Michael Sullivan - Vice President of Investor Relations Gary E. Dickerson - Chief Executive Officer, President and Director Robert J. Halliday - Chief Financial Officer and Senior Vice President

Timothy M. Arcuri - Cowen and Company, LLC, Research Division Krish Sankar - BofA Merrill Lynch, Research Division Romit J. Shah - Nomura Securities Co. Ltd., Research Division Farhan Ahmad - Crédit Suisse AG, Research Division Atif Malik - Citigroup Inc, Research Division Harlan Sur - JP Morgan Chase & Co, Research Division Weston Twigg - Pacific Crest Securities, Inc., Research Division Patrick J. Ho - Stifel, Nicolaus & Company, Incorporated, Research Division Shawn Yuan - RBC Capital Markets, LLC, Research Division Thomas Diffely - D.A. Davidson & Co., Research Division Yeuk-Fai Mok - Needham & Company, LLC, Research Division Sidney Ho - Deutsche Bank AG, Research Division Mehdi Hosseini - Susquehanna Financial Group, LLLP, Research Division

Welcome to the Applied Materials Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to Michael Sullivan, Vice President of Investor Relations. Please go ahead, sir.

Thank you, Dustin. Today, we'll discuss the results for our first quarter, which ended on January 25. Joining me are Gary Dickerson, our President and CEO; and Bob Halliday, our Chief Financial Officer. Before we begin, let me remind you that today's call contains forward-looking statements, including statements about Applied's performance, products, strategies, opportunities, announced business combination with Tokyo Electron and business and industry outlook. These statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied, and they should be interpreted in that light. Information concerning these risk factors is contained in our most recent Form 10-Q and 8-K filings with the SEC. Forward-looking statements speak as of February 11, 2015, and we assume no obligation to update them. Today's call also includes non-GAAP adjusted financial measures. Reconciliations to GAAP measures are contained in today's earnings press release and in our reconciliation slides, which are available on the Investor page of our website at appliedmaterials.com. Now I'd like to turn the call over to Gary Dickerson. Gary E. Dickerson: Thanks, Mike, and good afternoon. Let me start by providing an assessment of our overall progress. First, our long-term strategy. We are driving profitable growth by enabling major technology inflections using our precision materials engineering leadership to gain share and grow faster than the markets we serve. Major transitions in semiconductor and Display technology create great opportunities for Applied. We are making meaningful progress towards our long-term strategic goals, and this will be accelerated by our upcoming merger. In the midterm, we have been focused on those opportunities that move the needle for customers and for Applied. We have strengthened our R&D and field teams, while increasing investment in product development. We've also created a pipeline of new, differentiated products that accelerate Applied's growth when customers move to new technology -- when customers move new technology into high-volume production. And we're managing the effect on margins as we ramp these new products. In the short term, the forecasted levels of invested by our -- investment by our customers provide a solid foundation for the year ahead. While there are challenges inherent in our spending mix and some uncertainties about timing, we remain firmly on our trajectory of profitable growth. At the same time, we are completing our preparations to merge with Tokyo Electron. The Applied and Tokyo Electron teams are very excited about the strategic opportunity this merger creates and share a strong commitment to work together to achieve our performance goals for the new company. We believe we are making progress with regulators around the world on a coordinated proposal that would allow us to move forward with our business combination. We are working to secure the remaining approvals and complete the merger as soon as possible. During this phase, we've been advised not to provide details or answer questions about ongoing discussions. Turning to our market outlook. Industry growth is fueled by evolving trends in mobility, connectivity, video and wearable devices. This is accelerating innovations in mobile processors, solid-state storage and interactive displays. Our customers are focused on winning share in these inflection and this is resulting in a period of sustained investment by semiconductor customers. We believe wafer fab equipment spending for calendar 2014 was approximately 15% higher than the previous year. And as we look ahead, we maintain our view that the market could grow another 5% or more in 2015. In foundry, we expect investment to be maintained at the same healthy levels seen in 2014, with the potential to be slightly higher than last year. Our current view is that spending for advanced nodes will be heavily biased towards the second half of the year. While we see some timing uncertainty with the ramp of this complex technology, the FinFET inflection is highly beneficial for Applied, expanding the opportunity for our leadership products in FE, metal deposition, implants, anneals and CMP. In memory, supply remains tight with a healthy pricing environment and robust investment. In the past quarter, we booked our highest orders from memory customers in over 7 years. This includes our highest quarterly DRAM orders since 2010. DRAM bit growth for 2015 is expected to be around 30% with mobile DRAM standing out as the most significant driver. While technology conversions are currently providing a large portion of the needed supply, increasing device complexity and additional process steps required at the smaller nodes are reducing effective factory output. In addition, mobile DRAM devices are typically larger than PC DRAM and the combination of these factors is leading to new capacity additions this year. The market for NAND memory is also expanding. Leading smartphone makers have doubled the average bits per box over the past 12 months and this, added to growth in solid-state drives is supporting NAND bit growth in the range of 40%. Although we believe the majority of NAND investments will still be focused on advanced planar capacity, we see 3D NAND spending for the year at approximately twice the 2014 level, with more customers starting to move to this technology. The industry's transition to 3D NAND has been slower than forecast, however, it remains a positive inflection for Applied, expanding our served available market by 35% to 50%. The outlook for Display also remains very healthy. Average TV sizes are growing faster than historic rates, and we are seeing a surge in unit sales, fueled by consumer spending on new 4K and OLED models. Demand for bigger, higher resolution, low-power screens for mobile applications is also a key factor behind Display growth. In TV and mobile, supply is tight, and our customers are investing in new capacity and advanced technology. This quarter, our Display business delivered its highest revenue in the past 3 years. As we have said before, major inflections like FinFET, 3D NAND and new displays represent unprecedented technology advances that are enabled by materials innovation. We are still in the early stages of these inflections and as they play out over the next several years, they create great, long-term growth opportunities for Applied. To fully capitalize on these transitions, we have aligned our structure and talent around key areas of value creation. We will continue to aggressively manage our product portfolio so we can quickly shift resources to areas that are truly enabling for customers and generate the best returns for us. We are starting to see the impact of these changes. In 2013, we won 1.4 points of share in wafer fab equipment while delivering innovative and enabling new products to customers. In 2014, we consolidated our new product positions and strengthened our product pipeline. We believe we gained share or held share in almost all our businesses. And based on our current view of customer spending, we expect to grow our overall wafer fab equipment share again in 2015. We are making our largest