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Industry Segment Operations
 9 Months Ended
Jul. 28, 2019
Segment Reporting [Abstract]  
Industry Segment Operations Industry Segment Operations
Applied’s three reportable segments are: Semiconductor Systems, Applied Global Services, and Display and Adjacent Markets. As defined under the accounting literature, Applied’s 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 Applied’s management organization structure as of July 28, 2019 and the distinctive nature of each segment. Future changes to this internal financial structure may result in changes to Applied’s 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, certain remanufactured earlier 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 flexible coating systems and other display technologies for TVs, monitors, laptops, personal computers, smart phones, and other consumer-oriented devices.
Each operating segment is separately managed and has separate financial results that are reviewed by Applied’s 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 Applied’s chief operating decision-maker. The chief operating decision-maker does not evaluate operating segments using total asset information.
Applied derives the segment results directly from its internal management reporting system. The accounting policies Applied uses 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 sales 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 its reportable segments and are managed separately at the corporate level. These operating expenses include costs related to share-based compensation; 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, Applied does not allocate to its reportable segments restructuring 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 sales and operating income (loss) for each reportable segment were as follows: 
 
Three Months Ended
 
Nine Months Ended
 
Net Sales
 
Operating
Income (Loss)
 
Net Sales
 
Operating
Income (Loss)
 
 
 
 
 
 
 
 
 
(In millions)
July 28, 2019:
 
 
 
 
 
 
 
Semiconductor Systems
$
2,273

 
$
613

 
$
6,725

 
$
1,823

Applied Global Services
931

 
259

 
2,877

 
827

Display and Adjacent Markets
339

 
41

 
1,194

 
198

Corporate and Other
19

 
(111
)
 
58

 
(362
)
Total
$
3,562

 
$
802

 
$
10,854

 
$
2,486

July 29, 2018:
 
 
 
 
 
 
 
Semiconductor Systems
$
2,578

 
$
831

 
$
8,331

 
$
2,847

Applied Global Services
952

 
280

 
2,778

 
814

Display and Adjacent Markets
616

 
156

 
1,778

 
456

Corporate and Other
16

 
(174
)
 
59

 
(517
)
Total
$
4,162

 
$
1,093

 
$
12,946

 
$
3,600


Net sales by geographic region, determined by the location of customers’ facilities to which products were shipped to, were as follows:
 
Three Months Ended
 
Nine Months Ended
 
July 28,
2019
 
July 29,
2018
 
July 28,
2019
 
July 29,
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In millions, except percentages)
China
$
1,117

 
31
%
 
$
1,647

 
39
%
 
$
3,078

 
28
%
 
$
3,911

 
30
%
Korea
445

 
12
%
 
572

 
14
%
 
1,458

 
13
%
 
3,007

 
23
%
Taiwan
596

 
17
%
 
506

 
12
%
 
2,046

 
19
%
 
1,913

 
15
%
Japan
556

 
16
%
 
700

 
17
%
 
1,727

 
16
%
 
1,684

 
13
%
Southeast Asia
134

 
4
%
 
165

 
4
%
 
413

 
4
%
 
600

 
5
%
Asia Pacific
2,848

 
80
%
 
3,590

 
86
%
 
8,722

 
80
%
 
11,115

 
86
%
United States
552

 
15
%
 
348

 
9
%
 
1,459

 
14
%
 
1,063

 
8
%
Europe
162

 
5
%
 
224

 
5
%
 
673

 
6
%
 
768

 
6
%
Total
$
3,562

 
100
%
 
$
4,162

 
100
%
 
$
10,854

 
100
%
 
$
12,946

 
100
%

Net sales for Semiconductor Systems by end use application for the periods indicated were as follows:
 
Three Months Ended
 
Nine Months Ended
 
July 28,
2019
 
July 29,
2018
 
July 28,
2019
 
July 29,
2018
Foundry, logic and other
49
%
 
36
%
 
50
%
 
34
%
Dynamic random-access memory (DRAM)
27
%
 
25
%
 
22
%
 
28
%
Flash memory
24
%
 
39
%
 
28
%
 
38
%
 
100
%
 
100
%
 
100
%
 
100
%

The reconciling items included in Corporate and Other were as follows: 
 
Three Months Ended
 
Nine Months Ended
 
July 28,
2019
 
July 29,
2018
 
July 28,
2019
 
July 29,
2018
 
 
 
 
 
 
 
 
 
(In millions)
Unallocated net sales
$
19

 
$
16

 
$
58

 
$
59

Unallocated cost of products sold and expenses
(63
)
 
(126
)
 
(223
)
 
(383
)
Share-based compensation
(67
)
 
(64
)
 
(197
)
 
(193
)
Total
$
(111
)
 
$
(174
)
 
$
(362
)
 
$
(517
)


The following customers accounted for at least 10 percent of Applied’s net sales for the nine months ended July 28, 2019, and sales to these customers included products and services from multiple reportable segments.
 
 
Percentage of Net Sales
Taiwan Semiconductor Manufacturing Company Limited
13
%
Intel Corporation
13
%
Toshiba
10
%
SK Hynix Inc.
10
%