from the line of Mark Lipacis with Jefferies. Hi. Thanks for taking my question. Gary, maybe for you know, it seems like the consensus for WFE this year is somewhere in the $65 billion-$75 billion range. I'm not asking you to, you know, give a guidance or an outlook for next year, but I'm wondering in a scenario where that is proven to be too cautious of an outlook for next year, based on the conversations that you have with your customers, would you say that would be because lead times are long and customers just they don't wanna cancel orders or there's new secular drivers like bigger chips or advanced packaging or trailing node, like some of the things you've talked about, or, you know, just competition at the leading edge is driving people to invest more and, you know, enabled by subsidies? What are your customers suggesting to you or, you know, I mean, your backlog grew even as memory came down? Like, what do you think are the biggest drivers into next year regardless of whatever the end number is and what could surprise on the upside? Thank you. Yeah, Mark, yeah, thanks for the question. You know, all of our customers in any of these different markets, the technology is moving very, very quickly, so they're all racing against each other for power, performance, cost, their relative competitive position. You know, certainly as you mentioned in the leading edge foundry logic, there's a tremendous amount of focus there, high performance computing and a number of those different markets. You know, again, for Applied, what we've talked about is, you know, real strength in enabling new structures that are critical to competitive positions for our customers. Gate-All-Around is an incremental $1 billion for Applied for a 100,000 wafer starts, more than what we're currently capturing with FinFET. We're on path to gain five points of share in the transition from FinFET to Gate-All-Around. Wiring is probably the number one focus. I don't know that everyone really understands how important that inflection is for our customers. That's an area where we have tremendous strength. We're enabling 50% reduction in wiring resistance with integrated platforms that combine many technologies together. That's another one where Applied is really well positioned. Packaging has grown for Applied to nearly $1 billion, and we have over 50% share in our served market, and we have by far the broadest position in advanced packaging, and we're still in the early innings of that inflection. Again, that's all part of this technology race for all of our customers. ICAPS, I mentioned that earlier on the call. Those are also markets where I think it's surprising to people, including you've seen some of our peers talking about ICAPS growth over a longer period of time. There are technology inflections there, and that's, as I mentioned earlier, metal deposition, implant. Those are areas where we're in very strong enabling positions with our customers. I think the other thing for Applied beyond all of these different areas, high-speed DRAM with logic-like structures, all of those big inflections, our PDC business grew. I think it was 67% in FY 2021. We're up around 35% in FY 2022. That business is also outperforming, and we think that will continue to outperform as we go forward. At least from an Applied standpoint, it's really all around those big inflections and how we're positioned for those major inflections. I don't know, Brice, if you want to add anything. No, I would just comment that, you know, we highlighted that we still have to catch up to customer demand in several areas. That adds, you know, some momentum into 2023. The other piece is just, it seems clear that productivity, you know, to drive productivity in the world, a lot of these things like in the energy market, data center market, et cetera, still have resilient demand. Thank you. Very helpful. Thank you. Our next question comes from the line of Atif Malik with Citi. Hi, thank you for taking my question. Gary, I have a question on long-term impact of China restrictions to both domestic and multinational spend. If I look at China spending over the last five years, it has outgrown WFE by two to four times. What replaces this in terms of spending, capital intensity, and above-average profitability for you? Yeah. Hi, Atif. I'll start. This is Brice. I think on the China side, when we look at that impact, you know, the larger part of the business has been on the trailing nodes for us, and we expect that to still be a very strong business for Applied. You know, we see that in both the factory projects that we monitor and also in the different end markets where there's investments. On the leading edge, you know, if it's a question of do we expect that demand to be taken away from WFE demand globally and permanently, we don't. It'll either be satisfied in some way in China, either by multinationals or in some other way, or it'll move to another, you know, geography. We don't believe that that will be an impact. Just circling back around, I would just focus on, over time, we expect the China market to be a strong grower, especially in the ICAPS mature node space. Thank you. Thank you. Thank you. Our next question comes from the line of Toshiya Hari with Goldman Sachs. Hi, thank you so much for taking the question. I wanted to ask about the AGS business going into next fiscal year and calendar year. Obviously, it's been a very steady grower for you guys and for the overall industry. Many of your