Applied Materials Inc. (NASDAQ:AMAT)

The analysis of inventory-related financial data reveals distinct trends over the six-year period under review. There is an observable overall increase in inventory values, though the growth trajectory exhibits variations depending on the specific inventory category.

Customer Service Spares

This category shows a consistent upward trend from 2019 through 2024, increasing from $1,245 million to $1,742 million. The gradual rise suggests a strategic emphasis on maintaining or expanding spare parts availability, possibly to enhance customer support or anticipate increased demand.

Raw Materials

Raw materials inventory has demonstrated significant volatility. Starting at $802 million in 2019, it rose steadily to a peak of $1,807 million in 2022, followed by a decrease to $1,653 million in 2023 and a slight increase thereafter to $1,680 million in 2024. This indicates fluctuations in procurement or production planning, potentially reflecting supply chain adjustments or market demand changes.

Work-in-Process

Work-in-process inventory grew from $575 million in 2019 to a peak of $1,029 million in 2022, followed by a decline to $879 million by 2024. The initial increase may be associated with higher production levels or longer manufacturing cycles, while the subsequent decrease could reflect improved efficiency or adjustments to production schedules.

Deferred Cost of Sales

This item was not reported until 2022, with values starting at $704 million and declining substantially to $217 million by 2024. The introduction and reduction of this deferred cost indicate changes in how costs are accounted for or shifts in sales recognition policies.

Evaluation Inventory

Beginning in 2022 at $422 million, evaluation inventory showed modest growth to $459 million by 2024. This steady increase might reflect ongoing investment in product testing or validation phases.

Manufactured On-Hand Inventory

First reported in 2022 at $561 million, this category increased to $650 million in 2023, followed by a decline to $444 million in 2024. The fluctuation suggests variability in inventory management post-production, possibly influenced by demand forecasting or shipment schedules.

Finished Goods

Finished goods inventory, reported from 2022, shows a downward trend from $1,687 million to $1,120 million in 2024. This reduction may signal improved sales performance, inventory drawdowns, or changes in production targets.

Finished Goods (Legacy)

Available only from 2019 to 2021, legacy finished goods peaked in 2020 at $1,140 million before dropping to $1,049 million in 2021 and being discontinued from reporting thereafter, suggesting a phase-out of certain product lines or accounting reclassification.

Total Inventories

Total inventories rose from $3,474 million in 2019 to a peak of $5,932 million in 2022, before decreasing to $5,421 million in 2024. Despite the overall growth over the period, the decline in the last two years reflects possible inventory optimization efforts or reduced production volumes.