어플라이드 머티어리얼즈(AMAT) 2026 회계연도 4분기 실적 콘퍼런스콜: 사상 최대 매출 및 강력한 AI 수요

핵심 요약

• 어플라이드 머티어리얼즈는 2026 회계연도 4분기 매출이 전분기 대비 14%, 전년 동기 대비 53% 증가한 104억 달러로 사상 최대치를 기록했다고 발표했다. Non-GAAP EPS는 전년 동기 대비 92% 증가한 4.16달러로 사상 최고치를 경신했다.
• 2026 회계연도 연간 매출은 전년 대비 21% 이상 증가한 344억 달러를 기록했으며, Non-GAAP EPS는 37% 늘어난 12.89달러를 나타냈다. Non-GAAP 총마진율은 130bp 확대된 50.1%를 기록했다.
• 4분기 반도체 시스템 부문 매출은 선단 공정 파운드리 로직, DRAM, 첨단 패키징 수요에 힘입어 전년 동기 대비 64% 증가한 사상 최대치인 80억 달러에 달했다.
• 경영진은 2027 회계연도 1분기 매출을 111억 달러(오차 범위 ±5억 달러), Non-GAAP EPS를 4.35달러(오차 범위 ±0.20달러)로 전망했다. 이 전망치는 14주로 구성된 분기 기준을 반영한 것이다.
• 어플라이드 머티어리얼즈는 2027년 웨이퍼 팹 장비 수요가 전년 대비 30% 이상 성장할 것으로 예상하며, 자사가 다시 한번 시장 성장률을 상회할 수 있을 것으로 보고 있다.
• 공급망 병목 현상과 클린룸 확보 여건은 여전히 제약 요인으로 남아 있다. 어플라이드 머티어리얼즈는 2028년까지 시스템 생산량을 2026 회계연도 4분기 수준의 두 배로 확대하고, 2030년까지 제조 및 연구소 역량을 두 배 이상 늘릴 계획이다.

주요 재무 데이터

사업 및 운영 실적

반도체 시스템 부문은 전분기 대비 14%, 전년 동기 대비 64% 증가한 80억 달러의 사상 최대 4분기 매출을 기록했다. 이 부문은 한국과 대만에서 사상 최대 매출을 달성했을 뿐만 아니라 DRAM 및 첨단 패키징 분야에서도 사상 최고 실적을 나타냈다.

제품 매출은 PVD, CVD, ALD, 에피택시, 식각, CMP, 공정 제어 전반에서 사상 최고치를 기록했다. 반도체 시스템 부문의 Non-GAAP 총마진율은 전년 동기 대비 240bp 상승한 55.2%를 기록했으며, 영업이익률은 940bp 이상 상승한 39.0%에 달했다.

어플라이드 글로벌 서비스(AGS) 부문은 서비스 및 예비 부품 매출이 사상 최대치를 기록하면서 전년 동기 대비 26% 증가한 19억 달러의 사상 최대 매출을 달성했다. AGS 총마진율은 100bp 상승한 35.1%를 나타냈고, 영업이익률은 약 170bp 오른 30.5%를 기록했다.

경영진은 2026년 첨단 패키징 매출이 약 90% 증가할 것으로 예상되며, 이러한 성장의 상당 부분을 HBM 관련 패키징이 차지할 것이라고 밝혔다. 검사 및 계측 장비 매출 또한 같은 기간 50% 이상 증가할 전망이다.

어플라이드 머티어리얼즈의 AI 기반 AIX 플랫폼에 연결된 챔버 수는 3만 7,000개를 넘어섰으며, 연결 기반은 연간 20% 이상 증가하고 있다. 또한 인텔, 키옥시아, BESI, UCLA를 EPIC 파트너로 추가하여 공식 발표된 총 파트너 수는 15개로 늘어났다.

경영진 가이던스

2027 회계연도 1분기는 14주로 구성된 분기이며, 경영진은 이것이 AGS 매출에 긍정적으로 작용할 것이라고 밝혔다.

경영진은 2027 회계연도 2분기 AGS 매출이 1분기 수준에 근접하게 유지되고, 2분기 영업비용은 매출의 약 15% 수준일 것으로 예상했다. 또한 2027 회계연도의 모든 분기에서 시스템 생산량이 증가할 것으로 내다봤다.

2027년 연간 기준으로는 선단 공정 로직, DRAM, 첨단 패키징이 지속적으로 가장 강력한 성장 분야가 될 것으로 경영진은 예상했다. 성숙 공정인 ICAPS 투자 역시 회복될 것으로 보이며, 중국 외 지역의 성장세가 중국 내보다 더 빠를 것으로 전망된다. 2027년 대중국 출하 비중은 전체 사업의 25% 미만을 차지할 것으로 예상된다.

리스크 및 주목할 부문

• 공급은 몇몇 병목 지점에서 여전히 제약을 받고 있다. 경영진은 필요한 모든 부품이 온전히 공급되었다면 2027 회계연도 1분기 매출이 소폭 더 높았을 것이라고 밝혔다.
• 클린룸 수용 능력은 반도체 산업이 장비를 얼마나 흡수할 수 있는지를 결정짓는 핵심적인 중기 제약 요인이다.
• 어플라이드 머티어리얼즈 공급망 전반의 협력업체들은 더 높은 생산 수준을 뒷받침하기 위해 생산능력과 인력을 확충해야 한다.
• 총마진율은 제품 믹스, 가격 책정, 시스템 출하량 증가로부터 혜택을 받고 있지만, 회사는 직원 채용 및 교육에 따른 생산 확대 비용도 감당하고 있다.
• 팹 건설 및 라인 증설 시점은 장비 수요에 영향을 미칠 수 있다. 경영진은 2027년에 20건 이상의 팹 가동 개시 및 증설을 추적하고 있는 반면, 새롭게 확인된 다수의 프로젝트는 2029년 또는 2030년이 되어서야 가동될 것으로 예상된다.