leading-edge, you know, memory customers and logic and foundry customers, I believe are in the process of cutting wafer starts, you know, potentially over the next couple of quarters. I guess the question is, when you cite, you know, services as one of the reasons why you'll outperform into next year, is the baseline assumption that business continues to grow, given the installed base growth and given how you transform the mix of that business, or could it be down, but just down less? Thank you. Okay. Thanks, Toshiya. Thank you. Yeah, a couple drivers here. You'll see in our outlook for Q1 that we have a down quarter for AGS, which is unusual. The reason is we've got a full quarter impact, approximately $100 million for the reduction of the China customers that we won't be able to serve for the rest of the year. That's definitely a headwind in Q1, but you hit the nail on the head with respect to the dynamics thereafter. Every time we ship a tool, it grows our installed base of equipment. We grew the installed base 8% last year. Beyond or after that, our ability to provide services and put those services on subscription agreements, we typically outgrow the installed base, and we did last year. That is the driver for the reason the services business is sticky. We have more equipment to serve. The equipment becomes more intensive in terms of service needs, and over time, that grows the business. Now, to your point, a portion of the business is transactional. We do see lower utilization this quarter and next quarter. What we have pointed to is, you know, even in 2019, where there was lower utilization, we still grew the services business. Besides the headwind of China that I pointed out, we expect that to be the dynamic this year and going forward. Toshiya, this is Gary. I'll add a little bit more color. We do expect services to be up in 2023. As Brice mentioned, transactional will be down based on capacity utilization. Our profile with a significant amount of our service and spares business being agreements gives us stickiness going forward, and that is continuing to increase. The comprehensive agreement's up 16% last year. The tenure of our agreements, the length of the agreements are up to 2.6 years, renewal rates at 93%. It was an interesting thing through all of the chip shortage period of time, we were able to demonstrate value for customers with ramp services to accelerate chip output, managed part services so that people could increase tool availability and output, managed services for yield and optimizing productivity. All of that helped us. Position our service business in a higher value for our customers. Again, that's what gives us the ability to continue to grow into 2023. The longer-term model we've communicated is double-digit growth, and we still have high confidence we'll achieve that. Thank you so much. Thank you. Our next question comes from the line of Harlan Sur with JPMorgan. Hi, good afternoon. Thanks for taking my question. Yeah, another follow-up on AGS. Looking back on fiscal 2022, your Semi Systems operating margin declined about 200 basis points on strong revenue growth, obviously due to the inflationary cost pressures. Your AGS business sustained near-record operating margins of 30%. I guess how has the team been able to sustain the record or near-record AGS operating profitability in this inflationary environment? More importantly, in a down year or potential down year next year, you know, you guys talked last call, this call on sustainability of AGS from a revenue perspective, how should we think about the sustainability of operating margins for AGS? Yeah, Harlan, thank you. One thing I would call out is, you know, we did have lower gross margins and operating margins in Q4, and that's largely due to looking at the specific inventory we had for China customers that we'll have to either reposition or move somewhere else or scrap. To your point on operating profit, one of the plans the business has there is to improve the amount of repair that we do for products that we bring back to customers. That helps us lower the cost and cost of goods sold with customers. That's one of the ways that we improve our gross margins and the ultimate profit of that business. The other is just increased efficiency as we demonstrate more and more capability with the customers and we provide more services with the same, you know, spending profile, then that helps us maintain the profitability. Those are the two key drivers. Thank you. Thank you. Our next question comes from the line of Joe Quatrochi with Wells Fargo. Yeah, thanks for taking the question. I wanted to ask about the gross margin impact from the China restriction. Can you talk about what's driving that one percentage point impact? How do we think about what you could potentially recapture in the mitigated scenario that you outlined? Yes, thank you. Two things. It depends on which time period you look at, but if we look forward, the gross margin impact is really that they're generally smaller customers, so the profitability of those customers for Applied is higher. You know, when we talk about mitigation as we go forward, it's going to be TBD as to, you know, who we sell that product to and what the profitability is. At this point, we're expecting the impact that we described. If you look at the current quarter, we did have specific inventory for customers that's unique. We are working to qualify some of that inventory, and we were successful to a degree, but we did