Applied Materials (AMAT): The Geopolitical Pinch

1. Executive Summary

AMAT is the "Switzerland" of chips—everyone (TSMC, Intel, Samsung) needs their tools. However, query "What will happen at Applied Materials?" relates to the DOJ investigation into shipments to China (SMIC) via South Korea. The regulatory overhang masks a strong fundamental story in Gate-All-Around (GAA) transistors.

Key Thesis Points

1. China Revenue Cliff: ~40% of AMAT revenue recently came from China (DRAM/mature nodes). New US export controls could cut this in half.
2. Architecture Shift: The move to "Gate-All-Around" and "Backside Power Delivery" requires new deposition/etch tools where AMAT leads.
3. Inflection: Advanced packaging (HBM stacking) is distinct from front-end wce, creating a new growth vector.

2. Business Overview

• Semi Systems: Etch, Deposition, Inspection tools.
• Global Services: Recurring maintenance and spares (very high margin).

3. Risks

• DOJ Investigation: Potential for massive fines or criminal charges if they knowingly evaded sanctions.
• WFE Cycles: Wafer Fab Equipment spending is lumpy. Intel cutting CapEx hurts AMAT directly.