Good afternoon and thank you for standing by. Welcome to the Applied Materials third quarter fiscal year 2007 earnings conference call. (Operator Instructions) I would now like to turn the conference over to Mr. Randy Bane, Vice President of Investor Relations, Applied Materials. Please go ahead, sir.

Thank you, Operator. Good afternoon and welcome to Applied Materials’ fiscal 2007 third quarter conference call. Joining me on the call today are Mike Splinter, President and CEO; George Davis, Chief Financial Officer; and Joe Sweeney, Senior Vice President, General Counsel, and Corporate Secretary. Today we will discuss our results for the period ending July 29, 2007. The financial results were released this afternoon at 1:06 P.M. Pacific Time. A copy of the news release is available on Businesswire and on our website, www.appliedmaterials.com. You can also access our slide presentation supporting today’s discussion on the investor relations section of our website. Today’s earnings call contains forward-looking statements, including those relating to Applied’s performance, its technology leadership, operational efficiencies, business strategy, growth opportunities, cash generation and deployment, solar strategy and planned acquisition and targets, customer spending and fab utilization trends, and the industry outlook and drivers. All forward-looking statements are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Information concerning these risk factors is contained in today’s earnings press release and in the company’s filings with the SEC. Forward-looking statements are based on information as of August 14, 2007 and the company assumes no obligation to update such statements. Today’s call also contains non-GAAP financial measures. Reconciliations of these measures to GAAP measures are contained in our earnings press release issued today and on our earnings call highlights presentation, both of which are available on the investor page of our website. George Davis will lead the call with a discussion of our financial performance for the third quarter. Mike will follow with highlights on the current industry environment and company progress. George will close our commentary with our targets for the fourth fiscal quarter of 2007. After these remarks, we will open the call for questions. With that, I would like to turn the call over to George. George.

Thank you, Randy and good afternoon, everyone. I will make a few comments on our overall results for the quarter before discussing our four segments. For the quarter, our results were within the range forecasted for orders and revenue and exceeded our target for earnings per share. Orders came in at the low end of our range as the expected slowdown in DRAM orders was compounded by weaker-than-expected orders from foundry and display customers. The strong financial results were driven by the performance of our silicon systems group, offsetting weakness in display and services. The company also showed strong cash flow and improved balance sheet performance in the quarter. For the quarter, orders were down 14% both year over year and quarter over quarter. We had expected orders to be down in the range of 10% to 15%. Backlog at the end of Q3 decreased slightly, in line with the book-to-bill ratio. Backlog adjustments for the quarter were positive at $34 million. As a reminder, our backlog does not include solar contracts for thin film production lines. Revenue was up 1% in Q3 compared to both last quarter and to Q3 of last year. Gross margin increased 2.6 points to 47.5% in Q3. Q2 gross margin included charges of $50 million, about 2 points, related to our decision to cease development of beamline implant products. Third quarter operating expenses were essentially flat with Q2. Headcount at the end of Q3 was 14,465 employees. EPS of $0.34 per share was $0.02 above our target range and was an increase both quarter over quarter and year over year. Non-GAAP EPS of $0.37 per share was also an increase quarter over quarter and year over year. Non-GAAP adjustments are detailed in the press release. Now I will discuss our segment results. Mike will…