애널리스트 Q&A 주요 내용

수요 가시성: 경영진은 지난 90일 동안 고객 수요가 지속적으로 강화되었다고 밝혔다. 3개 분기 연속으로 10개 이상의 팹 건설 또는 전환 프로젝트가 추적 목록에 추가되었다. 고객들은 장비 납품 연기보다는 조기 납품을 지속적으로 요청하고 있다.

2027년 시장 전망: 어플라이드 머티어리얼즈는 2027년 웨이퍼 팹 장비 수요가 전년 대비 30% 이상 성장할 것으로 예상한다. 경영진은 또한 선단 공정 로직, DRAM, 첨단 패키징에 대한 사업 비중에 힘입어 회사가 시장 성과를 상회할 것으로 전망하고 있다.

생산능력 확충: 회사는 2028년까지 시스템 생산량을 2026 회계연도 4분기 수준의 두 배로 늘릴 계획이다. 2030년까지 제조 및 연구소 역량을 두 배 이상 확충하여 더 높은 생산량 시나리오에 대비한 추가적인 여력을 확보할 방침이다.

DRAM 기술 전환: 경영진은 반도체 업계가 6F²에서 4F² 및 3D DRAM 아키텍처로 전환함에 따라 어플라이드 머티어리얼즈의 유효시장과 점유율 확대 기회가 증가하고 있다고 밝혔다. 회사는 각각의 기술 경로 전반에서 고객들과 협력하고 있다.

하이브리드 본딩: 경영진은 하이브리드 본딩이 I/O 밀도, 배선 길이 단축, 전력 및 성능 측면에서 중요하다고 설명했다. 어플라이드 머티어리얼즈는 하이브리드 본딩 공정 단계의 약 80%를 지원하며, 로직과 메모리 전반에서 도입이 확대될 것으로 기대하고 있다.

서비스 부문 성장: 경영진은 연간 설치 기반(installed base) 성장률 5~10%와 장비당 매출 성장률 5~10%를 바탕으로, 계획 기간 동안 AGS 부문의 약 15% 성장 프레임워크를 제시했다.

중국 및 성숙 공정 지출: 경영진은 2027 회계연도 동안 중국 시장이 성장할 것으로 예상하지만, 그 속도는 AI 주도 시장보다 완만할 것으로 내다봤다. 또한 기존 생산능력이 소진되고 가동률이 정상화됨에 따라 중국 외 지역의 성숙 공정 투자가 강화될 것으로 예상했다.

실적 발표 콘퍼런스콜 전문

전체 실적 발표 컨퍼런스 콜 녹취록

경영진 발표

Operator

Welcome to the Applied Materials Fourth Quarter of Fiscal 2026 Earnings Call. [Operator Instructions].

I would now like to turn the call over to Mike Sullivan, Corporate Vice President of Investor Relations. Please go ahead.

Michael Sullivan

Good afternoon, everyone, and thank you for joining today's call. With 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 includes forward-looking statements. which are subject to risks and uncertainties that could cause our actual results to differ. Information concerning these risks and uncertainties is discussed in our most recent Form 10-Q and other filings with the SEC.

Today's call also includes non-GAAP financial measures. Reconciliations to GAAP measures can be found in today's earnings press release and in our quarterly earnings materials, which are available on our website at ir.appliedmaterials.com. In addition, any comments regarding calendar 2026 refer to fiscal Q2 2026 through fiscal Q1 2027.

And with that introduction, I'd now like to turn the call over to Gary Dickerson.

Gary Dickerson

Thanks, Mike. With quarterly results at the top end of our guidance range and all-time highs for revenue and profitability, Applied delivered a record fiscal 2026 and our seventh consecutive year of growth. I would like to recognize our employees and supply chain partners around the world for their outstanding execution this year, which enabled us to maintain high levels of customer trust during an unprecedented industry ramp.

As this is our year-end call, I'll begin with a brief review of our performance in 2026. I'll provide our perspective on the market environment as demand continues to strengthen, Finally, I'll talk about how Applied has built the most enabling portfolio to advance the AI computing road map giving us a strong foundation for a multiyear revenue and profit growth.

In fiscal 2026, we grew revenue more than 21% and earnings nearly twice as fast, reflecting the operating leverage in our model. Based on the midpoint of our first quarter guidance, we expect our semiconductor systems revenue to be up more than 40% in calendar 2026. As AI computing drives strong secular growth in semiconductors and wafer fab equipment Applied is outgrowing the wafer fab equipment market because we've built leadership positions in the most enabling highest value technologies for AI computing.

Our outperformance is driven by addressable market growth and notable share gains in both advanced foundry logic and DRAM. Our strength in advanced packaging where we expect revenues to be up around 90% this calendar year and our growing inspection and metrology business where we're on track to increase revenue more than 50% in calendar 2026.

Demand for advanced semiconductors remains much higher than supply and multiyear investments in new fab capacity are needed for the industry to close this supply-demand gap. We expect 2027 to be another record year for the market and for Applied. Our current view is that wafer fab equipment demand will be up more than 30% year-over-year and we are in a strong position to outperform the market again.

The rate of industry growth will depend on how quickly the end-to-end semiconductor ecosystem can scale all the way from clean room construction to equipment components and raw material supply. At Applied, we're taking multiple actions to ensure we have the capacity and resources in place to support our customers' ramps.

We are working more closely with customers on demand planning. Our largest customers are giving us rolling 8-quarter forecasts and earlier orders. We're also deepening our collaboration with suppliers. In fact, I recently met with more than 250 senior executives from our key suppliers to align on capacity ramp expectations and readiness to serve a range of growth scenarios.

In an AI data center, approximately 60% of the capital cost is silicon and more than 85% of this silicon content is leading-edge foundry logic, DRAM and advanced packaging. These 3 areas have the greatest impact on the AI computing road map are expected to be the fastest-growing parts of wafer fab equipment in 2027 and together drive approximately 75% of WFE growth through 2030.

This is exactly where Applied has invested over the past several years to build the industry's most enabling portfolio, positioning us to outperform the market again in 2027 and beyond as we gained share at major device inflections.

