Semiconductor Equipment

Howard here, grabbing a coffee before the analyst call prep. Look, I'm not going to sugarcoat this — the last four quarters were a nice run, but I've sat through enough semi cycles to know when to put the brakes on enthusiasm. Let me walk you through how I'm thinking about Q3 and Q4. First, two key assumptions. One, the AI-driven build-out at leading-edge foundries keeps the order book healthy through our fiscal Q4, with strong demand for gate-all-around and advanced packaging tools. That supports revenue holding above the $7.6B mark. Two, mix continues to skew toward our higher-margin deposition and etch portfolios, so I'm penciling gross margin ticking up to roughly 50% by year-end — not a moonshot, just continued execution on what we've already proven. On revenue: Q3 moderates slightly from the Q2 peak as customers digest the heavy installs, then Q4 picks back up on fiscal year-end pushes and residual AI capex. That gets us to about $8.1B in Q4. Net income trends up more modestly because I'm normalizing the Q2 figure — that quarter had some favorable items that don't repeat every period, so I'm holding the net margin around 28-29% rather than extrapolating the 35% we just printed. Top risk? China export controls. One rule change out of Washington and our service revenue takes a hit overnight. Memory weakness is the other one — if DRAM and NAND capex pull back, Q4 could surprise to the downside. I'm not promising anything. We're running the business, not forecasting miracles.