Thanks, George. Good afternoon and thanks all of you for joining us today. As you know, Applied’s strategy is to utilize nano-manufacturing technology to solve key technical challenges, drive higher returns for our customers, and accelerate growth in new markets. As George summarized, memory stood out as the driver of our business this quarter, while foundry orders were weaker than expected. Service and display were essentially flat. At the same time, demand for solar is growing and we are building the capabilities to be the solar technology leader. Our results this quarter illustrate our ability to execute in a changing environment and adapt quickly to the needs of our customers. Thanks to the many talented people we have at Applied, we have made significant achievements during the quarter and this year. Recently, we created the silicon systems group under the leadership of Tom St. Dennis, a strategic move which consolidates our semiconductor equipment divisions in one organization to extend our leadership in innovation, improved customer satisfaction, and operational efficiencies. Our customers are facing increased process complexities and shortened product lifecycles, resulting in higher R&D costs to introduce the next technology node. Applied is leading by delivering innovative technical solutions, such as high-K metal gate and double patterning. In etch, we have been extending our position in memory, advancing particularly in metal and silicon etch. We released the Carina Etch system for high-K metal gate and made our first customer shipments during the quarter. We are addressing our customers’ need to improve their product costs with higher productivity tools. One example of the importance of improved productivity is the unprecedented demand for our producer GT system. Just nine months after launch, we shipped our 100th system, demonstrating one of the fastest ramps of any new product in the industry. In addition,…

Thank you, Mike. With the industry dynamics that Mike just summarized as the foundation, here are the targets for Applied’s fourth quarter: we expect orders to be in the range of flat to down 5%, with reductions in silicon orders partially offset by improved orders in display and fab solutions; we expect revenue to be down in the range of 5% to 10% with lower revenue predominantly from DRAM and foundry customers partially offset by increases in fab solutions; we expect EPS to be down in line with revenue and in the range of $0.26 to $0.29. Randy, let’s now open the call for questions.

Operator, let’s please begin with the first question.

(Operator Instructions) Your first question comes from Stephen Chin with UBS.

Thank you. On the order guidance, how should we think about the silicon business unit? Do you get the sense that the silicon business unit orders will trough here in the October quarter? And then just as a follow-up to that, how sustainable do you think this 39% operating margin level in the silicon business is going forward, especially since you’ve created this new silicon systems group?

Maybe I can answer the first part of the question, Stephen, and let George answer the second part of it. I really think the question gets down to what is going to happen in foundries and we are really not going to know that until maybe October. We see this quarter being certainly weaker than we anticipated but we see DRAM and flash continuing their strength with confidence by those manufacturers to continue their investments, particularly because of strong unit demand and strong bit growth. George.

On the gross margin end, obviously they had a very big pick-up quarter over quarter. We would expect that they are going to continue to drive improvements in operating profit. I think you have some mix issues that assisted in Q3 that you can’t always rely on being there in out quarters, but we certainly expect that through the combination we are going to improve both gross margin and operating margin.

Your next question comes from Satya Kumar with Credit Suisse.

Thanks for taking my question. In your October guidance, you mentioned earlier in the call that the HCT acquisition closes in a month. How much of HCT is baked into your revenues and orders in October?

None.

Okay, and secondly, when you talk about bookings down about, flat to down 5%, how much is memory bookings down do you think for your from peak to trough within that guidance in October?

Well, as you know, DRAM bookings were off in our Q3. They are roughly flat going into Q4. Flash was very high for us in Q3, so it is down a bit but when you look at our overall bookings, we expect memory to be in the range that it’s been in in the last few quarters.

A quick follow-up; on your solar contracts, now that they are tracking above expectations, can you remind us where we are in terms of where we can expect these contracts, when we can expect these contracts to flow into bookings and revenues? Thanks.

Sure. We expect to begin booking these contracts in the first half of ’08 and the first revenue should come in at the tail end of ’08.

Okay, next question, please.

Your next question comes from Edward White with Lehman Brothers.

Thanks. You mentioned that the foundries had lower bookings, revenues increased, and they are basically extending their fabs, getting more productivity out of the fabs. How far do you think they can take that? At what point do you think they really have to come back in and start investing more?

We really thought it would be by this time but if we really look year over year, the utilization is down. When they started ordering last year, their utilization was in the mid-90s. They haven’t quite reached the mid-90s yet but with utilization continuing to move in a positive direction, we think that should be shortly. But right now our projection is for very low revenue in Q4 from foundries.

Okay, and then secondly, if the flat panel display related to orders pick up in the fourth quarter, what do you think would be the driver behind that? Can you give us some color as to what is causing the inflection point there as you go forward?

