Net sales for the three months ended January 29, 2023 decreased compared to the same period in the prior year primarily due to lower customer investments in display manufacturing equipment as a result of weakness in the consumer electronics market, including personal computers and smartphones.
| (in millions) | 1Q23 | 1Q22 |
| Net Sales | $167 | $366 |
| Operating Income | $8 | $76 |
| Operating Marging | 4.8% | 20.8% |
In the display market, five companies represent 83% of the net sales Applied Materials makes from selling equipment to LCD and OLED manufacturers. Overall, the company saw a slight uptick in its total business driven by semiconductor equipment sales and improvements in supply chain management. But, in general, end user demand, or lack thereof, impact the sale of new equipment into the market.
Applied Materials has three market segments: semiconductor systems, applied global services, and display and adjacent markets. The display segment of its business took the biggest hit. Presently, the company is not experiencing any bottlenecks in supply, but it is sitting on new technology and doesn’t have an order book to show anything but stagnation. Looks like most of the spending by customers, at least for now, is going to be on maintaining their legacy systems which will continue to hit the display segments bottom line. There’s an awful lot of data points to suggest that the actual projections for second half growth, or a return to normal levels of demand, may be more optimistic than one would hope.
