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Goodwill, Purchased Technology and Other Intangible Assets
 3 Months Ended
Jan. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill, Purchased Technology and Other Intangible Assets Goodwill, Purchased Technology and Other Intangible Assets
Goodwill and Purchased Intangible Assets
Applied’s methodology for allocating the purchase price relating to purchase acquisitions is determined through established and generally accepted valuation techniques. Goodwill is measured as the excess of the purchase price over the sum of the amounts assigned to tangible and identifiable intangible assets acquired less liabilities assumed. Applied assigns assets acquired (including goodwill) and liabilities assumed to one or more reporting units as of the date of acquisition. Typically, acquisitions relate to a single reporting unit and thus do not require the allocation of goodwill to multiple reporting units. If the products obtained in an acquisition are assigned to multiple reporting units, the goodwill is distributed to the respective reporting units as part of the purchase price allocation process.
Goodwill and purchased intangible assets with indefinite useful lives are not amortized but are reviewed for impairment annually during the fourth quarter of each fiscal year and whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The process of evaluating the potential impairment of goodwill and intangible assets requires significant judgment, especially in emerging markets. When reviewing goodwill for impairment, Applied first performs a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value.
In performing a qualitative assessment, Applied considers business conditions and other factors including, but not limited to (i) adverse industry or economic trends, (ii) restructuring actions and lower projections that may impact future operating results, (iii) sustained decline in share price, and (iv) overall financial performance and other events affecting the reporting units. If Applied concludes that is more likely than not that the fair value of a reporting unit is less than its carrying amount, then a quantitative impairment test is performed by estimating the fair value of the reporting unit and comparing it to its carrying value. If the carrying value of a reporting unit exceeds its fair value, Applied would record an impairment charge equal to the excess of the carrying value of the reporting unit’s goodwill over its fair value.
As of January 31, 2021, Applied’s reporting units include Semiconductor Products Group and Imaging and Process Control Group, which combine to form the Semiconductor Systems reporting segment, Applied Global Services, Display and Adjacent Markets and other reporting units recorded under Corporate and Other.
Details of goodwill as of January 31, 2021 and October 25, 2020 were as follows:
 
 January 31,
2021		October 25,
2020
 (In millions)
Semiconductor Systems$2,207 $2,208 
Applied Global Services1,032 1,018 
Display and Adjacent Markets199 199 
Corporate and Other41 41 
Carrying amount$3,479 $3,466 

From time to time, Applied makes acquisitions of companies related to existing or new markets for Applied. During the first quarter of fiscal 2021, goodwill increased by $13 million primarily due to the preliminary purchase accounting for an acquisition during the first quarter of 2021, which was not material to Applied’s results of operations.
A summary of Applied’s purchased technology and intangible assets is set forth below:
January 31,
2021		October 25,
2020
 (In millions)
Purchased technology, net$67 $75 
Intangible assets - finite-lived, net73 78 
Total$140 $153 

Finite-Lived Purchased Intangible Assets
Applied amortizes purchased intangible assets with finite lives using the straight-line method over the estimated economic lives of the assets, ranging from 1 to 15 years.
Applied evaluates long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value of an asset group may not be recoverable. Applied assesses the fair value of the assets based on the amount of the undiscounted future cash flow that the assets are expected to generate and recognizes an impairment loss when estimated undiscounted future cash flow expected to result from the use of the asset, plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. When Applied identifies an impairment, Applied reduces the carrying value of the group of assets to comparable market values, when available and appropriate, or to its estimated fair value based on a discounted cash flow approach.
Intangible assets, such as purchased technology, are generally recorded in connection with a business acquisition. The value assigned to intangible assets is usually based on estimates and judgments regarding expectations for the success and life cycle of products and technology acquired. Applied evaluates the useful lives of its intangible assets each reporting period to determine whether events and circumstances require revising the remaining period of amortization. In addition, Applied reviews intangible assets for impairment when events or changes in circumstances indicate their carrying value may not be recoverable. Management considers such indicators as significant differences in actual product acceptance from the estimates, changes in the competitive and economic environments, technological advances, and changes in cost structure.
 
Details of finite-lived intangible assets were as follows:
 
 January 31, 2021October 25, 2020
 Purchased
Technology		Other
Intangible
Assets		TotalPurchased
Technology		Other
Intangible
Assets		Total
 (In millions)
Gross carrying amount:
Semiconductor Systems$1,477 $256 $1,733 $1,476 $256 $1,732 
Applied Global Services35 44 79 35 44 79 
Display and Adjacent Markets163 38 201 163 38 201 
Corporate and Other12 16 28 13 16 29 
Gross carrying amount$1,687 $354 $2,041 $1,687 $354 $2,041 
Accumulated amortization:
Semiconductor Systems$(1,431)$(189)$(1,620)$(1,423)$(185)$(1,608)
Applied Global Services(31)(44)(75)(31)(44)(75)
Display and Adjacent Markets(157)(38)(195)(157)(37)(194)
Corporate and Other(1)(10)(11)(1)(10)(11)
Accumulated amortization$(1,620)$(281)$(1,901)$(1,612)$(276)$(1,888)
Carrying amount$67 $73 $140 $75 $78 $153 

Details of amortization expense by segment were as follows:
Three Months Ended
January 31,
2021		January 26,
2020
(In millions)
Semiconductor Systems$12 $10 
Display and Adjacent Markets1 4 
Total$13 $14 

Amortization expense was charged to the following categories:
Three Months Ended
January 31,
2021		January 26,
2020
 (In millions)
Cost of products sold$8 $9 
Marketing and selling5 5 
Total$13 $14 
As of January 31, 2021, future estimated amortization expense is expected to be as follows: 
 Amortization
Expense
 (In millions)
2021 (remaining 9 months)$36 
202233 
202320 
202417 
202515 
Thereafter19 
Total$140