Economic Growth & Policy - US economy shows resilience despite changes in trade, immigration, fiscal, regulatory, and geopolitical policies [1] - Pace of economic growth has moderated recently [1] - Balance of risks has shifted, prompting a move towards a neutral policy stance [2] Employment & Inflation - Unemployment rate is low but has edged up [2] - Job gains have slowed, and downside risks to employment have risen [2] - Inflation has risen recently and remains somewhat elevated [2]

Bank of Canada Governor Tiff Macklem suggested the US dollar’s status as a “global safe asset” may be hurt by President Donald Trump’s trade policies https://t.co/FryFaOgNCx ...

Trade Policy Concerns - Republican lawmakers challenged Trump's tariff strategy [1] - Lawmakers sought more say on setting trade rates [1] Political Implications - Anxiety over Trump's trade policies surfaced among Republicans [1]

Trade Policy Impact - Trump's trade policies have disrupted business decisions [1] - Companies are scrambling to adapt to the up-and-down trade policies [1] Import Volatility - Imports experienced a crazy swing due to trade policy uncertainty [1]

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $792 million, down 3% year on year but up 2% sequentially [11] - Gross margin on a GAAP basis was 44.4%, and on a non-GAAP basis, it was 46.6%, generally in line with guidance [12] - Non-GAAP EPS was $0.66 per share, at the high end of guidance [12] Business Line Data and Key Metrics Changes - Materials Solutions sales were $355 million, up 4% year on year, driven by CMP slurries and pads, selective etch, and deposition materials [13] - Advanced Purity Solutions sales were $440 million, down 7% year on year but up 1% sequentially, primarily due to a decline in facilities-based CapEx investments [14] Market Data and Key Metrics Changes - Asia customers represent approximately 70% of total revenue, with expectations to serve about 70% of this demand from non-U.S. manufacturing sites by year-end [7][8] - The China business saw a sequential increase of 8% in Q2, reflecting a recovery after tariffs were put on hold [32] Company Strategy and Development Direction - The company is focused on expanding its global manufacturing footprint and optimizing supply chains to mitigate trade policy volatility [7][8] - Investments in new manufacturing sites in Taiwan and Colorado are expected to ramp up volumes significantly in Q4 [6] Management's Comments on Operating Environment and Future Outlook - The semiconductor market remains dynamic, with mixed conditions; AI-related demand is strong, but overall fab utilization levels are subdued [10][28] - The company expects a stronger second half performance, despite ongoing uncertainties in trade policies and capital spending [11][57] Other Important Information - Free cash flow was $79 million in the first half of the year, with expectations for a low double-digit free cash flow margin in 2025 [15] - The company has paid down $50 million of its term loan, resulting in gross debt of approximately $4 billion [16] Q&A Session Summary Question: Industry conditions in semiconductors - The current industry conditions are mixed, with strong AI-related demand but subdued fab utilization levels in mainstream logic and NAND [27][28] Question: China business activity - The China business started slow in Q2 but saw an 8% sequential increase in the latter part of the quarter after tariffs were put on hold [32] Question: Q3 guidance scenarios - The guidance for Q3 reflects a mix of favorable wafer start environment and ongoing tariff uncertainties, making it difficult to predict exact impacts [36][37] Question: Inventory adjustment process - The inventory adjustment process is ongoing, and while it impacts gross margins, the focus remains on optimizing free cash flow [83] Question: Transition of U.S. business to Asia - The company expects to serve about 85% of China demand from Asian manufacturing sites by year-end, with a goal of reaching 95% next year [39][66]

Trade Policy Impact - Donald Trump's trade policies are forcing Chinese factory owners and workers to adapt and explore new markets [1] - The policies raise the question of whether production will shift to the US [1]