have specific inventory that we had to take a demand reserve on. Got it. Thank you. Yep. Thank you. Our next question comes from the line of Timothy Arcuri with UBS Securities. Thanks a lot. Gary, um, I had a question about WFE intensity. Um, so we're exiting this year at fifteen and a half percent, and you were saying that through two thousand and thirty, you think WFE is gonna grow faster than semiconductors. You've certainly been, you know, beating that drum now for a while, that, you know, WFE intensity is gonna keep going up. And obviously there are some underlying, you know, upward pressures. But China's obviously been ordering tools and building, uh, capacity well at, you know, ahead of demand now, in part due to the fear of these bans. So if China becomes a little more of a lagging tier, um, uh, region, wouldn't that lower WFE intensity, uh, a bit and maybe argue that maybe it has to reset a bit? Thanks, Gary. Yeah. Tim, I'll jump in for a second here just because I have, you know, the picture of the graph in my mind that we use. We do think intensity is gradually increasing, and it's because of the reasons Gary described. A lot of the steps in the process are becoming more complex and require more equipment. We see that. When we think about, you know, China and ICAPS specifically, in the past, there's been a lot of reuse of existing fabs and existing process tools, and that allowed for a low intensity. That's not been what's happening in the past few years and with recent additions. We've talked about the number of factory projects that we see. As capacity gets added, even in the ICAPS space, what you see is an intensity level that's more like what we were experiencing on the leading edge just a few years ago, and that's also serving to raise the overall average of intensity. We're pretty confident that intensity will continue to rise. Yeah, Tim, relative to ICAPS, just reminding people that there was a time period where you had a lot of movement of business to foundries. During that time period, there were many factories and tools that came on the market. All of that stuff is gone. That's what Brice was referring to relative to ICAPS capital intensities. Went through a list of key inflections, technology inflections for customers, and I gave some color around wiring and the number of steps that are increasing. Now, that's what we're seeing, really in all of the different segments of the business. I think that capital intensity is probably the right ZIP code, if we look through 2030. Thanks, Gary, and Brice. Thank you. Our next question comes from the line of Joseph Moore with Morgan Stanley. Great, thank you. I wonder if you could talk about the environment in China with the multinationals. You know, obviously, they need to get a license. They did immediately get a license, but it's a 12-month license. Would you say that you generally see the footprint moving away from China with those multinational customers? Do you see any potential for that to become an issue down the road? Can you just talk generally to the fact that the multinationals weren't included in this? Yeah. Joe, this is Gary. Thanks for the question. The multinationals are not impacted today. Relative to their strategies, you know, we'd really rather have them comment on that. Again, just today, they're not impacted. How they position their businesses geographically, you know, that's really up to them. Thank you. Thank you. Our next question comes from the line of Sidney Ho with Deutsche Bank. Thanks for taking my question. I want to follow up on an earlier question on the longer-term WFE. As you think about the growth of WFE in the next, call it, 3-5 years, how do you think about the mix between different type of tools, how that could change, meaning deposition etch versus litho versus process control as you talk to your customers about their roadmap and technology inflections? I also want to ask about, I assume your served addressable market will continue to expand, but maybe help us understand how much would that grow. Thanks. Yeah. Sidney, thanks for the question. If you look at what our customers are talking about relative to their roadmaps, really there are five big drivers of the technologies going forward. Workload-specific architectures, there are new structures, new materials, new ways to shrink, new advanced packaging inflections for our customers. What we see, if you look at the advanced foundry logic roadmap, you see a tremendous focus on new structures and new materials. The transistor innovations around Gate-All-Around are essential relative to power and performance wiring. I've talked a lot about wiring. Our largest business is metal deposition, and the wires are getting thinner, and resistance goes up, so you're seeing more dollars moving in that direction. Advanced packaging is an area where we see. For sure that's another big, one of the big five drivers for the roadmaps for our customers, and that's still in the early innings, around a billion-dollar business for us today, over 50% served market for the areas we participate. We see that one, you know, that's an area that will attract a tremendous amount of investment, and relative to competition between customers, is very, very important. In memory, you certainly see material scaling in 3D NAND as customers are moving to more layers or other ways to include logic and memory together through different technology inflections. DRAM is moving to high speed, and so you have High-k/Metal Gate