gains in areas where the market is growing rapidly, including CVD and Etch. This past calendar year, we estimate that we won at least 3 points of share in CVD and 5 points of share in conductor etch. Etch is a business where we continue to build momentum. We have been focusing on key technology inflections in market segments, where we believe we have sustainable technology differentiation. New wins in memory combined with our traction in foundry, helped us deliver our highest Etch quarterly revenues in orders since 2007. Our latest generation Etch system has one of the fastest adoption rates of any new Applied product in recent years. We shipped 3x as many chambers in the first quarter than we did in the prior quarter, and we expect to double shipment volumes again in Q2. We also see great opportunities to grow our service business. We are bringing together capabilities from across the company to develop expanded service offerings that help customers ramp complex new device technologies faster and at lower cost. At both leading and trailing nodes, wafer starts and fab utilization are at very high levels. We are winning new service contracts from a broad base of customers and growing faster than the market. Over the past 2 quarters, our service business booked its highest orders for any 6-month period in our history. In summary, while there are risks related to the timing of customer investments, our current view is that 2015 will be a solid market growth -- a year of solid market growth, driven by robust memory spending in the first half and foundries ramping FinFET production in the second half. Applied Materials has a strong platform to gain share, driven by tremendous customer pull for enabling precision materials, engineering products and services. And across the organization, we remain highly focused on improving execution. We are driving alignment, speed and scale as we prepare to merge with Tokyo Electron and hit the ground running as we become one company. Let me now hand the call over to Bob, who will provide further details on our performance and outlook. Robert J. Halliday: Thanks, Gary. Gary gave us an update on the market environment and the status of technology inflections. I'll begin by translating how we expect those patterns to play out in our business during the current fiscal year. First, you'll notice that memory spending is particularly strong in the first half of our year. In Q1, our memory orders top foundry and logic orders for the first time in 5 years, and we could see a similar mix in Q2. Next, you will notice that while our foundry customers are intensely focused on ramping FinFETs, the order pattern is shaping up to the back half loaded, also for the first time in years. We expect this mix to put more revenue and margin in our fiscal second half. Gary indicated the calendar 2015 WFE could be up by 5% or more. The greatest swing factor in our model is how much of the expected foundry spending is captured by the end of our fiscal year in October. From where we sit today, we expect a very strong fiscal second half. The high mix of memory in Etch resulted in gross margins being below our expectations for the quarter. Specifically, Etch grew 90% sequentially, higher than our previous goal of 60%. Gary spoke about our focus on portfolio management. Like we discussed, some of the results we're seeing in our efforts to generate profitable growth across our businesses. In AGS, we've strengthened the linkages to SSG and operations, invested in higher-value offerings and focused on delivering long-term service contracts that could help customers with uptime, yields and cost. After 2 years of declining sales, AGS posted 9% growth in fiscal 2014. AGS delivered near-record orders in Q1 and is on track for continued revenue growth and margin expansion. Our Display business was the first one to fully deploy our product development engine best practices and received internal funding to capture share in CVD, PVD and new products based on large area precision materials engineering. In Q1, the Display group posted a second sequential quarter with operating margins above 25%. Display also had strong momentum, with new Gen 6 PVD products for advanced mobile displays and new CVD encapsulation systems for OLEDs. In FSG, the increased investments we made beginning in the second half of 2012 are starting to pay off by giving us memory share gains during a period of renewed memory investment. In calendar 2014, memory spending drove the growth of the Etch and CVD markets at a higher rate than overall WFE. We believe Applied's Etch and CVD businesses grew more than 50% combined in calendar 2014, which is 1.5x the rate of the Etch and CVD markets and over 2x the rate of our largest competitor in these areas. Our latest Etch platform is generating traction in foundry, as well as memory. We have a task force in place to drive our Etch gross margins to higher levels as we mature our new chamber technology and increase our scale. In foundry, our investment and advanced deposition techniques is enabling strong adoption of CVD cobalt for interconnects, and new Epi steps in emerging nodes. In Logic, we have nearly doubled the number of D2R wins in the past 2 years, which is a good leading indicator of share gains in next-generation transistors. And finally, over the last 2 years, we have tripled our corporate technology groups funding of disruptive new products and markets for our longer-term growth. In short, we are seeing strong early returns for our growth initiatives within FSG, Display and AGS that will allow us to grow revenues and profitability, particularly as our customers ramp new nodes into higher volumes. Next, I'll summarize our first quarter results as compared to the prior quarter. Orders of $2.3 billion were up 1% sequentially, with increases in FSG and EES, offsetting decreases in AGS and Display. Although AGS orders were down from our Q4 record, they were the second highest ever and up 16% from Q1 of 2014. Net sales of $2.4 billion were near the high end of our expectations. Non-GAAP gross margin was 42.3%. Non-GAAP operating expenses of $552 million were near the low end of guidance. As a reminder, many of our groups had a holiday shutdown during the quarter. Non-GAAP EPS of $0.27 was at the midpoint of our guidance. Operating cash flow of $60 million, reflecting high revenue from Display tools that were previously secured with cash in advance. In Q1, we also had annual incentive compensation and withholding tax payments. Absent the timing of these items, operating cash flow remains strong. Now I'll comment on our segment results as compared to the prior quarter. FSG orders of $1.4 billion were up 7%, with increases in memory, offsetting decreases in foundry and Logic. FSG net sales of $1.4 billion were slightly above the midpoint of our expectations. FSG non-GAAP operating margin decreased slightly to 24.2%. AGS orders of $690 million were down 8% and remained at near-record levels. AGS net sales of $583 million were in line with our expectations and AGS non-GAAP operating margin increased by 1.7 points to 26.4%, reflecting favorable product mix. Display orders declined to $107 million, and we expect the booking pattern to remain lumpy. Display net sales of $275 million were up 45% as customers began to ramp the new TV capacity booked over the last 6 to 9 months. Display non-GAAP operating margin was 26.5%. EES orders grew slightly to $50 million and net sales of $55 million were below our expectations. EES both posted a small non-GAAP operating loss, and we continue to monitor the solar market closely. Now I'll provide our second quarter business outlook. We expect our overall net sales to be flat to up a couple of points sequentially. Within this outlook, we expect FSG net sales to be up by about 4% to 8%. AGS net sales should be up by about 5% to 10%. We expect Display net sales to be approximately $160 million, and EES net sales should be approximately $75 million. Non-GAAP gross margin should be approximately flat. Non-GAAP operating expenses should be in the range of $570 million, plus or minus $10 million. We expect non-GAAP earnings per share to be in the range of $0.26 to $0.30. Now let me turn the call back over to Mike for questions.