We’ve seen a very positive growth in LCD TV sales. Prices have been coming down pretty dramatically in the first half of the year. Volume pick-up, 65%, that absorbed a lot of the capacity, and as long as consumer spending stays strong during the second half of the year, we think that companies are going to reinvest. People have held back on gen 8.5. Now we see one of the major manufacturers going and talking about gen 10, so there starts to be a pretty big spread from the leading manufacturers to the trailing manufacturers. I think really it gets down to the growth in the LCD TV sales.

Great. Thank you.

Your next question comes from Patrick Ho with Stifel Nicolaus.

Thanks a lot. Just a quick question first for George; in terms of the $19 million in the items associated with acquisition, is that all in G&A or is there any in cost of goods?

That should all be mostly in G&A.

Mostly in G&A, okay, great. And a question for you, Mike, and just following up Ed’s question about the foundries, in terms of the 65-nanometer adoption, what do you think is causing I guess the delays or the slower-than-expected adoption of that technology node?

Well, we think it is really cost crossover. Those products that absolutely need 65-nanometers are already on 65-nanometer. I think the bulk of the customers are waiting to see that they are going to get a cost savings by moving to 65-nanometers or other kinds of performance benefits, but I think that is the big thing -- are yields high enough, are production costs low enough to drive the bulk of the products over to 65-nanometer. We think that there are plenty of products that are now getting qualified on 65.

Great. Thank you.

Your next question comes from Harlan Sur with Morgan Stanley.

Thank you and good afternoon. Mike, with a good portion of the installed NAND memory capacity at 200-millimeters, and with the roadmap for flash going to sub 65 next year, are more of your NAND customers now positioning to transition to 300-millimeter in a more accelerated manner than your prior views?

You can already hear a number of companies talking about dispositioning their 200-millimeter capacity. Our view is that over the next couple of years, there needs to be about 200,000 equivalent 300-millimeter wafers created to replace those aging 200-millimeter factories where they are really not going to be cost competitive. That’s the real issue, is as prices come down and 300-millimeter density goes up, the 200-millimeter products really are not -- 200-millimeter fabs are not competitive any longer. So I think we are going to seen an increased movement next year and into 2009.

Okay, great, and then a question for George; great job on the margins. As it relates to the gross margin improvement, how much of that was a richer mix because of equipment sales for sub-90-nanometer technologies, where you have higher ASPs?

I would say in general, I can’t be that specific but the silicon group really drove the improvement in gross margin and obviously you had in Q2 about two points of gross margin impact, but even if you take that out, margin was up quarter over quarter, despite the softness in some of our other segments. So it was really an outstanding performance by the silicon systems group.

Okay, great. Thank you.

Your next question comes from Gary Hsueh with CIBC World Markets.

Thanks for taking my question. My question relates to your fab solutions business. Specifically, George, since that business is starting to pick back up, if I look at fab solutions over the last three quarters, it seems on higher revenue you are seeing a little bit of operating margin compression. Can you walk me through what kind of mix issues might have been affecting that or influencing that, and sort of what to expect in terms of operating margins if fab solutions starts picking up? Is there any kind of step function to the upside here since we’ve seen such a gradual decline in operating margins there?

Good question. What you are really seeing just between quarters has really been the addition of operating expenses as we take in the Brooks Software division into the group. We have pretty flat revenue and so I would say the margin erosion that we’ve seen is really some of the drivers that we’ve talked about, where we’ve seen both refurb and spares softer than expected, which has brought down the operating margin. I think as you see the refurb markets and the spares group picking back up, then that will have some leverage into margin. But again, they’ve been -- if you look out over time, they’ve been having an operating margin somewhere between 25 and the high 20s, and they are certainly at the low-end of that, but even as recently as Q1 they were at about 28%, so I think you are just seeing some softness based on the factors we were talking about.