In mid-October, we unveiled the Epic Center in Silicon Valley and hosted an investor breakfast in San Francisco, thanks to all of you who attended in person or online. At the investor event, we shared 3 main themes: The unprecedented opportunities created by the AI era, the unique advantages in Applied's capabilities and portfolio to address these opportunities and how we are creating more value for customers and capturing more value for Applied.

As the pace of the global AI deployment increases and the adoption of AI rapidly broadens, there is an intense battle for AI computing leadership that comes down to 2 interconnected races and Applied is central to both.

The first race is a race for technology leadership which is enabled by accelerating the chip and packaging road maps that drive improvements in data center tokens per second per watt. The second is a race to add new chip manufacturing capacity by rapidly ramping new fabs, while also optimizing the output and yield of existing factories.

At Applied, we have created the industry's leading portfolio of materials innovation, integration innovation and yield innovation technologies. The foundation for our leadership in materials innovation is our comprehensive and connected technology portfolio. We serve around 55% of total wafer fab equipment with #1 positions in CVD, PVD, epitaxy, CMP, implant, thermal processing, e-beam and conductor etch for advanced foundry logic and DRAM.

An advanced nodes, smaller feature sizes, 3-dimensional structures and the introduction of novel materials all drive immense process complexity. The interaction between process steps is critical, especially when it comes to engineering interfaces where the layers of materials are now just 1 to 2 nanometers thick. That's why codeveloping deposition, etch, treatment, inspection and measurement technologies and solving integration challenges from the very start of development is such a powerful advantage and one that Applied is uniquely positioned to deliver.

Applied has also built world-class integration, modeling and simulation teams as well as comprehensive lab infrastructure to accelerate transistor, wiring, memory and advanced packaging innovations. As yield and output become increasingly critical for customers, Applied is bringing new yield innovations to market.

We have the highest resolution and fastest e-beam imaging combined with industry-leading AI-enabled services that we call AIX. E-beam and AIX enable faster learning cycles in R&D, faster transfer and qualification of new technologies in pilot production and more good ships out in high-volume manufacturing.

Applied has by far the largest number of connected systems in the field with more than 37,000 chambers connected to AIX today. growing at more than 20% annually. Materials innovation, integration innovation and yield innovation are all accelerated by our EPIC platform.

Epic enables Applied to develop technology side by side with customers and partners, providing them with much earlier access to next-generation applied technology accelerated cycles of learning and faster transfer and ramp to high yield and output.

For Applied, Epic means we are designed in earlier at new chip and packaging architectures, gain better visibility into multiple generations of customer road maps and increase our R&D productivity. Since our last earnings call, we have added 4 more Epic partners. Intel, Kioxia, BESI and UCLA, bringing our total number of announced EPIC partnerships to 15 clear validation of the value of co-innovating with Applied.

At our investor event, we also outlined our 2025 to 2030 value creation targets to gain more than 2 points of wafer fab equipment share, increased service revenue per installed base tool by 20% or more and increased gross margin and operating margin by 5 and 10 points, respectively.

I am confident we will make meaningful progress towards these targets in 2027, and all our teams are driving to higher targets.

Before I hand over to Brice, I'll quickly summarize. Fiscal 2026 was a record year for Applied Materials, and we're on track to grow our semiconductor systems business more than 40% this calendar year. We are growing faster than the wafer fab equipment market because of the strong leadership position we've built in leading-edge foundry logic, DRAM and advanced packaging.

These are the most enabling areas for AI computing, the fastest-growing parts of wafer fab equipment in 2027 and where Applied has invested strategically to build the industry's most enabling portfolio. We see 2027 as another record year for the industry and another year of outperformance for Applied, in which we expect to make significant progress towards our long-term targets.

In short, AI is driving a multiyear expansion in semiconductor demand and Applied has never been better positioned to lead and outgrow the market. Brice, over to you.

Brice Hill

Thanks, Gary. I'm pleased to share that Applied delivered a third consecutive quarter of double-digit sequential and year-over-year growth in revenue, operating profit and non-GAAP earnings per share. Fiscal Q4 also marks our 14th consecutive quarter of year-over-year gross margin expansion, which demonstrates the customer value of our highly enabling product and services portfolio.

We expect to outperform the market this calendar year with strong growth in DRAM, leading-edge foundry logic and advanced packaging, which is precisely where we've been investing to lead. I'd like to thank our manufacturing and operations teams and our partners for responding to further increases in customer demand and helping make these strong results possible.

On today's call, I'll update you on the demand environment, summarize our fiscal 2026 and Q4 results and provide our Q1 business outlook. All the leading indicators we track continue to point upwards. Cloud CapEx is expected to increase more than 50% in 2027 and to well over $1 trillion. AI token usage is growing exponentially.

The increasing variety of AI models is enabling more applications and generating positive economics both for service providers and for early adopters like Applied Materials. AI is now a core part of everyday work it applied. Over 80% of our employees use tools like Microsoft CoPilot and Anthropics Cloud, along with newer domain specific tools for materials discovery and engineering.

Inferencing is driving positive results throughout the company from equipment and software development to field service operations and back office functions. All our software developers use AI, with an average productivity gain of over 40%.

As a result, our monthly token consumption grew by more than 50x this year, and we expect our token and task usage to increase substantially in 2027 and as we find more ways to use AI to accelerate revenue, improve customer service and operate more efficiently. AI continues to drive strong incremental growth in wafer demand with leading-edge logic and DRAM fabs running at full utilization.

NAND is not far behind, and ICAP is now in a healthy zone. In the near term, A major focus is expanding our supply chain capacity to further increase the number of systems we can produce.

We've raised our demand forecast to our suppliers every quarter this year, and they are partnering with us as the 2027 demand outlook continues to increase. We've mapped our supply chain and our teams and partners are executing to manage pinch points and deliver another very strong growth year. Over the medium term, clean room capacity remains a gating factor for how much equipment the industry can consume.

