Here are a couple of excerpts from AMAT's CC that are relevant to DRAM and NAND. There are other relevant comments but these sort of summarize them and it is late for me. Perhaps I will get to them tomorrow or over the weekend sometime. My bolding.
Christopher Muse
I guess, first question, in your prepared remarks, you talked about expectations for NAND to recover sooner than DRAM. And so, I guess, on that front, how are you thinking about that coming back in terms of both timing and magnitude? As well as, as we move from single stack to multi-stack and there's clearly clean room availability, how are you thinking about conversions versus new capacity as that comes online into 2020 and beyond?
Daniel Durn
CJ, maybe I'll start and see if Gary wants to offer anything from a technology standpoint towards the end. So when we think about the memory market, and you called out NAND specifically. But let me broaden the comments just a little bit more to encompass the entire memory market, we don't expect to see a recovery in 2019, we see it as a 2020 event. And as you pointed out, we expect to see NAND first then followed by DRAM. If we think about where we sit today from an overall WFE standpoint, the memory markets are clearly down in 2019 versus where we were in 2020, so this is clearly a correction year. But we are seeing early signs of improvement. Output across the industry has come down, we are under shipping true end market demand from a supply standpoint as we exit the year. This is bringing our customers inventories down, it's bringing our customers' customers inventories down, and we do see the early signs of demand elasticity beginning to kick in and signs of price stability. When we met all of this together, we definitely see 2020 as a recovery year in the memory market. And again, we see it as a NAND-led event followed by DRAM.
In terms of magnitude, I think it's premature to be point specific on any individual market right now into 2020, but we like the setup of what we see. When we take a step back and we think about the long-term in these markets beyond 2020, we do see that there is a data explosion as the data economy kicks in and the value of that data is increasingly going up as companies learn how to monetize it. We see capital intensity going up. We see new forms of memories, which really plays to our strengths in materials. We see our customer base being rational and disciplined. We met all that together, we think there's a real opportunity to go structurally larger as a memory market off of the levels we're currently seeing in the current environment. So we feel good about the long run.
Gary Dickerson
Yes. Maybe I can add something relative to our position in memory and also in NAND. I think many of you know that we have a much more balanced overall share across memory and foundry logic. In memory, we increased our share of total spending from less than 15% in 2013 to around 20% today, and we're confident we're going to continue to drive gains into the future. Another thing that's really positive for Applied is memory is very much driven by materials-enabled scaling. And I think everyone's aware, capital intensity has been increasing. We are also engaged with all the major memory companies with Integrated Materials Solutions. Again, it's all about new structures, new materials, how far, especially in NAND, you can scale vertically. So we have very strong pull from customers for new materials, new products, to enable their cost and performance road maps.
In NAND, specifically, we're winning new etch applications in NAND. And to get more layers in NAND, one of the most important things is new materials, especially high selectivity hardmasks where we have very strong capability. I talked last quarter about hardmasks that increased etch selectivity by 50%, and we are seeing strong adoption of those new capabilities across multiple customers with new steps that give us significant TAM growth. So again, we've been increasing our share in NAND, we have new materials and new products that make us very optimistic. We're going to continue to drive strong momentum into the future.
Toshiya Hari
Congrats on the solid exclusion. Gary, I was hoping you could talk a little bit about what you're seeing in China from a technology progression perspective, both on the DRAM side as well as the NAND side. It continues to be a pretty big part of your business as well as your peers' businesses in the near term as well. So if you can talk about the rate of progress on the technology front as well as your expectations in terms of WFE for 2019 and preliminary thoughts on 2020? That will be helpful, and I've got a follow-up.
Gary Dickerson
So our view on China is similar to what we communicated before. We don't see any major inflection in spending. 2019, we see relatively flat versus 2018. If you look at domestic China, our view is a little stronger over the past few months with some increases in memory. For the year as a whole, we see slightly higher spending on foundry logic versus memory. With foundry logic focused on IoT, communications, sensors, those types of devices. In our -- in display business in China, we believe that's going to be down roughly in line with our global display forecast. Overall, in China, we have a great position, semi-service, we've been in China for 35 years, the display is a great team for us, very, very strong customer relationships and engagements. Relative to the technology progression, I don't really think, again, anything has changed from what we communicated before. As I said, we believe the foundry logic on the trailing nodes is where we will see over half of the domestic investment this year. We think that market is going to continue to grow. If you look at image sensors, that's going to be a very strong market, and we see the investment there, it's being rational and in line with the increase in demand for those types of products.
Memory is a -- those are very difficult technologies, and it's a long road to be able to produce those technologies at a competitive level for performance and cost. As we've communicated before, we don't see any big hockey sticks. I really don't see much different than what we saw before. We think it's going to be a long journey and incremental spending going forward.
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