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Industry Segment Operations | 6 Months Ended
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Apr. 28, 2024
Segment Reporting [Abstract] |
Industry Segment Operations | Industry Segment Operations Our three reportable segments are: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. As defined under the accounting literature, our chief operating decision-maker has been identified as the President and Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire company. Segment information is presented based upon our management organization structure as of April 28, 2024 and the distinctive nature of each segment. Future changes to this internal financial structure may result in changes to our reportable segments. The Semiconductor Systems reportable segment includes semiconductor capital equipment for etch, rapid thermal processing, deposition, chemical mechanical planarization, metrology and inspection, wafer packaging, and ion implantation. The Applied Global Services segment provides integrated solutions to optimize equipment and fab performance and productivity, including spares, upgrades, services, 200mm generation equipment and factory automation software for semiconductor, display and other products. The Display and Adjacent Markets segment includes products for manufacturing liquid crystal displays (LCDs), organic light-emitting diodes (OLEDs), equipment upgrades and other display technologies for TVs, monitors, laptops, personal computers, smart phones, other consumer-oriented devices and solar energy cells. Each operating segment is separately managed and has separate financial results that are reviewed by our chief operating decision-maker. Each reportable segment contains closely related products that are unique to the particular segment. Segment operating income is determined based upon internal performance measures used by our chief operating decision-maker. The chief operating decision-maker does not evaluate operating segments using total asset information. We derive the segment results directly from our internal management reporting system. Effective in the first quarter of fiscal 2024, management began including share-based compensation expense in the evaluation of reportable segments' performance. Prior-year numbers have been recast to conform to the current-year presentation. The accounting policies we use to derive reportable segment results are substantially the same as those used for external reporting purposes. Management measures the performance of each reportable segment based upon several metrics including orders, net revenue and operating income. Management uses these results to evaluate the performance of, and to assign resources to, each of the reportable segments. The Corporate and Other category includes revenues from products, as well as costs of products sold, for fabricating solar photovoltaic cells and modules, and certain operating expenses that are not allocated to our reportable segments and are managed separately at the corporate level. These operating expenses include costs related to certain management, finance, legal, human resources, and research, development and engineering functions provided at the corporate level and unabsorbed information technology and occupancy. In addition, we do not allocate to our reportable segments restructuring, severance and asset impairment charges and any associated adjustments related to restructuring actions, unless these actions pertain to a specific reportable segment. Segment operating income also excludes interest income/expense and other financial charges and income taxes. Management does not consider the unallocated costs in measuring the performance of the reportable segments. Net revenue and operating income (loss) for each reportable segment were as follows:
| Three Months Ended |  | Six Months Ended
| Net Revenue |  | Operating Income (Loss) |  | Net Revenue |  | Operating Income (Loss)
| (In millions)
April 28, 2024: |  |  |  |  |  |  |
Semiconductor Systems | $ | 4,901 |  |  | $ | 1,701 |  |  | $ | 9,810 |  |  | $ | 3,445 |
Applied Global Services | 1,530 |  |  | 436 |  |  | 3,006 |  |  | 853 |
Display and Adjacent Markets | 179 |  |  | 5 |  |  | 423 |  |  | 30 |
Corporate and Other | 36 |  |  | (230) |  |  | 114 |  |  | (449) |
Total | $ | 6,646 |  |  | $ | 1,912 |  |  | $ | 13,353 |  |  | $ | 3,879 |
April 30, 2023: |  |  |  |  |  |  |
Semiconductor Systems | $ | 4,977 |  |  | $ | 1,715 |  |  | $ | 10,139 |  |  | $ | 3,570 |
Applied Global Services | 1,428 |  |  | 384 |  |  | 2,797 |  |  | 729 |
Display and Adjacent Markets | 168 |  |  | 16 |  |  | 335 |  |  | 19 |
Corporate and Other | 57 |  |  | (204) |  |  | 98 |  |  | (437) |
Total | $ | 6,630 |  |  | $ | 1,911 |  |  | $ | 13,369 |  |  | $ | 3,881 |