Fortunately, we're tracking more than 20 fab ramps and line expansions in 2027 alone. We've created new teams and AIX technologies that will help our customers accelerate these ramps and maximize wafer output and yields. Longer term, demand signals from our customers remain very positive, with more than 10 major fabs and expansion projects added to our tracker for the third quarter in a row.

Many of these new projects are not expected to come online until 2029 and 2030 and which indicates a much higher level of demand across the 5- and 10-year horizon than previously planned in both logic and memory. At Applied, we're already working with customers to forecast their needs through 2030.

To support our customers' growth, we're investing to be able to double our systems output from Q4 26 levels by 2028 and more than double our manufacturing and lab capacity by 2030.

Next, I'll briefly summarize fiscal 2026 during which we grew revenue by over 21% to $34.4 billion, expanded non-GAAP gross margin by 130 basis points to 50.1% and increased non-GAAP EPS by 37% to $12.89. We generated double-digit revenue growth in semi systems and AGS and increased gross margins in both segments by around 150 basis points.

Operating cash flow was $8.9 billion, up 11%. And after $2.7 billion in capital expenditures, free cash flow was $6.2 billion, up 9%. We distributed over $4.7 billion to shareholders, including nearly $3.2 billion in stock buybacks and $1.6 billion in cash dividends.

Turning to our Q4 results. we delivered the highest dollar growth in our history, generating record revenue of $10.4 billion, which is up 14% sequentially and 53% year-over-year. Non-GAAP gross margin increased to 50.6%, up 20 basis points sequentially and 250 basis points year-over-year, driven by favorable mix effects and higher pricing.

Non-GAAP operating margin expanded to a record 35.3%, up 130 basis points sequentially and 670 basis points year-over-year. We delivered strong operating leverage with non-GAAP OpEx as a percent of revenue declining by 430 basis points year-over-year to 15.2% and we increased non-GAAP earnings per share to a record $4.16, up 19% sequentially and 92% year-over-year.

We plan to drive further gross margin expansion by introducing more enabling products and sharing in the value they create for our customers. We also plan to further increase operating leverage and margins as our AI and automation strategies enable us to scale our support function capabilities with minimal increases in headcount.

Turning to segment performance in Q4. Semiconductor Systems delivered record revenue of $8 billion up 14% sequentially and 64% year-over-year, including record sales in Korea and Taiwan. DRAM grew strongly as we expected it would, and we posted record revenue in both DRAM and advanced packaging. From a product perspective in Q4, we had record revenue and deposition across PVD, CVD, ALD and epitaxy.

We also had record revenue in etch, CMP and process control. Segment non-GAAP gross margin increased 240 basis points year-over-year to 55.2%, and non-GAAP operating margin increased over 940 basis points year-over-year to 39%. Applied Global Services delivered record revenue of $1.9 billion, up 26% year-over-year, reflecting record revenue in both services and spares.

AGS gross margin grew 100 basis points year-over-year to 35.1% and non-GAAP operating margin increased nearly 170 basis points to 30.5%. Other revenue of $517 million was in line with our expectations for the quarter. We generated record operating cash flow of $3.3 billion in Q4. Capital expenditures declined sequentially to $684 million, resulting in record free cash flow of $2.6 billion.

We distributed over $2.4 billion to shareholders, including $2 billion in stock buybacks and and $421 million in cash dividends. We have $10.8 billion remaining in our share buyback authorization and continue to expect to distribute 80% to 100% of free cash flow to shareholders over time.

Now I'll share our business outlook for Q1, which, as a reminder, is a 14-week quarter, which benefits AGS revenue growth in the period. We expect company revenue of $11.1 billion, plus or minus $500 million, which is up 58% year-over-year at the midpoint. We expect non-GAAP EPS of $4.35 plus or minus $0.20, which is up 83% year-over-year.

Within this outlook, we expect Semiconductor Systems revenue of around $8.7 billion, up 69% year-over-year. Our first AGS quarter of $2 billion, up 28% year-over-year and other revenue of around $400 million. We expect non-GAAP gross margin to increase to approximately 50.8%, up 170 basis points year-over-year, and we expect non-GAAP operating expenses of around $1.7 billion.

We are modeling a non-GAAP tax rate of around 13%. Finally, to help with your modeling after the 14-week quarter, we expect AGS revenue to remain close to Q1 levels in Q2 and OpEx in Q2 to be around 15% of revenue.

In summary, AI continues to add a fast-growing and incremental layer of demand to the industry. The investments we've made to help enable this new wave have given us a rich and growing portfolio of highly enabling products and services.

Our technology leadership in the most critical markets is now evident in our strong revenue growth and gross margin expansion. Our focus on operating leverage is producing record operating margins and contributing to strong cash flow and shareholder distributions, including the largest quarterly share buyback in over 8 years.

We continue to have long visibility from our customers expect another strong record year in 2027 and are making substantial investments to be able to ramp to higher levels beyond next year. We have high confidence in our strategy and that we will demonstrate continuous progress on share gains, gross margin expansion and operating leverage.

Now Mike, let's start the Q&A.

Michael Sullivan

Thanks, Brice. [Operator Instructions]. Operator, let's please begin.

Operator

[Operator Instructions]. And our first question for today comes from the line of CJ Muse from Cantor Fitzgerald.

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Christopher Muse

I guess first question, would love to hear how the demand environment has changed or evolved in the last 3 months. You talked about visibility at the 28 29. I would love to hear more of how those conversations are going? And if you can be kind of specific around end market, foundry, logic, DRAM, NAND? And I guess as part of it, I think, Brice, you talked about doubling your system output, but also doubling manufacturing and lab capacity by 2030, if you can kind of bridge what kind of growth you're implying overall for shipments into the 20 and the 30 time frame as part of it would be very helpful.

Brice Hill

Sure. Nice to hear from me, C.J. So on the demand environment over the last 90 days, we've continued to see increases from customers. So we mentioned that we added more than 10 projects to our factory tracker. Those are new fab construction projects and existing fab conversions that are added, so that's the third quarter in a row that we've added more than 10 projects to the tracker.