If I could ask just one quick follow-up here for Mike, Mike, you mentioned Sharp and their gen 10 project and it seems like they are the first customer that’s potentially running both LCD, panels, and thin film solar panels together to sort of balance out utilization rates. Is that true and is that a trend we could see with other higher gen flat panel manufacturers?

I don’t think we’re quite sure about the architecture of their line right now and how that is going to really be created but obviously the most expensive pieces of equipment are common between flat panels and thin film solar cells, so it can give them an opportunity to improve their overall factory utilization but we have to have a lot more discussions before we clearly understand how they are going to architect that factory.

Okay, great. Thank you.

Your next question comes from Timothy Arcuri with Citigroup.

A couple of things; Mike, you mentioned that you think that about, you have to replace about 200,000 300-millimeter equivalents in NAND. It sounds like that’s about $9 billion that has to be spent. Is it reasonable A, that that’s spent maybe over the next two years? And do you have an estimate for what might have to be spent in DRAM to replace all that 8-inch capacity?

Roughly, your numbers are very close to ours, 200,000 300-millimeter equivalents over the next two years. It’s difficult to tell exactly how that is going to go. It will depend on the market but we certainly think by the end of 2009 those have to be replaced. We think that there is something not maybe as big as 200,000 for DRAM, but a significant amount of capacity that has to be replaced for DRAM as well.

Okay, and then Mike, you are keying a pick-up in bookings to the foundry business. I guess as you look at what has gone on in foundries, foundries are at record sales, as you’ve cited. They seem to have utilizations increase. Obviously you have very big exposure there as well and yet you are booking close to record lows out of those customers, so do you think that there is something structural actually going on there? I know that they are trying to extend their factories but it seems like maybe there’s some kind of a mix shift going on with respect to their customer base that just makes them not have to spend as much money.

There’s a couple of things going on. One is they are extending their utilization further up before they start buying capacity. If you look over the last couple of generations, it’s gone from 85% to 90% to 95% and it’s getting I think now maybe close to 100% utilization before they add capacity. The other thing is just the growth of the 65-nanometer node is not as fast as we thought it would be, relative to the number of products we’ve seen get qualified on 65-nanometer. So I think those two are structural changes that we are seeing but we’ve also seen that when we look at CapEx per revenue of the foundries, it’s been dropping for a few years, leveling off something around 10% but that seems really quite low for a very capital intensive sort of company. So we are still thinking that the orders have to come back relatively soon and as 65-nanometer ramps in a major way, it should be a fairly substantial order pattern from foundries.

Okay, thanks.

Your next question comes from Mark FitzGerald from Banc of America Securities.

Thank you. On the gen 10 equipment, can you give us some idea when that’s going to be ready to ship at this point? And as it pertains to the solar market, how important in terms of opening up building integrated photovoltaics is the gen 10?

Well, we think the gen 10 will ship sometime late fiscal year next year. As far as building integrated photovoltaics, obviously even with gen 8.5 you can do it but architectural glass is kind of in the 3 to 3.2 meter range. Gen 10, or a modified gen 10, should be able to handle that, so that is an area that we are quite excited about and as we design our gen 10 platform, we are going to make sure that it can handle the largest sizes of architectural glass.

Just a quick follow-on; can you give us some idea what the spares and service in the solar business mean in terms of a revenue opportunity? Is it the same level as semiconductor? Is it above or below?

We think it is going to be an attractive business but we are really just in the process of sorting that now with our customers, as we are holding these lines together. We’ll cover that in some detail at the analyst meeting in January. We are going to try and give you a more comprehensive look because we will be well into these first contracts by then.

Thank you.

Your next question comes from Jay Dana with J.P. Morgan.

Hi, it’s [Betty] for Jay Dana. It seems like you have a lot of moving parts to your gross margin --

We’re having a very hard time hearing you. Maybe you could get closer to the microphone.

I’m sorry. Could you give us some gross margin guidance in 2008 with all the moving parts, your HCT acquisition, your ramp of solar deliveries -- where should we be modeling corporate gross margins in 2008?

