AMAT’s Display division
Applied Materials (AMAT) is losing some share in the semiconductor system market to Lam Research (LRCX) and KLA-Tencor (KLAC). However, it is expanding its presence in the display market as consumer electronics transition from LCD (liquid crystal display) to OLED (organic light-emitting diode).
AMAT’s Display division supplies products such as chemical and physical vapor deposition and array tests that helps display manufacturers like Samsung (SSNLF) Display and LG Display overcome major technical challenges in OLED manufacturing.
Display division’s earnings
AMAT’s Display revenues more than doubled on a YoY basis to $391 million in fiscal 2Q17, but they fell 7.3% on a sequential basis because of supply constraints in the OLED market.Japan’s Canon Tokki, the only manufacturer of a particular type of OLED equipment, is having difficulty coping with rising demand. As the company expands capacity supply, constraints would ease, and the OLED market could witness strong growth. This would drive AMAT’s Display revenues significantly.
In the meantime, weakness in the Display segment would be more than offset by strength in Semiconductor System and Global Services as Display accounts for only 12% of the company’s revenues.