So the environment continues to strengthen. We see that the leading-edge logic and DRAM market are constrained, so customers are looking to add capacity as much as possible and pull in projects where they can do. So the environment continues to be similar to prior quarters where it continues to strengthen from that perspective.

And then on capacity investments, we are increasing our capacity. By 2028, we'll be able to double our output. So we just had an $8 billion quarter, so you can calculate that. That will be a capacity capability that we'll have.

And then since we're not fully loaded today, doubling the output is one thing, doubling our capacity is another thing, which we'll accomplish by 2030. So that will allow an even greater level of output. The way we think of it is we have to have the capacity to cover all ranges of scenarios from an output perspective, and we're definitely looking at the growth rate that continues to pick up and making sure that we'll have the capacity to accomplish that. And then we're also sharing all this information with our suppliers.

Gary Dickerson

CJ, one thing I would add beyond the leading-edge foundry, logic and DRAM, which are being driven by AI, advanced packaging is another area that we see tremendous demand from customers. We talked about our business being up 90% in calendar year. We see very strong growth in '27 and also going forward in that segment also.

Christopher Muse

Very helpful. And a quick follow-up. If you could speak to kind of the work that you're doing with your suppliers and your suppliers, suppliers. Are you kind of funding giving upfront deposits I would love to hear kind of how you're facilitating what should be another tremendous kind of growth vector over the coming 2, 3 plus years?

Brice Hill

Yes, it's a great question, C.J. We talk about having over 2,000 suppliers and everybody needs to increase their output. The first thing we've done is made sure we've got all of the data coming from our customers and getting to our suppliers. We talk about the 8-quarter forecast. We're getting that data to them. We're getting it in detail so that they can plan their output.

The second thing that we're doing is working closely with the actual schedules for each quarter as we go through those 8 quarters of the year. And as far as investments, I think all the suppliers are incentivized to make these investments and grow their own profitability. So we don't see any issues there. And from a -- what's it look like we don't see any roadblocks to the higher levels of demand that are being envisioned. There will be plenty of pinch points that we talk about. So just about all the suppliers need to add capacity and add labor. So we're working on that with each of them.

Operator

And our next question comes from the line of Tim Arcuri from UBS.

Timothy Arcuri

Brice, I'm wondering if you can give us just a sense of what the mix is assumed for fiscal Q1. And I asked because DRAM was up a ton for fiscal Q4. So I'm wondering if you think it will be up a lot again. Just if you can give us like a sense of what the mix looks like.

Brice Hill

Tim, yes, we're expecting similar trends looking at Q1, where DRAM and leading logic will be very strong. We think both of those end markets are constrained. So customers are doing whatever they can to increase capacity as rapidly as possible. So we actually see a similar mix to what we saw in Q4. And as we look through the year for '27, we expect that to stay about the same. So leading-edge DRAM and advanced packaging being the strongest growers for the year. And what's changing for us in '27 is that ICAPs, the mature logic technologies. That looks like it will start to grow again and see greater investment in 27 as the market has digested the capacity and is getting normal from a capacity utilization perspective.

Gary Dickerson

Yes. Maybe one thing I would also add, Tim, is that relative to the ICAP growth in 27, it's going to be growing much faster in non-China versus China.

Timothy Arcuri

Okay. Good. So Gary, I just wanted to ask, so the stock market sometimes leads fundamentals, but not always. And we know that there is a mismatch between what the supply chain is building in terms of gigawatts that will be ready from a shell point of view versus what the chips are being built.

So have you seen the in the past, I don't know, a few weeks or months or anything. Have you seen any customers come to you and said, "Hey, seems great, but I might not want to take that tool exactly when I thought I would. And so maybe I want to take that a quarter or 2 or like a month or 2 later. Are you seeing any of that? Or is literally everyone pushing to get tools as fast as they can.

Gary Dickerson

No, very clear. The answer is no. Nobody is saying that they're not wanting the tools as fast as we can get them. I've been traveling quite a bit over the last couple of months. And we're constantly receiving requests from customers to accelerate our ramp and deliver earlier.

Operator

And our next question comes from the line of Vivek Arya from Bank of America Securities.

Vivek Arya

Gary, I wanted to ask the last question in a slightly different way, which is let's say, there are -- if there is any slowdown in data center build-out, right, whether it is next year and it impacts, whether it's next year or 2028, what do you think that does to WFE forecast? Do you think your customers are planning this deployment for the long term, so they're not going to be phased, right, by a slowdown, right, any short term, just how should investors think about the impact on the semi cap industry if there is any temporary or a little bit extended slowdown in the build-out of data centers.

Gary Dickerson

Yes. Thanks for the question. So as I mentioned on the last question, what I'm seeing in some of our leading customer CEOs are meeting on a monthly basis, is really requesting for us to ramp faster.

I think demand in all of those areas, especially the ones that are being driven by AI leading foundry, logic, DRAM and advanced packaging demand is significant. And as you know, it takes time to ramp capacity. So I mean, you have to start with a view of computing demand and everything we see, everything I hear when I'm talking to companies through the ecosystem, computing demand is going to continue to go higher.

And so I don't see any signs from people that they're concerned about ramping too quickly, it's really the opposite where people want us to pull in and ramp faster. I don't know, Brice, if you want to add any color?

Brice Hill

Yes. I'll just add the point that probably no surprise, but supply exceeds demand, especially DRAM and leading logic. So there's some buffer there between I'm sorry sorry, demand exceeds supply. So there's some buffer there.

And then we have markets that are underserved at this point also. So we have the PC market -- you've got smartphone markets that are constrained, smart TVs that are constrained. So we think there's a considerable amount of buffer in the market even if data center were to have less demand over the next couple of years. And I think Gary highlighted, that's not what we're seeing, just to be clear.

Vivek Arya

All right. Very helpful. And for my follow-up, if I look at last year, when the year started, I think the expectation was that you would grow your semi systems over 20%, right? And now the actual number is likely to be closer to 40%, right? So you grew much faster. And they were the same conservatism around availability of clean room and so forth.