Thank you, Bob. [Operator Instructions] Dustin, let's please begin.

[Operator Instructions] Our first question comes from the line of Tim Arcuri with Cowen and Company. Timothy M. Arcuri - Cowen and Company, LLC, Research Division: Bob, can you give us the specific SSG order breakout by memory, foundry? And then maybe within memory, can you give us DRAM and NAND? Robert J. Halliday: Sure. Let me take it out. Yes, in Q1, foundry was a little under 500. Memory total was about 700, a little over, and Logic and other was about 200. Timothy M. Arcuri - Cowen and Company, LLC, Research Division: Okay, great. And then, Bob, I just wanted to ask about margins. You talked about the second half being stronger. It sounds like fiscal second half revenue is going to be up versus fiscal first half, but the margins in the fiscal first half have been a little bit under pressure. Can you speak to why that's been the case? And will the margin pressure lift during the fiscal back half the year? Of course, this is on a standalone basis X the merger, obviously. But will that margin pressure lift during the fiscal back half of the year? Robert J. Halliday: Yes, it should. The biggest thing that's going on is mix for us within SSG. So SSG we're doing very well and gaining share in Etch, particularly in memory. So if you look at memory, I think over 50%, 52% of orders in the first couple of quarters are memory-related, which is a high point for us. And a lot of that drive is Etch and CVD. Etch, we're shipping new tools. Our C3 chamber is doing really well. So that's dragging margin a little bit and what we usually see as we see foundry picking up around a little stronger, a little sooner and the mix of tools there is a little better for us and the margins. So the mix is hurting us a little bit. We had some of this in the first -- early part of last year, but foundry picked up a little early last year. So it should go better in the second half but that's what's going on. Gary E. Dickerson: Yes, Tim, one thing I'd say is that, I think, the good news is that we're getting great traction with some of our new products, including products in Etch and CVD, and some of the fastest ramp rates that we've ever seen for new products. But the start-up costs there are also higher and then over time, we can work those back down.

