Analysis of Property, Plant and Equipment
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Property, Plant and Equipment Disclosure
Applied Materials Inc., balance sheet: property, plant and equipment
US$ in millions
Based on: 10-K (reporting date: 2025-10-26), 10-K (reporting date: 2024-10-27), 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25).
The financial data for property, plant, and equipment reveals a consistent growth trend over the six-year period examined. Each category and the overall net values demonstrate increasing investment and asset accumulation, reflecting expansion and upgrading in fixed assets.
- Land and Improvements
- Values rose steadily from 256 million to 558 million US dollars, more than doubling over the period. This indicates ongoing acquisitions or enhancements of land assets, likely supporting infrastructural growth.
- Buildings and Improvements
- There is a clear upward trend from 1.655 billion to 2.930 billion US dollars, reflecting continued construction and improvement activities. The increase is substantial, demonstrating significant capital allocation towards physical facilities.
- Demonstration and Manufacturing Equipment
- This category shows a steady rise from 1.586 billion to 2.708 billion US dollars, highlighting enhanced production capacity or modernization of manufacturing resources, important for maintaining operational efficiency and innovation.
- Furniture, Fixtures, and Other Equipment
- The incremental growth from 646 million to 855 million US dollars suggests steady upgrading or additions in less capital-intensive asset categories, contributing to overall operational support infrastructure.
- Construction in Progress
- This item experienced the most pronounced percentage growth, escalating from 237 million to 1.460 billion US dollars. The marked increase reflects an expanding pipeline of ongoing projects, indicative of strategic investments for future capacity or capability enhancement.
- Gross Property, Plant, and Equipment
- The aggregate gross value rose from 4.380 billion to 8.511 billion US dollars, illustrating substantial capital investment across categories. The steady increments underscore sustained asset base expansion.
- Accumulated Depreciation
- Accumulated depreciation increased from -2.776 billion to -3.901 billion US dollars, consistent with the aging of acquired assets. The relatively moderate growth compared to gross assets suggests that newly added assets have not yet fully depreciated.
- Net Property, Plant, and Equipment
- The net book value more than doubled, from 1.604 billion to 4.610 billion US dollars. This reflects not only sizeable asset additions but also indicates that asset disposals or impairments have been minimal relative to acquisitions, contributing positively to the company’s asset base strength.
Overall, the data indicates a robust and continuous investment strategy in property, plant, and equipment, enhancing the company’s operational infrastructure and potential production capabilities. The marked increase in construction in progress signals future capacity expansion, while consistent depreciation patterns demonstrate prudent asset management practices.
Asset Age Ratios (Summary)
Applied Materials Inc., asset age ratios
Based on: 10-K (reporting date: 2025-10-26), 10-K (reporting date: 2024-10-27), 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25).
- Average Age Ratio
- The average age ratio displays a declining trend over the years under review, decreasing from 67.31% in 2020 to 49.05% in 2025. This indicates that the property, plant, and equipment assets are getting relatively younger over time, suggesting an increase in either asset acquisition or replacement activities.
- Estimated Total Useful Life
- The estimated total useful life of the assets remains stable at 13 years from 2020 to 2023, then increases notably to 19 and 20 years in 2024 and 2025, respectively. This extension suggests a revision in asset longevity assumptions, potentially due to upgrades, improved maintenance, or changes in accounting estimates.
- Estimated Age (Time Elapsed Since Purchase)
- The estimated age of the assets remains relatively stable around 8 to 9 years from 2020 to 2023, rises to 11 years in 2024, and decreases again to 10 years in 2025. This fluctuation may reflect a mix of asset disposals and new acquisitions, impacting the weighted average age of the asset base.
- Estimated Remaining Life
- Estimated remaining life stays consistent at 4 to 5 years from 2020 through 2023, then increases significantly to 8 years in 2024 and further to 10 years in 2025. This trend aligns with the increased total useful life and suggests that assets are expected to remain productive for a longer period going forward.
Average Age
Based on: 10-K (reporting date: 2025-10-26), 10-K (reporting date: 2024-10-27), 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25).
2025 Calculations
1 Average age = 100 × Accumulated depreciation ÷ (Gross property, plant and equipment – Land and improvements)
= 100 × ÷ ( – ) =
- Gross Property, Plant and Equipment
- The gross property, plant, and equipment value shows a consistent upward trend over the periods analyzed. It increased from $4,380 million in 2020 to $8,511 million in 2025, nearly doubling in six years. This indicates significant capital investment and expansion in fixed assets over the timeframe.
- Accumulated Depreciation
- Accumulated depreciation also increased steadily from $2,776 million in 2020 to $3,901 million in 2025. The increasing accumulation aligns with the growing base of assets but at a slower rate of growth compared to gross property, plant, and equipment. This suggests ongoing depreciation expenses but possibly new asset additions are outpacing depreciation charges.
- Land and Improvements
- Investment in land and improvements showed consistent growth, rising from $256 million in 2020 to $558 million in 2025. The steady increase reflects ongoing investment in site-related assets, contributing to the overall fixed asset growth.