We are not going to give any guidance yet for ’08 but we can just generally, the acquisition picture, HCT, won’t have a material impact on gross margins in ’08 and each of the groups I think has a -- there’s no fundamental deterioration in the gross margin outlook, so I think you can kind of model off of today and then just make some assumptions for improvement that we, you know, just general improvement over time, particularly in the silicon systems group.

Okay, great. And then, for foundries, if they do come back and order in October, is that in your guidance or is that upside to your guidance?

Our guidance has very low orders for foundries in our Q4.

Okay, great. Thank you.

Your next question comes from Steven O’Rourke with Deutsche Bank. Steven O’Rourke - Deutsche Bank: Thank you. Good afternoon. A couple of questions. First, I hate to beat a dead horse but are the foundries telling you anything different now than they told you three months ago?

Well, if you look at our revenue in Q3, we had an up-tick in foundry orders that we delivered in the quarter, had some good turns business, and so we -- three months ago we kind of expected that trend to continue throughout the year and it’s not. And so yes, there is a fairly substantial difference between now and May. Steven O’Rourke - Deutsche Bank: Okay, and of all the solar PV amorphous silicon lines that you’ve signed to date, how many are dual junction?

Really only one dual junction contract so far, but one of the interesting things about our single junction line is that it is always possible to upgrade those in the future.

And obviously certain customers are looking at that as an option as they think about their expansion plans. Steven O’Rourke - Deutsche Bank: Fair enough. And is it safe to assume that the start-up of that dual junction line is well out into fiscal ’08?

Yes. Steven O’Rourke - Deutsche Bank: Okay. Thank you.

Your next question comes from Steven Pelayo with HSBC.

A question for each of you guys; George, bookings and backlog, looking going forward here, specifically kind of timing and magnitude. You’ve got solar coming out in the first half of ’08. I don’t know if that was fiscal or calendar, if you can comment on that. You’ve got some service contract renewals that are going to be coming here. HCT being added in, and then you’ve even got foundry at a record level and bouncing off the bottom -- it seems like you guys have a fair amount of cushion, if you will, looking forward. Could you comment a little bit on timings of how we add in some of those solar and service contract renewals and HCT impacts? And the Mike, do you think these cushions can allow October bookings to actually be a quarterly trough?

Let me start with the -- again, for the thin film solar lines, and let me start to differentiate now because obviously HCT will have a different backlog picture than that. We believe that we will start booking these things sometime in the first half of ’08, fiscal or calendar, it’s pretty close so I won’t differentiate too much there. I think I would put it safely in the latter half of fiscal, or the latter part of the first half of fiscal ’08, if that’s not too confusing. On HCT, we would obviously -- we’ll take their backlog in when the deal closes, which we hope will be within the next 30 days.

Steven, as far as Q4 being a quarterly trough, I think the real question again will be how sell-through goes, back to school, and holidays. Our checks in Taiwan are pretty positive so far on computer builds and other consumer products for the latter half of the year. I think those things are going a little bit better than normal seasonality, so we are starting out okay. But again, it is going to be whether our customers have confidence to invest going into 2008. At this point, we think they should but I don’t think they are going to decide even until October.

Great. Thank you.

Your next question comes from Robert Maire with Needham & Company.

Robert, are you there?

Mr. Maire has withdrawn his question. Your next question comes from Mehdi Hosseini with Freedman Billings and Ramsay. Mehdi Hosseini - Freedman Billings & Ramsay: Thank you for taking my question. A question for George and one for Mike. Given the restructuring that is going on in the silicon business, how many -- what will be the impact on the operating costs, especially on the SG&A? I imagine there will be some headcount reduction. And then for -- moving on to the solar side, from what I understand some of your customers are actually going to be installing thin film and these panels beginning in the first quarter of 2008, so help me understand how these bookings and revenue recognition is going to play out. What are the factors that determine the actual recognition as these panels are installed? And just, if I may squeeze in one more question -- you are talking about 65-nanometer ramp is lower than expected but at the same time, we are hearing that a lot of activity regarding the take-outs for 45-nanometer. Will there be a situation where some of these high-end customers actually are skipping from 65-nanometer and jumping on to 45?