So what got better through last year? And then I guess the real question is that when you were saying the industry will grow 30%, is that a line in the sand? Like, what can help the industry grow faster than 30%. Like why can't the same thing that happened in '26 happened in '27 also?

Brice Hill

Yes, Vivek, great question. So we do think it's governed by clean room and clean room availability. Now to your point, all through last year, customers were able to either add clean room, pull in projects work on projects that increased output from their factories by doing upgrades and those sorts of things. So those are the tools that customers have to increase output. I think the the macro equation at the end of the day is guided by the clean room that can become available.

Operator

Our next question comes from the line of Stacy Rasgon from Bernstein Research.

Stacy Rasgon

First, so if your equipment, you're going to grow equipment more than 40% in '26. I guess what do you think WC actually is growing on a percentage basis in 2026? And given you see WD growing more than 30% in 2017. Do you think we should expect the same kind of outperformance in '27 relative to WP that you're -- that we're seeing in '26?

Brice Hill

Stacy. Yes, we do think that that we're outperforming WFE in '26, and we expect that in '27 also, and that's on the strength of our top positions in leading logic DRAM and advanced packaging and the strong mix to those being the fast-growing markets.

So I think greater than 40% for our business and whatever our business is slightly less than that for WFE for '26.

Stacy Rasgon

Got it. For my follow-up, you had some competitors calling out near-term supply constraints that actually impacted their outlook in the next quarter. Are you actually seeing any of it, it sounded like the same kind of stuff that you guys will be buying anyways. Are you seeing any of that? Is that actually -- I mean, as strong as the outlook is, is it impaired in any way by supply constraints? And would it be higher if you weren't seeing anything or if you're seeing anything at all?

Brice Hill

Yes, Stacy, good question. As I've highlighted, there's a few pinch points from a supply perspective. Our Q1 number would be slightly higher if everything were perfectly available. It's not a major impact, but we are working closely with all the suppliers. You saw 3 sequential quarters of more than double-digit growth as we went through the year. And supply chain is just reacting greatly, and we're working hard to increase the output, and we expect to increase the output every quarter this year.

Gary Dickerson

Yes, Stacy, I would add, at least for me, as I'm engaging with all of our customers, they want us to ship as fast as we can. I mean, just demand is very, very strong. Compute demand is very strong. So -- and as Brice said, I think our teams have done a really great job in ramping, but we have more work to do in '27, but we are in a very strong position to outperform going forward.

Operator

And our next question comes from the line of Atif Malik from Citi.

Atif Malik

I have a question on the DRAM road map. One of the memory makers is going to pursue 3D DRAM versus 4x Square. And I know you guys have done a good job in the master classes covering the technology. If you can just remind us about Applied Materials product positioning and opportunity on one versus the other?

Gary Dickerson

Yes. Thanks for the question. One thing I would do is point to the investor breakfast and there was a slide in there where we show the foundry logic technology nodes and DRAM technology nodes.

And what you see there in DRAM is as you go to new versions of 6F square we're gaining share. And then as you go to 4F square and 3D DRAM, our servable market is increasing and our share is increasing multiple points. So from an Applied Materials standpoint, DRAM is a very strong segment for us. We're much larger than our nearest process equipment competitors.

We're in very deep co-innovation relationships with every one of these different companies. So for Applied, we're in a good position. Certainly, a 6F squared adoption continues, and you have new transistors for higher-speed bandwidth on those chips. And then as you go to 4F squared and 3D DRAM, we showed in that breakfast that our SAM share is increasing for 4Fs and 3D DRAM.

We also show the SAM per 100,000 wafer starts increasing significantly as you go from 6F square to 4Fs and then 3D DRAM. So again, from a Applied's standpoint, we are deeply engaged with every one of these companies, and we have the most enabling technologies for these major inflections. So again, this is an area where we have very, very deep co-innovation relationships.

Atif Malik

And Brice, for the AGS part, you mentioned growing 20% annually and service revenue per tool also growing 20%. So how should we think about AGS growth for next year?

Brice Hill

Yes, we've highlighted mid-teens. So I think 15% for the horizon. The way I would think about that is the installed base grows 5% to 10% each year. The revenue per tool grows 5% to 10% each year. So giving you a total of approximately 15%. This year, we grew faster on the -- benefiting from the increase in utilization across the whole ecosystem. So we're close to 100%. So you don't get that unique benefit again in the forward years. But those are the 2 building blocks, and we expect to continue to build new products that help the customers ramp and get the highest yields.

Operator

And our next question comes from the line of Krish Sankar from TD Cowen.

Sreekrishnan Sankarnarayanan

I just want to follow up on the open supply question. It seems like you're not adding inventory as much and days of inventories was also down 10 days. I'm wondering why wouldn't you be more aggressive in adding inventory. And along the same path, you kind of gave some color on AGS in April. Any idea you think about semi systems in April quarter? And I have a quick follow-up.

Brice Hill

Yes. Thanks, Krish. Nice to hear from you. So -- we added just over $300 million of inventory in the quarter, $6.9 billion of inventory. And I think it's fair. I would like to have even more inventory. So we're working on that with the suppliers -- and I'll just highlight again, we had 3 quarters of double-digit increases in output. So we're definitely pushing the system and we'll continue working on that as we go through the year. And it's a good point. We would like to have more inventory.

Sreekrishnan Sankarnarayanan

Any color on April quarter any systems?

Brice Hill

Yes. Nothing specific at this point. Yes, what we said was we expect to increase output every quarter this year as we work with the supply chain.

Sreekrishnan Sankarnarayanan

A quick follow-up. Gary, this year, it seems like when you started the year to ending the year, DRAM WC actually grew pretty substantially. A lot of it is conversion driven, how to think about it in 2017? Do you think conversion slowdown in greenfield picks up? Or do you think conversions continue for next year?

Gary Dickerson

I think our customers are doing everything they can to increase output, everything they can do on upgrades and certainly much more aggressive investments in greenfield. So I would say both. One thing that I've seen more so than any point in my career is the focus on yield and output innovation.