Our next question comes from that line of Krish Sankar with Bank of America Merrill Lynch. Krish Sankar - BofA Merrill Lynch, Research Division: First, Gary or Bob, if I look at foundry spending over the last few years, it's always been front half loaded, which kind of makes sense given end consumer products release in the second half. What is different this time around that foundry is actually back half loaded? Robert J. Halliday: Yes. Well, that's a question we talked a lot about, too. I'll tell you my opinion. Typically, it's first half loaded and last year, it was even a little earlier than previous years, in my opinion, because a leading foundry had the Apple business and they wanted to ramp very effectively. So things like our Epi tools, they took a little earlier even to make sure they're working well and they had a good ramp. This year, it's not clear how many -- when the cutover to FinFET devices are. So all the customers are saying they're going to ramp FinFET, spend a lot of money, but it looks like the ramp of that is a little later and part of that is also impacted by what is the relative rate of reuse of tools, too. So it was probably a little bit early last year and it seems a little bit later than the average this year. Krish Sankar - BofA Merrill Lynch, Research Division: Got it, got it. All right. And then as a follow-up, on the conductor etch side, you guys mentioned significant wins last year. I'm kind of curious, when you quantify wins, is it by revenue shift or is it by units share? And also, which specific segments? Was it more on the DRAM NAND side or was it more on the foundry side? Robert J. Halliday: It was revenue dollars as measured by Dataquest, and it will be in memory. We did pretty well in DRAM and NAND. And we're pretty optimistic we'll do well again in calendar '15. Gary E. Dickerson: Yes, we also have traction in foundry. But as Bob said, the majority of the share gains right now were in memory. If you look over the last couple of years, in Etch and conductor etch, we talked about 5 points of conductor etch share gain this year. We had 6 points of share gain last year in 2013. So we have really significant momentum. Certainly, memory is where we see the largest revenue now, but we also have traction outside of memory that provides an opportunity for growth going forward. And the other thing as we talked about, the Etch and CVD revenues combined increase greater than 50% in 2014. So if you look at the growth rates of those markets, in both of those areas, we're significantly outgrowing the market.

Our next question comes from the line of Romit Shah with Nomura. Romit J. Shah - Nomura Securities Co. Ltd., Research Division: I appreciate your comments on the transaction. Having said that, a lot of people are sort of stumped as to why the transaction is taking so long. And I realize that you guys are limited in what you can say. But I'm kind of hopeful that you can provide us some additional color. And I guess just what gives you confidence that this process isn't going to continue to drag on beyond the first half the year? That's my first question. Gary E. Dickerson: Yes, I think the reason it's complicated is because we have a very complicated business. If you look between us and Tokyo Electron, many, many different segments, many different products. And so I think that's a higher degree of complexity than you normally see in this type of situation. What we said earlier was that we're making progress with regulators. And we're going to close the merger as soon as we can. We really can't talk any -- say anything more at this point beyond that. Romit J. Shah - Nomura Securities Co. Ltd., Research Division: Okay. And then I guess my other comment is just on mix. You mentioned that memory is really strong here in the first half. Are you guys -- I guess how should we think about memory in the second half? Is there concern that we may see a sharp fall off and maybe offset some of the growth that you're expecting in foundry? Robert J. Halliday: Well, we all have our opinions. I think you have to look at the fiscal halves and the calendar halves. As you know, our fiscal half is -- we end our fiscal year in October 31. My belief is that the second half foundry is stronger than typical, as I said, before. We think memory is stronger in the first half although I think there's a little upside to the memory outlook quite frankly. So I don't think memory is going to follow off if you look at pricing. I'll give you another data point. Utilization across all the fabs is running pretty darn high right now. So that I think that the forecast is pretty good, just timing and mix issues really.

Our next question comes from the line of Farhan Ahmad with Credit Suisse. Farhan Ahmad - Crédit Suisse AG, Research Division: My first question is regarding the foundry investment this year. I just wanted to make sure I understand the linearity of it a little bit better. You mentioned that's stronger in the second half. Just given the timing of the end consumer devices and the ramp associated with it, is it fair to think like the strength would be more stronger in the July quarter than the October quarter? Robert J. Halliday: Yes, I'll try and take that one. Right now, we think that the July and October quarters are pretty strong. We think right now that -- they're pretty close actually. I'm looking at the data. July might be a little stronger than October, but they're pretty close. Gary E. Dickerson: One other thing I would say on the foundry business is that this is a huge competitive battle for our customers. So I would expect there's going to be more technology buys also than we would normally see. There's certainly the race to the first generation FinFET but there's also, in parallel, a tremendous pull from customers as they drive to second generation FinFET from a technology perspective. So that's another thing that we see very strong pull from customers that could play out. And we're talking about second half of our fiscal year. So it could play out a little bit more in the second half of our fiscal year. Farhan Ahmad - Crédit Suisse AG, Research Division: Got it. And then one question on the market share. You mentioned that AMAT gained share in WFE this year. But when I look at your revenues, they're up 12% year-on-year like just for the calendar year and I'm kind of using the Jan ending revenues for the last 12 months. They're up 12% year-on-year and you mentioned that WFE was up 15%. So I just wanted to understand like if WFE is up 15% and your revenues are up 12% then how are you gaining share? Robert J. Halliday: Yes, let me see if I can help that one. I think on the -- so we gained share in '13 and that's in the Dataquest, I think about 1.4, whatever it was. On WFE, I think we held share in calendar '14 on WFE. I don't think we gained. I think we gained or held share at every single product group in which we competed, but some of our large share product groups didn't outgrow the WFE. So on WFE, I think we're flat. Across all other product groups, we gained or held except one we lost.