I’ll go first then on the question on the silicon systems cost savings. Again, the group was just formed so Tom and his team are looking at what are the opportunities? Clearly we think that there is a chance to, like I said, to have savings both in the gross margin line and on the SG&A line. We are also -- there’s a real focus on asset efficiency. Part of the organizational change was to have under one point of accountability not only the product business groups but the manufacturing and the global supply chain. One of the first things that we did as the group was formed was to challenge them to address what we believe to be some excess inventory that had built in the system, and as you can see in the quarter, we were very pleased that they were able to really have an impact on that inventory. So I am confident we are going to see cost-savings. I am confident that we are also going to see some other operational improvements in addition to the benefits that we believe it will provide to our customers in terms of both the customer service but also our innovation. So with that, I would just say we’ll probably have a better feel as Tom and his team finish their work on this and we can probably talk about it a little bit more certainly by the analyst meeting but maybe even by next quarter.

Hey, George, you want to talk about how we are recognizing revenue in the solar contracts?

Sure. We’ll be recognizing revenue obviously when HCT closes -- let me just talk about HCT because there’s been some confusion. HCT has an established product so when it comes on, we will go ahead and recognize revenue based on their existing business. The solar thin film contracts that are all basically right now first of a kind, we will be basically taking revenue as we have sign-off on those, and we would expect that at the -- the first of that at the tail-end of ’08 and the bulk of what we’ve talked about so far, and then of course in the early part of ’09. Mehdi Hosseini - Freedman Billings & Ramsay: So when --

As I mentioned that we are shipping the first line, so it will be installed in the first quarter and we have to meet some performance parameters to get those sign-offs, so the machines have to be started up, the line has to run, modules have to be made. On the 65-nanometer ramp, there is a phenomena going on that some customers are skipping generations of technology because of the cost of redesigning products, the costs of masks, the costs of starting up a new product. This phenomena really started at 130 where customers skipped 130, went to 90, or 130 customers skipped 90 and went to 65. I’m not sure how much of a major trend this is. I think the trend is already -- so, next question.

Your next question comes from Brett Hodess with Merrill Lynch.

Mike, your orders were done on the silicon system side about 17% sequentially and you commented on a few product lines, but I was wondering in this softer environment how you see your share holding up on the semiconductor system side? Obviously you mentioned you were gaining, you think you are gaining some share on memory etch but I was wondering if you could talk overall on that side.

Well, our trend maybe in a couple of directions and then a couple of specifics, Brett. In memory, we continued to gain share. It’s been a focus of ours for the last several years, especially since the NAND Flash is really the technology leader now. The leading edge capabilities have to be brought up on NAND Flash. We’ve been doing a lot of work on leading edge capabilities there. You can see that pretty much in how much our booking has gone towards flash memory. I think if you would have thought back a couple of years ago, our percentage of flash memory, or memory of our total would not be nearly as great. As we go through the nodes, we continue to gain share as well. You know, from our share standpoint, it is one or two points in each one of the subsequent generations. Now, where is the share coming from? The share is really coming from some of the areas where our share is lower. In etch, we are moving ahead, particularly in silicon and metal etch this year. We feel like we have a strong set of products there. In EPI, EPI has been adopted by memory manufacturers, by DRAM memory manufacturers, growing that market dramatically and our share there has grown as well. We see that as an evolving story over the next year, few years. Our inspection is growing. U-Vision now has got seven repeat customers that we are taking share at, so we are excited about our other new products in inspection as well. And then in our major areas, we feel like we are holding share at a very high level and the other stronghold areas that we’ve traditionally had.

Thank you.