We talked about this in the investor breakfast. Every customer that I'm talking to, they want more good chips per wafer, and they want more wafers out. So I would say that -- and again, these -- I traveled quite a bit over the last couple of months with all of our leading customers -- this is creating tremendous pull for our AGS business.

We talked about having over 37,000 chambers connected to these AI-enabled AIX servers and Tim Dean and the investor breakfast talked about what we're doing in advanced matching in predictive models for preventative maintenance, a number of innovations that we're driving in our service business that I really think is going to accelerate our service growth and certainly, that's incredibly valuable for customers.

So I see, again, more pull there in yield innovation and output innovation that I've ever seen in my career.

Operator

And our next question comes from the line of Harlan Sur from JPMorgan.

Harlan Sur

On your Process Control segment, the team is anticipating 50% plus growth this calendar year that's faster than your overall systems segment growth, combination of strength in your e-beam and optical portfolio. Next year, you have the launch of your advanced packaging inspection platform. But next year is also biased towards aggressive technology migration and therefore, a strong focus on yield and cost. Given the sort of backdrop, does the Applied team anticipate PDC outgrowing your overall semi systems business next year as well?

Gary Dickerson

Thanks, Harlan. So as you said, this year, we're growing over 50% a in both our e-beam and our optical businesses and of course, for the business overall. Just there's really tremendous pull our e-beam is leading. We're 2x bigger than our nearest competitor.

And that's increasingly important as our customers are driving these big architecture inflections, e-beam you can't fix what you can't see. We can look into structures and uniquely improve yield, and that has also tremendous synergies. I think Keith in the investor breakfast did a great job showing the synergies between this leadership that we have with our e-beam imaging and then how we're accelerating our process equipment innovations to enable device architecture inflections for our customers.

So I would say, again, that synergy is stronger than it's ever been. The pull from our customers are very strong, and we have very strong product pipeline. So in e-beam will bring to market some really important new innovations that are critical for our customers to accelerate their road maps. And in optical, you mentioned advanced packaging -- we have a number of big innovations in our optical business that I feel very optimistic about. So I would say that PTC will see very strong growth, again, in '27. And I think overall applied, we'll also see strong growth in '27.

Harlan Sur

And then for Brice, AGS, another quarter of strong growth, second consecutive quarter, 30% plus operating margins. Incremental operating margins sort of in this high 30s, low 40% range. That's for the third consecutive quarter. Is this how we should think about the operating margin trajectory on future revenue growth? And maybe a little bit longer term within your calendar 30 total corporate operating margin target of 40%. What's your assumption for AGS operating margins within that?

Brice Hill

Yes. Thanks, Harlan. We do expect to continue to advance operating margins and gross margins in AG. And what you see is with new products being launched, those products have a lot of value for customers in terms of yield and output management. and that's helping with our margin growth. So definitely a contributor to the overall targets for the company.

Operator

And our next question comes from the line of Jim Schneider from Goldman Sachs.

James Schneider

I was wondering if you could maybe comment on the pace of gross margin expansion you expect over, say, the next 4 or 6 quarters, obviously, you're getting some good uplift in Q1. Maybe talk about what's driving that aside for mix? And maybe talk about how much operational improvement or pricing improvement you could see over the course of the next year.

Brice Hill

Jim, thanks for the question. The -- what we're seeing, we have some ramp costs that are being overcome by the yield -- I'm sorry, by the output increases that we're having and also price increases for our tools as we launch new tools that are more and more valuable for customers.

So really, the dynamics that we see is a faster-growing semi market helps with gross margins and then the pricing helps with gross margins. In the Q4, just printed and in our Q1 outlook, we've got some ramp costs as we're adding employees and training employees for the higher level of ramp. That's the other side of the equation for us. But in general, we expect to continue to advance gross margin as we go through the year. And I think you can sort of judge the pace by what you see in Q4 and Q1.

Gary Dickerson

Jim, maybe let me add that I think the setup for us is very positive and we are leading in the fastest-growing parts of the market, the leading foundry, logic, DRAM and advanced packaging. And as we talked about in the investor breakfast, we are enabling these major architecture innovations for our customers, we're bringing high-value products to market. And that gives us a tailwind in terms of our semi systems gross margin.

So I would expect that will continue to drive that forward. And as I talked about earlier on the call, this value for the yield and output innovation in our services also is incredibly valuable. So we're very well positioned there. I would expect '27, you're going to see significant progress in margins. And then also going forward, as these new devices ramp our positions there are very strong.

The value we're creating very strong -- is very strong, and it puts us in a good position to share value with customers as those new technologies ramp.

James Schneider

That's helpful. And then as we look into fiscal '27, can you maybe comment on sort of what you expect from China? I'm assuming you're expecting the growth to be better than it was in '26, but maybe not as good as the overall market? And maybe just comment on China's impact on gross margins, too.

Brice Hill

Jim, you've got the right dynamic with the fast growth in leading-edge DRAM advanced packaging that we're seeing. We do expect to see growth in China, but it won't be as fast as those markets that are being pulled by AI. So our share that's related to China or shipments to China will probably be less than 25% of the business as we look into '27.

Operator

And our next question comes from the line of Chris Caso from Wolfe Research.

Christopher Caso

Yes, thanks. So first question is with regard to some of the clean room space constraints that you discussed in your remarks. And it sounds like that's 1 of the main constraints on shipments as you go into next year. You spoke about having 8 quarters of visibility -- what are you seeing into '28? And obviously, not providing guidance at this point. But if you could talk about what you're seeing in terms of your customers' clean room availability as you go into -- do we get to a point where we can see accelerated WFE growth based on clean room availability? Do we still stay tight as an industry and 28 where clean room still becomes a constraint even beyond.

Brice Hill

Chris, I think the best way to picture this is it's an expanding envelope each year. So we've talked about how each quarter companies have added projects A lot of those projects, for example, this quarter, more than 10 projects added. A large number of them are in 29 and 30 in terms of when those factories open up. And so as customers continue to add to the road map, it expands every year, but especially in the out years.