Our next question comes from the line of Atif Malik with Citi. Robert J. Halliday: Yes, let me just -- on the last question, one final point. We also had a strong November, December. So that will help you understand it, too. Atif Malik - Citigroup Inc, Research Division: Bob, if I look at your outlook for SSG, up 48%. Is that in line with your peers given your mix is a little bit more foundry-centric, but the nonsemi markets are, like you said, a bit lumpy. So can you provide a bit more color on what what's happening in the Display market near term in its seasonality? And then on the EES, is that being impacted by oil prices being lower? And then I have a follow-up. Robert J. Halliday: So the first question was the foundry spending mix, is this what you're asking, Atif? Atif Malik - Citigroup Inc, Research Division: No, what's going on with the nonsemi markets and Display and EES? Can you give a little bit more color? Robert J. Halliday: Sure. Nonesemi, I'll do solar first. On solar, we're managing that pretty darn well and the market, the end-used market for solar panels and solar cells is pretty good. But there still is an overhang of excess capacity out there that's being eaten up. So it's sort of a neutral market, it's treading water. And so it's just quarter-to-quarter variations on small numbers. In the Display market, our position has been very strong in Display. We've gained share, we've come up with new products, execution has been a very good and that market is made up of 2 primary customer types, Display equipment we sell for TVs and Display equipment we sell for smaller form factors like iPhone -- cell phones and pads, iPad-type things. So if you look at it, this year looks like bookings will be a little bit more swinging towards the smaller form factors. And so what we're doing is the build out of TVs which are helping revenues. So we've got really big bookings last year if you remember that was shipping those. This year, we think the bookings on TVs will be a little less, but the bigger -- the smaller form factors will be greater. So that's the transition that's going on there. Atif Malik - Citigroup Inc, Research Division: Okay. And then you had $63 million in adjustments in your backlog on FX. Can you talk about the headwinds from here on FX in your exposure? Robert J. Halliday: Yes, that's a good question, too. So as you know, that yen is down significantly and euro softened up. So no. The yen is the bigger impact for us. Now as a practical matter, the way we sell, most of our costs are in dollar-denominated and our revenues are fundamentally dollar-denominated. Now when we priced in Japan, we are somewhat competitive to Japanese competitors, but we largely price in dollars and translate that into yen and largely hedge the impact. So we can somewhat differ the impact. So I'd say that the yen to Applied alone is not a big impact. It's a little bit more impactful to Tokyo Electron who bills in yen.

Our next question comes from the line of Harlan Sur with JPMorgan. Harlan Sur - JP Morgan Chase & Co, Research Division: I know you talked about a stronger second half driven by foundry and continued memory and within that, a strong July quarter. So just to clarify, you guys are seeing foundry and memory being strong contributors in July? And if foundry is indeed starting to become stronger in July, is it more than just one customer? Is a little bit more broad-based than that? Robert J. Halliday: Yes, we see that the foundry is picking up in the second half. So the mix of spending by half. Foundry is more heavily weighted to our -- to the calendar second half and our fiscal second half. Memory is more weighted to the calendar first half and to our fiscal first half. So that's the mix. If you ask me, I think there's a little bit of upside to what we think on memory in the second half, particularly DRAM. In terms of absolute dollars, I think because the mix is heavier on memory in the first half, the dollar is probably a little bigger in the first half. And then the other wildcard is 3D NAND could be an opportunity later in the year. Harlan Sur - JP Morgan Chase & Co, Research Division: Got it. Okay. And then you typically have a step-up in OpEx in Q2, as you just guided to. How should we expect that to trend in Q3 and Q4, especially as the team continues to invest heavily on growth opportunities? Robert J. Halliday: Yes. Last quarter, I talked about our spending is up a little bit this year. I thought we might even get up closer to $570 million, $575 million. We're trying to manage that tightly. We had the benefit of a shutdown this quarter. We guided to $570 million, plus or minus, $10 million in Q2. Q3 I think and Q4 were sort of in the same range, up a few million, in the $570 million is my guess.