and logic-like structures there. A lot of that investment, you know, is moving more towards materials-enabled technologies, and that's where Applied has really a tremendous strength. I don't know, Brice, do you want to add anything there? No. Good. Thanks. All right. Thank you. Thank you. Our next question comes from the line of Quinn Bolton with Needham & Company. Thanks for taking my question. Just had a question with the CHIPS Act applications expected to be received or submitted beginning sort of this February timeframe, wondering as you look at your 2023 WFE outlook, do you expect to see any benefits from CHIPS Act spending in 2023, or do you think it's really more of a 2024 and beyond before it hits WFE spending? Thanks. We do expect, Quinn, a small, you know, really small amount in 2023. On the equipment side, it'll likely really start in 2024, as a number of those projects, you know, start with construction. There are a few that will start with equipment, but it'll really, for us, be more the 2024 timeframe. Yeah, Quinn, one thing I'd add is that those investments are time-bound, and so, as Brice said, not so much in 2023, starting in 2024, there is timing associated with those incentives. Got it. Thank you. Thanks, Quinn. Operator, we have time for two more questions today. Certainly. Our next question comes from the line of Pierre Ferragu with New Street. Thank you for taking my question. Gary, I'd like to come back to the comments you made about capital intensity and the specifics of the trailing edge part of your portfolio. You described there, I think, like three reasons why capital intensity, I mean, two reasons why capital intensity is very high there, I mean, higher than in the past. The first one is that there is no innovation going on, so like that drives capital intensity up. You mentioned the fact that there used to be like a secondhand market that was feeding the trailing edge that is kind of going away. My question is, there must be also a third element that justifies a very high capital intensity today, which is that we've been growing capacity very fast this year and last year. There is a significant trend that the capacity growth is at some point going to slow down or even to pause. I'd like to hear your thoughts about that and maybe a sense of how much it will impact, in the shorter term, capital intensity. Hi, Pierre, this is Gary. Thanks for the question. I will say that we're 100% certain that all of these markets will not be up every year. What we do see, if you think about, you know, pick a number in terms of edge computing devices by 2030, you know, these technologies are becoming much more pervasive. They're really, if you think about industrial automation or gas to smart electric vehicles, you know, a number of different inflections. A lot of these ICAPS technologies are going to grow at a fair compound annual growth rate. I think that's what other people are seeing also. You know, what the shape of that looks like every single year, we're not gonna forecast that. You know, we do think that business is going to see healthy growth. That's why also we formed the ICAPS organization three years ago. We saw that that market was going to be significant from a growth perspective and pulled together all of our different technologies. Again, if I look across all of those segments within ICAPS, we think over the longer term, there will be significant compound annual growth rates. We have very, very strong positions in enabling some of those technology inflections in ICAPS, but, you know, we're not going to give a, you know, specific profile on a year-by-year basis. Thanks, Gary. Thank you. Our final question comes from the line of David O'Connor with Exane BNP Paribas. Great. Good afternoon. Thanks for taking my question. Follow-up on the backlog to a previous question. Gary or Brice, how should we think about the timeframe of getting the backlog back to a kind of more normalized level? You know, when do you expect to get caught up on demand for those products that are running pretty hot on the PPACt side? Thank you. Yeah. Thanks, David. We're expecting it's gonna take us more than two quarters. Depending on the line of equipment, I would say between two and four quarters is our internal estimate. You know, that's what we're focused on. We are behind with the customers, and we're working on increasing output every week. Thanks for the question. Thank you. Yeah. Thanks, David, for your question. Brice, would you like to give us your closing thoughts today? Absolutely. Clearly, there are questions about the market in the near term, but for our part, we had healthy Q4 orders, and we have record backlog that we described, and it's mostly in our leadership product areas that drive the big technology inflections. Job one for us is increasing our output to meet customer demand. We're in a strong financial position to continue to develop our broad portfolio of technology and to drive the critical inflections and to support eventually a one trillion dollar semiconductor market. I hope we get to see many of you at the upcoming Credit Suisse and Wells Fargo conferences. In the meantime, we hope you enjoy a safe and happy Thanksgiving. Thank you. Mike, let's close it up. Okay. Uh, great, Brice. So we'd like to thank everybody for joining us today. A replay of the call is going to be available on our website by five o'clock Pacific Time, and we would like to thank you for your continued interest in Applied Materials.