Applied Materials Q1 2025: Key Contradictions on China Revenue, WFE Growth, and Customer Visibility

These are the key contradictions discussed in Applied Materials' latest 2025 Q1 earnings call, specifically including: China revenue expectations, WFE growth expectations, visibility into customer forecasts, and Gate-All-Around revenue expectations:



Revenue Growth and Market Leadership:
- Applied Materials delivered record revenues surpassing the prior high set last quarter, reaching over $7.2 billion, marking a 7% year-over-year increase.
- This growth was driven by major technology trends shaping the global economy, supported by AI and advanced semiconductors, which underpin long-term secular growth for the industry.

Semiconductor System Sales and Margin Expansion:
- Semiconductor Systems sales were $5.36 billion in Q1, up 9% year-over-year.
- The increase was driven by 20% growth in foundry logic, partially offset by an expected decline in DRAM sales due to non-repeating prior year sales to customers in China.

Advanced Packaging and Integrated Solutions:
- The packaging business captured more than half of the market it serves and is on track to double revenues over the next several years.
- Growth is driven by the development and commercialization of co-optimized and integrated solutions addressing higher value device challenges, with significant recent volume orders from leading edge customers.

Impact of Trade Restrictions and Market Forecast:
- Applied Materials anticipates a $400 million revenue headwind in fiscal 2025 due to expanded export controls, with nearly half affecting Q2.
- Despite this impact, the company remains confident in its growth trajectory and continues to prioritize high-velocity co-innovation to bring next-generation technology to market faster and at lower cost.