Our next question comes from the line of Weston Twigg with Pacific Crest. Weston Twigg - Pacific Crest Securities, Inc., Research Division: I just had a couple of questions and this is probably beating a dead horse. But just on the foundry demand, I'm really just trying to reconcile what I heard from TSMC which is that they raised CapEx by around 24% and Samsung, which said that foundry CapEx would be up year-over-year. With your view that foundry spending should be kind of flat or maybe up in 2015, is there a way to reconcile that? Are you hearing -- you're seeing a good visibility into this but are you hearing maybe something a little different than maybe what the companies are indicating? And then I have a follow-up. Robert J. Halliday: I think global foundry is probably down year-on-year is my guess, and UMC is up a little bit or flat. And then the other issue -- so I think the other thing is that calendar fiscal we sort of are a little bit conservative just because our fiscal year ends in October. So it could be slipping to November, December, too, which makes us a little worried. But overall, we're seeing it's up a little bit overall, foundry. Weston Twigg - Pacific Crest Securities, Inc., Research Division: Okay, good. And then just on the other side, back to the currency question. It seems like you should get maybe a little bit of gross margin uplift from some of your foreign production. But yet, you're modeling gross margin kind of flattish. And I am wondering why you're not getting a little bit of uplift maybe from the foreign exchange or currency discrepancy? Robert J. Halliday: Oh, in terms of our... Weston Twigg - Pacific Crest Securities, Inc., Research Division: Or manufacturing and selling in dollars? Robert J. Halliday: Yes, we don't do heavy manufacturing overseas. Most of what our product costs is materials. The majority -- vast majority of our material cost is dollar-denominated. So we haven't got a lot of benefit there. We're trying to get some more benefit but the vast majority of our product costs is dollars.

Our next question comes from that line of Patrick Ho with Stifel Nicolaus. Patrick J. Ho - Stifel, Nicolaus & Company, Incorporated, Research Division: Gary, maybe just, first, from an industry perspective. Given some of the uncertainty and the timing of this foundry FinFET ramp. Do you believe it's weighted more towards the uncertainty in terms of the customer allocation of the capacity to the foundries or the yield challenges that the industry is facing right now? Gary E. Dickerson: Well, Patrick, that's a very good question. Certainly, this is the -- a major competitive battle for our customers and everybody is focused on -- as I said before, not just first generation but also second generation FinFET. So for us, when we -- I think one of the other callers, maybe it was Wes, I talked about announcements from customers, TSMC and Samsung being pretty bullish on CapEx. I think for us, the uncertainty, as you said, is around allocation. Where are those dollars going to go? They're going to go to one of those different companies and so there's still some uncertainty around that. I think that for all of these companies, this is a huge bet. This is the biggest change in terms of the transistor technology that we've seen in a very, very long time. So all of these companies are extremely focused. They're investing a lot also in technology so they can shorten their cycle between first generation and second generation and all of that is very good to us because, as we've said before, our total available market increases a significant amount and we're very leveraged around the transistor. Our businesses like Epi and PVD are extremely strong, implants, a number of different areas. So for us, we're in a very good position no matter who that business goes to because the TAM for us is so much larger. But when we talk about the uncertainty, it's really what I just discussed. Patrick J. Ho - Stifel, Nicolaus & Company, Incorporated, Research Division: Great. That's helpful. Maybe for Bob. Just kind of following up on some of the uncertainty with the foundry ramp. How are you managing the supply chain as well as the inventory given the uncertainties out there? How are you going to -- I guess, with the pulls and pushes on the levers on that front? Robert J. Halliday: Yes, that's a good question, Patrick. We actually think our demand on the supply chain is going to be pretty high for 2 reasons. One, our sales of spare parts are pretty strong, as you can see in our AGS business, and with fab utilization running pretty high. We think the spare parts that we ship a lot of will be pretty high, so we'll buy those from suppliers. And the second thing is if we get this steep way up in this second half, we'll get a lot of pull. So overall, demand on suppliers is going to be pretty high. Some of those tools and inventory we have brought in now to mitigate the risk of the ramp, so you see our inventory is up a little bit. And then the third thing we're going to take a look at is we're spending a lot of time handholding, working closely with suppliers to make sure that ramp goes okay.

Our next question comes from the line of Mahesh Sanganeria with RBC. Shawn Yuan - RBC Capital Markets, LLC, Research Division: This is Shawn Yuan for Mahesh. First, you mentioned WFE up 5% or more this year. This is relatively lower than some of the peers are commenting and it's certainly lower than -- I think people are thinking about 5% to 10% -- up 5% to 10% range. So are you guys seeing anything differently from your peers? And then do you think in the long-term model, you guys are thinking about 30 17 [ph] in WFE [indiscernible] 17. And do you think in this year or next, we may see maybe 1 or 2 quarter WFE run rate when they reach that level? Robert J. Halliday: No, I think we're pretty close on the WFE. We're sort of around the $34 billion number. I think everybody else is pretty close to that. Gary E. Dickerson: Yes, I think what we said was 5% or more. I think LAM was 0% to 13%, if I remember correctly. So we're really in the same range. Shawn Yuan - RBC Capital Markets, LLC, Research Division: Okay. And then another comment you made in the prepared remark is that 3D NAND spending will be about twice of 2014 level. And some of your customers in their earnings indicate that they're planning to reuse some tools for 3D NAND development. I'm just wondering, can you talk about your assumptions on your 3D NAND spending for 2015? Gary E. Dickerson: Yes, that's a good question. So 3D NAND is really, for us, really major opportunity from a growth perspective. It is very focused on Etch and deposition and not so much on litho. So the feature sizes are actually increasing as they go from planar to 3D NAND, but there is a lot of spending on Etch and deposition systems. And the process is very different than the planar NAND. So it is true that there's reuse but for us, in our business, there's a huge opportunity for TAM growth.