Your next question comes from Gavin Duffy with A.G. Edwards.

Thanks, guys, for taking the question. Just quickly, George, what are we assuming for the tax rate next quarter?

Pretty much flat, 31% to 32%.

And Mike, maybe kind of more of a concept question. You talked about DRAM next year with corporate adoption of Vista. How would you see DRAM maybe playing out over next year? Will there be more, like, kind of a first half event like this year or could it be kind of a longer tail?

My thinking now is it is going to be a longer tail because Vista adoption in corporate is really going to start in earnest I think by the middle of next year and then extend for at least a year. Most corporations are not going to do Vista until it is well-established and it is really the reliable capability they need, so I don’t think that is going to start until mid-year. It is going to drive an awful lot of DRAM for corporate capability because of the experience that corporate users want.

If I can ask one last one, talking about utilization rates increasing at the foundries, and also record revenues. How much of this would be end market demand increasing versus you see this migration of customers towards fab-less or fab-light models where you essentially have a wash in terms of the foundries buying equipment instead of these guys? Do you think it is more end user demand helping out?

Well, some of both. Clearly our view is that the current environment and costs of R&D, cost of factories favor the foundry model so over a period of time, we saw a pretty big rush this year with a number of companies announcing that they won’t do new semiconductor factories. They will move to a foundry model of one type or the other. But I think in the overall run, it is going to be consumer devices growing the demand and also a substantial portion of the foundry growth from customers moving to that model and away from the traditional IBM model. It is hard to say a percentage at this point.

Okay, I appreciate it. Thanks, Mike.

Your next question comes from James Covello with Goldman Sachs & Company.

Good afternoon, guys. Thanks so much. Just two quick questions. First, George, if I go from your revenue guidance to your EPS guidance, it implies either a little bit higher op-ex or a little bit lower gross margins. Is it tilted towards one or the other of those?

It would be more towards margin on the segment mix. I think what you see is what we’ve said is guidance at -- let’s say 29 to 34, which is the difference there. You’ve got lower revenue accounting for about two-thirds of that and then mix where you have silicon going down, which was very, very strong, and you have we said we think fab solutions and display will be up. So that trade-off is where you get the mix impact.

Okay, thanks. And then the follow-up, Mike, relative to the commentary about memory spending, you talk about the willingness of memory customers continue to spend. Now, there’s been four or five DRAM customers that have come out and given ’08 CapEx guidance that’s been much, much lower than what they’ve spent in ’07, and while four or five is by no means a big enough sample size to draw any kind of conclusions, at least those four or five, which I think represent about 20% or 25% of the memory spending, are suggesting CapEx down between 30% and 50%. Is that being reflected in their current order patterns? Do you think they are just taking a conservative approach? How would you have us think about that?

Well, a lot of the quarter-to-quarter movement is just timing of investment. I think we’ll have to see how the environment shakes out in the next six months here before we really judge 2008 but one thing when you talk to the memory manufacturers, if there is bit growth, if there is bit demand, they are going to invest the capacity because they know that if they don’t, their share and their position in the market is going to deteriorate relatively rapidly. You can see that already with how the share has shifted around in the various memory players in the last year or two years, with some people used to have close to 20% now are under 10. They didn’t invest and their share has dramatically dropped off.

But then again, Mike, specific to the companies that are guiding ’08 CapEx a lot lower, how does that mesh with their need to continue to spend?

Well, it’s pretty difficult to comment exactly on each one of the three or four companies, but when you look at the major companies who represent the other 80%, I think they are still looking at trying to meet a very aggressive bit demand growth. Bit demand growth has been so aggressive in this first half this year and I thought it would initially slow down in the second half, and I don’t see it slowing down.

Okay. Thanks so much.

Your next question comes from Jesse Pichel with Piper Jaffray.

Thank you for taking my question and congratulations on guiding up your solar goal to $600 million. Two questions; I’m interested to know if you are accelerating your CIGS development activities, as evidenced by some key hires you’ve made?