Semiconductor Systems and Display and Adjacent Markets revenues are recognized at a point in time. Applied Global Services revenue is recognized at a point in time for tangible goods such as spare parts and equipment, and over time for service agreements. The majority of revenue recognized over time is recognized within 12 months of the contract inception. Net revenue by geographic region, determined by the location of customers’ facilities to which products were shipped to, were as follows:
| Three Months Ended |  |  |  | Six Months Ended
| April 28, 2024 |  | April 30, 2023 |  | Change |  | April 28, 2024 |  | April 30, 2023 |  | Change
| (In millions, except percentages)
China | $ | 2,831 |  |  | 43 | % |  | $ | 1,405 |  |  | 21 | % |  | 101 | % |  | $ | 5,828 |  |  | 44 | % |  | $ | 2,550 |  |  | 19 | % |  | 129 | %
Korea | 988 |  |  | 15 | % |  | 1,583 |  |  | 24 | % |  | (38) | % |  | 2,219 |  |  | 16 | % |  | 2,876 |  |  | 22 | % |  | (23) | %
Taiwan | 1,019 |  |  | 15 | % |  | 1,435 |  |  | 22 | % |  | (29) | % |  | 1,578 |  |  | 12 | % |  | 3,403 |  |  | 25 | % |  | (54) | %
Japan | 453 |  |  | 7 | % |  | 460 |  |  | 7 | % |  | (2) | % |  | 1,018 |  |  | 8 | % |  | 916 |  |  | 7 | % |  | 11 | %
Southeast Asia | 213 |  |  | 3 | % |  | 157 |  |  | 2 | % |  | 36 | % |  | 399 |  |  | 3 | % |  | 410 |  |  | 3 | % |  | (3) | %
Asia Pacific | 5,504 |  |  | 83 | % |  | 5,040 |  |  | 76 | % |  | 9 | % |  | 11,042 |  |  | 83 | % |  | 10,155 |  |  | 76 | % |  | 9 | %
United States | 853 |  |  | 13 | % |  | 1,113 |  |  | 17 | % |  | (23) | % |  | 1,612 |  |  | 12 | % |  | 2,164 |  |  | 16 | % |  | (26) | %
Europe | 289 |  |  | 4 | % |  | 477 |  |  | 7 | % |  | (39) | % |  | 699 |  |  | 5 | % |  | 1,050 |  |  | 8 | % |  | (33) | %
Total | $ | 6,646 |  |  | 100 | % |  | $ | 6,630 |  |  | 100 | % |  | — | % |  | $ | 13,353 |  |  | 100 | % |  | $ | 13,369 |  |  | 100 | % |  | — | %
Net revenue for Semiconductor Systems by end use application for the periods indicated were as follows:
| Three Months Ended |  | Six Months Ended
| April 28, 2024 |  | April 30, 2023 |  | April 28, 2024 |  | April 30, 2023
Foundry, logic and other | 65 | % |  | 84 | % |  | 63 | % |  | 81 | %
Dynamic random-access memory (DRAM) | 32 | % |  | 11 | % |  | 33 | % |  | 12 | %
Flash memory | 3 | % |  | 5 | % |  | 4 | % |  | 7 | %
| 100 | % |  | 100 | % |  | 100 | % |  | 100 | %
The reconciling items included in Corporate and Other were as follows:
| Three Months Ended |  | Six Months Ended
| April 28, 2024 |  | April 30, 2023 |  | April 28, 2024 |  | April 30, 2023
| (In millions)
Unallocated net revenue | $ | 36 |  |  | $ | 57 |  |  | $ | 114 |  |  | $ | 98 |
Unallocated cost of products sold and expenses | (266) |  |  | (261) |  |  | (563) |  |  | (535) |
Total | $ | (230) |  |  | $ | (204) |  |  | $ | (449) |  |  | $ | (437) |
The following customer accounted for at least 10 percent of our net revenue for the six months ended April 28, 2024, and sales to this customer included products and services from multiple reportable segments.
| Percentage of Net Revenue
Samsung Electronics Co., Ltd. | 13 | %

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 22 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-22 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 15 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-15 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 31 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-31 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 32 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-32 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 42 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-42 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 32 -Subparagraph (f) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-32 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 40 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-40 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//280/tableOfContent Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 26 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-26 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 34 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-34 Reference 11: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 41 -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-41 Reference 12: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-21 Reference 13: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 21 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-21 Reference 14: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 32 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org//1943274/2147482810/280-10-50-32 + Details
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