“In fact, tool spending will be up year-over-year ~25% or so.”

In context

“bout that in the CapEx figure? David Zinsner: Let me unpack CapEx just for a minute. We are now calling it flat year-over-year. Initial thinking was that it was going to be down. I think we moved it last quarter to flat to down, and now I think we are looking at flat. That is really a function of the current demand environment we are seeing. One thing to keep in mind: in the last few years, a lot of our CapEx spending was space, and I think we are actually in a pretty good position in space. We wanted to have white space available to move into when needed, and I think Lip Bu and I both feel like we are in a good place. So we will be bringing the space spend down pretty materially, even though the total is flat. What that means is the tool spend is actually increasing pretty significantly. In fact, tool spending will be up year-over-year ~25% or so. That is a function of the fact that we see a lot of demand, and we want to make sure we are catching up on the supply front. As we get into next year, we will have a better sense of what CapEx looks like. As it relates to external customers on the foundry side, our expectation—which we have been pretty consistent on for about a year—is that customer signals would be more concrete in the back half of this year and into early next year. As we pull that information together, combined with our own requirements, which are growing over time, that will give us a good sense of what supply we need over the next few years, and we will put the spend in place. Lastly, our relationship with the equipment vendors is quite strong, so I think we have a pretty good ability to flex as needed. Naga and Lip”