Well, we are really right now focused on both the crystalline silicon and the thin film silicon approaches. Certainly we think that all different kinds of materials and material modification are going to play into the solar landscape over a period of time and we want -- our goal is to be the technology leader in solar. And in order to do that, we really have to be knowledgeable about and really leading in all the key areas. But to be the technology leader, you have to be the leader that drives down the end cost per watt and we are going to use whatever means that are at our disposal to be able to do that. But at this moment, we think thin film silicon is the best path to be there. We think for installations where there is limited space, crystalline silicon is the best path to the lowest cost per watt for that kind of application. And there are a lot of other technologies coming on. We are going to be there with those technologies in the markets that they can play in.

Just to refine my question a bit, I was referring to copper indium gallium selenide type of materials.

I know what you were referring to.

Okay. All right. And the second question is do you anticipate a solar fab solutions opportunity, perhaps source targets or wire --

We do view that there is an excellent opportunity for fab solutions in the solar market. At this point, it is a little bit too early for us to give you a make-up of that but certainly service bears abatement, consumables of all different kinds can fit into that market and we are exploring all of those.

Thank you.

Operator, we’ll take one more question and make our closing remarks.

Your last question comes from Satya Kumar with Credit Suisse.

Thanks for taking my follow-up. I just have an observation/question. It seems like we are in a somewhat unique time here. Following up on an earlier question, it seems like some of the memory companies, [inaudible] and Micron, have cut CapEx but some others, the NAND folks and other Taiwanese folks are hinting at flat. It seems like logic and foundry is down a lot this year and it seems like display is down over 50% the last couple of years. Going back, to the best of your recollection, do you recollect a time in the past where you have seen such a wide divergence between all the different sectors, where one is at peak, one is at trough? And going forward into ’08, when you look at these end-markets, semi CapEx and display CapEx, ex-solar, what do you see as your available CapEx growth in ’08?

I think first of all, there’s different things that are driving the different parts of the market. In memory, I think if we just go to NAND Flash to start with, the ability to have mobile storage and large amounts of mobile storage is driving NAND Flash. I just look at the iPhone with 8-gigs. I can’t imaging that’s going to stay anywhere close to that over any kind of period of time. It is going to ramp dramatically. Will it have a large impact on overall cell phone sales? I don’t know. I think that it will as more features come in but the much bigger impact will be on NAND Flash because of the increased need for storage in devices that people carry around. DRAM is still I think, while it’s been increasingly adopted in cell phones, the big driver is still going to be PCs for the next 18 months, so this is a different kind of a cycle and a new operating system drives it up faster than just a simple unit growth. In other kind of devices that are really affecting foundries, it becomes more just how many units of computers and cell phones are increasing and those markets are increasing more closely to 10% a year. So there are different factors that are driving the different markets and I do think that that’s a fairly major change in our environment that it is not as uniform maybe as it’s been in the past. Display, I think it is a little bit different in that it is more of the old fashioned, supply-and-demand capacity getting ahead of itself and then having to absorb the capacity with growth in the market. Overall, when I look at WFE, wafer fab equipment spending for 2007 is kind of up 5%. Applied Materials is going to be up in our silicon systems business about 10%. Overall, this is going to be our best revenue year of all time, so how that is going to extend into 2008 -- if the things that we think are going to happen, we think that the growth is going to be relatively similar to 2007 but boy, it’s way too early to make a solid projection on that.

Thank you.

Thank you. We would like to thank all of your for joining us on the discussion of Applied Materials' financial results and would like to remind you that a replay of this call and the supporting slide package will be available on our website until 5:00 p.m. today and will remain posted until August 28th. Also, please remember to hold the date of January 17, 2008 for our analyst day. We will be holding a meeting in New York City and we’ll be publishing more details during the fourth quarter. Thank you for your interest in Applied Materials. This concludes our call.

Thank you. This concludes today’s conference call. You may now disconnect.