So I would think of it as an expanding equation where you should expect the WFE market to continue to grow as more and more clean room is added each year. And that matches our expectation. We highlighted at that same investor breakfast that the growth rate for WFE that we experienced the last 10 years, we expect it to be larger as we look forward. And it's really this AI demand that's incremental to what we've seen in the past.

Christopher Caso

As a follow-up question, something else you folks talked about at the investor breakfast on hybrid bonding. And could you give us an update on that and kind of outlook and timing given what you're seeing in the industry? And particularly as AI demand is increasingly driven by inference, what does that have -- what impact does that have on hybrid bonding adoption?

Brice Hill

Yes, I'll start. And I think today, we see that in leading logic for some of the 3D packaging solutions. And then -- we know all the memory customers are evaluating it for HBM, and that's in process. You'll have to talk to them about actual insertion and adoption points. But we think it's a very important technology. We think it's critical to the 3D and advanced packaging market. And obviously, we're making investments there.

Gary Dickerson

Yes. I think relative to power and performance, hybrid bonding is very important for I/O density and shortening the wiring length. So when I'm engaging with all of our customers, this is a prime topic. So we're seeing adoption in high-volume manufacturing in logic -- but again, this is a very important technology for power and performance going forward.

And we talked about this in the investor breakfast. We have -- we serve about 80% of the steps for hybrid bonding. And we're in a very strong position in that market. We're certainly in a very strong position in high-bandwidth memory stacking that we have a very, very high share. And that's -- all of that is contributing to our very strong growth in packaging in '26.

And for sure, hybrid bonding will be adopted further in both logic and memory -- and again, Applied is in a really good position with our partnership with BESI in hybrid bonding, but also in all of those adjacent steps, Applied has very strong positions and that will enable us to drive significant packaging growth going forward.

Operator

And our next question comes from the line of Joe Quatrochi from Wells Fargo.

Joseph Quatrochi

Just given it sounds like you think that non-China ICAP strengthens next year and maybe even China grows as well. Why should we not think about your outperformance of WFE maybe accelerating in 2027 relative to '26?

Brice Hill

We do expect to see rest of world investments. I think when you look at the customers worldwide, that digestion that we talked about the last few years with all the incremental investment in China, looks like it's completing its cycle. So some of the rest of world customers are looking at capacity increases and an increased level of investment.

And then in China, we expect to see that also. And I'll just say, focusing in on China. -- for the customers that we can serve our addressable market in China, we think we're gaining share in 2026. And we think that's on the strength of mostly 28-nanometer type investments. So we feel good about execution in China, and we'll continue to serve that market as we go forward.

Joseph Quatrochi

And maybe as a follow-up, you increased the advanced packaging growth rate again. Maybe could you help us understand just what's from versus foundry logic? And then also, how do we think about that into '27?

Brice Hill

Yes. So the -- we've increased each quarter, and that really is like the rest of the equation where we saw additional projects and additional capacity being requested as we went through the year. from the advanced packaging market, a large portion of that in 2026 is HBM related packaging, and that's that sees tremendous growth in 2026.

Gary Dickerson

Yes, I'd say 2027 also HBM remains very strong. And going forward, what our customers are focused on are new packaging architectures, they want to make the body sizes as large as they can and Applied has invested to create the leading portfolio for those inflections. And so again, as I'm engaging with all of these customers on a constant basis, this is an incredibly important focus for all of them because multichip connectivity for AI compute performance is really important.

So again, that portfolio that we've created over the last several years and that we've added to with some big innovations, also the acquisition of NEX, that gives us a tailwind in the '27 and going forward.

Michael Sullivan

Operator. We have time for one more question, please.

Operator

Certainly, and our final question for today then comes from the line of Melissa Weathers from Deutsche Bank.

Melissa Weathers

I'm sorry if I missed this, but as we think about the growth in 2027 and the shape of how that year is going to shape up -- any way that we should be thinking about like first half versus second half? I don't know if it's -- if there's some big clean room dynamics that we should be making sure we have in our models or capacity coming online. Just any color on first half versus second half dynamics next year?

Brice Hill

Melissa, it's Brice. Nice to hear your voice. We expect to increase output every quarter as we go through the year. So I think that gives you a perspective on the shape. I don't think there's much from a clean room dynamics that's not known at this point.

Melissa Weathers

Got it. And then on the other business, I know it's tiny, but I think if I remember from last quarter, you guys talked about some resegmenting some of the panel business. out of that. So just a high level on that other business, can you remind us what the trajectory is? And then I think also there might be a gross margin headwind there. So just any modeling color on the other business would be helpful.

Brice Hill

Sure. On other, which is the collection of our non-reportable operating segments in the company, the largest 1 is display Display had a strong quarter in Q4 '26, over $500 million. We said that we would tell you if it changed in terms of its performance. So that business, think of the gross margins in the 40% range and the operating margins in the 20s. And what we've said is for the foreseeable future, please model that business as approximately $400 million per per quarter from a revenue perspective. So that's where we are right now. So put in $400 million for Q1 and then for future quarters, and we'll let you know when it changes.

And then that other segment will be approximately breakeven as we move through the quarters. The profits from the display business are spent in our other adjacencies, the businesses that Gary highlighted at our investor breakfast that we're investing in as adjacencies to grow.

Michael Sullivan

Yes. Thanks, Melissa, for your question. And Brice, would you like to give us your closing thoughts for today.

Brice Hill

Sure, Mike. I'm pleased with the investments we've made are driving strong financial results, including record quarterly revenue growth and continued gross margin expansion. We look forward to seeing many of you here in Santa Clara this quarter and at conferences, including RBC in New York, UBS and Scottsdale, Wells Fargo and Dana Point and Barclays in San Francisco. Mike, let's go ahead and close the call.

Michael Sullivan

All right. Great. Thanks, Brice. And I'd like to let you know that a replay of today's call is going to be available on the IR page of our website by 5:00 Pacific Time today. And we'd really like to thank you for your continued interest in Applied Materials.

Operator

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect, and good day.