Our next question comes from the line of Tom Diffely with D.A. Davidson. Thomas Diffely - D.A. Davidson & Co., Research Division: So just a longer-term question here. Curious what you think the current spending patterns are in China? And if you expect them to go up materially over the next couple for years. And then what your percentage of that market is on a relative basis. Gary E. Dickerson: So we -- thanks for the question. We don't really see a significant change in the CapEx spending in China. Actually, our position there is very, very strong. The leading foundry in China, we have a great relationship, our share there is very high. In general, foundry is an area where we have high share at all customers. But in China, we have a very, very good position, very good relationship. So if that spending would ramp, that would be a good thing for us. But we really don't see a big change there in the next year or 2. Thomas Diffely - D.A. Davidson & Co., Research Division: Okay. And then maybe switching gears to the Display business. If the manufacturers were to switch to OLED TVs, does that materially impact the equipment market size? Gary E. Dickerson: Yes, OLED is -- basically, if you look at the number of deposition steps and the number of steps that we participate in, if you compare amorphous silicon to OLED, it's about 2x the total available market opportunity for us. So certainly, OLED ramping would be very good for our Display business. Overall -- there was a question earlier on Display. That group has really done an incredible job. They are gaining share in the market. And when we look at our model for the company, Display really is pretty much on model versus what we had discussed a couple of years ago. Growing share, really focused on how we help customers make these technology transitions from amorphous silicon to LTPS, metal oxide. And OLED really is the best opportunity for us when that technology ramps.

Our next question comes from that line of Edwin Mok with Needham. Yeuk-Fai Mok - Needham & Company, LLC, Research Division: So just quickly follow up on gross margin. I think you guys guided for flattish this quarter. And I noticed you have some pretty strong DRAM order, I mean, DRAM is very concentrated in the space. Now does those big orders have any effect on gross margin for this quarter? And also, does the timing of the Chinese New Year maybe have an effect on timing of the shipments, which impact gross margin? Robert J. Halliday: Sure. The biggest single swing for us within the SSG business is what tool types we ship. So Etch is -- we're gaining share and Etch, particularly in memory, we're getting more D2R positions, making progress in foundry and places like that. We get a lot of sales in Etch, high aspect ratio Etch and also all types of Etch steps and depositions steps seen in NAND and DRAM. So it's that tool mix that's different for us in memory versus foundry. Foundry, we tend to be very high shares, strong positions in tools like Epi, PVD, implants, things like that. But it's the tool mix between the 2 that's the biggest driver. Yeuk-Fai Mok - Needham & Company, LLC, Research Division: Okay. That's helpful. And then on your commentary about Etch plus CVD growing by 50% just last year, right? And I think someone asked you about what happened to your other business and you mentioned that you held share with some of the market may have shrinked a little bit. I'm trying to dive in a little bit into that. Is it just because its type of spending that caused that, some of those other product market -- or product market has shrunk? Or is that something else going on or is it just customer investing in other areas? Can you give us some color on that? Robert J. Halliday: Sure. We held overall WFE share. We gain an Etch CVD. We lost some in wafer defect and inspection. Frankly, that will come out in a month or 2. So we'll share that with you. Some of the others we held shared or gained share but the TAMs didn't grow as fast as Etch and CVD. So we're getting share in Etch and CVD, holding very high share in some other strong markets. But a couple of the other markets, like implant didn't grow quite as fast as some of the other markets. So it's a mix within the businesses as much as anything. Gary E. Dickerson: Yes. One of the things relative to the overall market, the overall wafer inspection business actually grew less than we had thought it would in 2014 and slower than the overall market growth. So that was a negative. Optical wafer inspection, as Bob said, we lost some share due to the customer mix in 2014. E-beam, where we have technology leadership, we actually gained share in e-beam review, about 15 points of share, we think, in e-beam review. We gained share in CD metrology and we think that e-beam inspection is also an opportunity for us. So in '15, what we think is that the mix will be more favorable for us and really, the area that is growing the fastest in e-beam technology, we have very, very strong position with some new products and we look at that as a growth opportunity for us in 2015.