- Average Age Ratio
- The average age ratio, expressed as a percentage, demonstrates a clear downward trend, declining from 67.31% in 2020 to 49.05% in 2025. This decline indicates that the asset base is getting younger on average, likely due to substantial asset acquisition and capital expenditures outpacing depreciation and asset retirements.
- Overall Analysis
- The data reveals a pattern of strong asset growth accompanied by steady depreciation increases, but with the average age of assets decreasing. This combination suggests a strategic emphasis on asset renewal and expansion, leading to a more modernized and potentially more efficient property, plant, and equipment base over time.
Estimated Total Useful Life
Based on: 10-K (reporting date: 2025-10-26), 10-K (reporting date: 2024-10-27), 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25).
2025 Calculations
1 Estimated total useful life = (Gross property, plant and equipment – Land and improvements) ÷ Depreciation expense
= ( – ) ÷ =
- Gross Property, Plant, and Equipment
- The gross property, plant, and equipment value shows a consistent upward trend over the periods analyzed. Starting at 4,380 million USD, it steadily increases each year, reaching 8,511 million USD by the final period. This indicates continuous investment in physical assets.
- Land and Improvements
- Values for land and improvements also depict a growth trajectory, increasing from 256 million USD to 558 million USD over the examined timeframe. The rate of increase is moderate compared to the overall gross property, reflecting steady but less aggressive expansion in land-related assets.
- Depreciation Expense
- The depreciation expense initially rises from 320 million USD to a peak of 471 million USD, followed by a notable decline to 346 million USD, and then a slight increase to 389 million USD. This pattern suggests changes in asset utilization or recalibration of depreciation methods. The decline after the peak might reflect asset disposals, changes in asset mix, or adjustments in depreciation schedules.
- Estimated Total Useful Life
- The estimated useful life remains constant at 13 years for the first four periods, then increases significantly to 19 years and subsequently 20 years in the last two periods. This extension could indicate revisions in asset longevity assumptions, possibly due to improved asset quality or changes in depreciation policies.
Estimated Age, Time Elapsed since Purchase
Based on: 10-K (reporting date: 2025-10-26), 10-K (reporting date: 2024-10-27), 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25).
2025 Calculations
1 Time elapsed since purchase = Accumulated depreciation ÷ Depreciation expense
= ÷ =
- Accumulated Depreciation
- The accumulated depreciation shows a consistent upward trend across the periods analyzed, rising from $2,776 million in October 2020 to $3,901 million in October 2025. This steady increase indicates ongoing depreciation of the property, plant, and equipment assets, reflecting their continual usage and aging over time.
- Depreciation Expense
- The depreciation expense exhibits fluctuations over the years. It increased from $320 million in 2020 to a peak of $471 million in 2023, followed by a decrease to $346 million in 2024, and a slight rebound to $389 million in 2025. This variability may reflect changes in asset acquisition, disposition, or adjustments in depreciation methods or estimates.
- Time Elapsed Since Purchase
- The average time elapsed since purchase generally remains within a close range of 8 to 11 years, indicating that the property's asset base has a relatively stable age profile. The variation between 8, 9, 10, and 11 years over the periods suggests a gradual renewal or replacement of assets rather than rapid turnover.
- Overall Insights
- The steadily rising accumulated depreciation combined with the fluctuating depreciation expense and stable asset age suggests a consistent investment in PPE assets with moderate asset turnover. The peak in depreciation expense in 2023, followed by a decline, could suggest a period of intensified asset utilization or acquisition prior to 2024, with subsequent stabilization. The data implies a balanced approach to asset management and reflects systematic depreciation aligning with asset lifespan.
Estimated Remaining Life
Based on: 10-K (reporting date: 2025-10-26), 10-K (reporting date: 2024-10-27), 10-K (reporting date: 2023-10-29), 10-K (reporting date: 2022-10-30), 10-K (reporting date: 2021-10-31), 10-K (reporting date: 2020-10-25).
2025 Calculations
1 Estimated remaining life = (Property, plant and equipment, net – Land and improvements) ÷ Depreciation expense
= ( – ) ÷ =
- Net Property, Plant, and Equipment
- The net value of property, plant, and equipment has demonstrated a consistent upward trend over the observed period. Beginning at $1,604 million, the value increased each year, reaching $4,610 million by the most recent date. This growth suggests significant investment in fixed assets or capital expenditures, possibly indicating expansion or modernization efforts.
- Land and Improvements
- Land and improvements have also shown growth, albeit at a more moderate pace compared to the total net property, plant, and equipment. Starting at $256 million, the value increased steadily to $558 million. This trend indicates ongoing acquisition or enhancement of land-related assets over time.
- Depreciation Expense
- The depreciation expense generally increased from $320 million to $471 million between 2020 and 2023, reflecting the aging or increased scale of fixed assets. However, a decline to $346 million occurred in 2024, followed by a moderate rise to $389 million in 2025. These fluctuations may relate to changes in asset composition, disposal of older assets, or adjustments in depreciation methods.
- Estimated Remaining Life
- The estimated remaining life of assets showed an increase from 4 years initially to 10 years by the end of the period. This extension suggests either acquisition of newer assets with longer useful lives or reassessment and revision of asset lifespans, potentially affecting depreciation expense calculation and capital planning.