Our next question comes from that line of Sidney Ho with Deutsche Bank. Sidney Ho - Deutsche Bank AG, Research Division: You and your competitors in the past have talked about, I guess, over the next few years FinFET and 3D NAND are the bigger incremental opportunities than more like in DRAM and advanced packaging. Yet, most of the upside in recent quarters have been coming from DRAM. So do you think this is just a timing issue because FinFET and 3D NAND is being pushed out? Or do you think the capital intensity for DRAM is higher than you previously thought? Gary E. Dickerson: Well, I think DRAM is certainly up and we talked about what the drivers are for the DRAM business. But the timing for 3D NAND is later than what some people had expected. I think everyone is seeing very strong pull for 3D NAND. There's compelling pull from customers around the performance of the 3D NAND technology. And when you look at bit scaling over the longer term, that is the direction for every single one of our customers. There's a huge focus there and we -- although it's later than what we had expected, we start -- we see the second half of this year switch over in 3D NAND being more significant. And FinFET is also a great opportunity. It is the #1 competitive battleground for all of the foundry customers. And we certainly see that all of the customers will move to that technology. And we look at that being more heavily weighted toward the second half of this year and into 2016. Sidney Ho - Deutsche Bank AG, Research Division: Okay. Then my follow-up question is, given the slower ramp of FinFET, how would you characterize the industry investment and capacity of 28-nanometers and 20-nanometers relative to what you think, let's say, 6 months ago? Robert J. Halliday: Well, we think this year is heavily weighted towards FinFET versus 28. In terms of 20, some of the tools sets are the same for 20 and FinFET. So it's a little hard to make a clear delineation of that, but we think it's more mostly FinFET, 16- to 14-nanometer ramping, but some of the tools you could use between 20 and 16 or 14. So I think it's just heavily weighted towards FinFET. The issue is I think it's a little later in the year than last year. Last year was a little early than normal. This year is a later than normal, I'd say. Gary E. Dickerson: Yes, 28 was the majority of the spending. 28-nanometer is the majority of spending in 2014. If you look at 2015 spending, what we're projecting, it's by far very heavily weighted to 14- and 16-nanometer technology.

Our next question comes from that line of Srini Sundar [ph] with Summitt [indiscernible].

My first question is what gives you any confidence that the merger will go through? And based on the prior approvals, what were the main points that you have to win to get the approval, assume that I have not gotten a memo that you cannot talk on the merger. Gary E. Dickerson: Well, thanks for the question. The -- as we said before, we really can't give you any more color than what we had discussed before. What we have said is that we are making progress with regulators. We believe that this is the right strategy for our companies to come together. We think there are -- it's a great strategic opportunity. All of the people involved are very excited. But unfortunately, we really can't say anything more than that.

Sure. No problem. Second thing is on the -- what are the basic differences between the first generation FinFET to second generation FinFET? And how would you guys be advantaged by going to the next generation FinFET? Gary E. Dickerson: Well, the FinFET technology is really very heavily weighted, if you look at Epi for instance. The number of Epi steps continue to grow and that's just a tremendous opportunity for us. NDP steps also are -- that's a great TAM for us and FinFET. We're also seeing actually a next-generation FinFET technologies, more opportunities in areas like implant. The customers are very focused on trying to drive down the cost of multiple patterning but the number of steps are certainly increasing. We have some technologies we talked about, selective material removal being an area that we see very high growth. And that's another area that we believe is going to be a big focus for our customers certainly as they go to second generation FinFETs. So our strength is really around the transistor and that's what FinFET is all about and so that leverages many areas where we have technology leadership.

The last question comes from that line of Mehdi Hosseini with SIG International. Mehdi Hosseini - Susquehanna Financial Group, LLLP, Research Division: Gary, I want to better understand your assumption for 3D NAND. When I talk to your customers, they all argue that when 3D NAND is still in commercialized, the CapEx for that is actually going to go down because the density per wafer is going to go up dramatically. So how can I reconcile your growth expectations with what your company -- with what your customers are saying? Especially when we think about CapEx per wafer compared to bits of NAND manufacturer per wafer? And I have a follow-up. Gary E. Dickerson: Okay. Thanks for the question. As I said earlier, when you look at -- I think we've shown also in Investor Day and there's been at least 2 customers that have publicly talked about CapEx spending and the breakdown of CapEx spending for planar versus 3D NAND. The big change is that for the litho area, the CapEx spending is going to be lower. The Etch deposition and even Epi for us, we're seeing growth in 3D NAND. So the shift in the CapEx spending is going to be very significant in planar to 3D NAND. But the areas I just talked about are areas where we have very good position as customers are ramping these new technologies and we see very strong pull as they go to the first and second generation FinFET technologies. Robert J. Halliday: Yes, I think related to that is -- it's the tool mix, it's more Etch and deposition versus litho. The second thing is because of that and you have a different tool set, the level of reuse is less. So if you look from a reuse model, which they've been pursuing pretty effectively to basically a pseudo-Greenfield model with a different device type, the tool mix is much more favorable for ourselves and other Etch and deposition companies. Mehdi Hosseini - Susquehanna Financial Group, LLLP, Research Division: Got it. And then one follow-up. Based on the funding commission, it seems like the merger agreement is going to expire March 24. And given how FX is favoring Tokyo Electron, wouldn't they be more enticed to maybe change the details of the agreement because exchange rate is going to their favor? Gary E. Dickerson: Yes, we really can't -- unfortunately, as I've talked about before, I think both companies strongly believe in the strategy. I think if anything, as we work together, we're more -- there's even a stronger belief that this combination will create value for customers and be just really a great opportunity. The working relationships are tremendous. And as I said before, we're making progress. We can't unfortunately, give any more color on the merger.

Well, thanks, Mehdi, for your question. And we'd like to thank everyone for joining us this afternoon. A replay of this call will be available on our website beginning at 5:00 p.m. Pacific time today. Thank you for your continued interest in Applied Materials.

Ladies and gentlemen, this concludes today's conference call. We thank you for your participation. You may all disconnect.