Applied Materials (NASDAQ:AMAT) outlined an expanded growth strategy tied to artificial intelligence demand at its SEMICON West technology breakfast, saying it expects to gain more than two percentage points of wafer-fab-equipment market share by 2030 while increasing profitability and service revenue.
Chief Executive Officer Gary Dickerson said AI-driven demand is concentrating semiconductor spending in leading-edge foundry logic, DRAM memory and advanced packaging. Applied expects those three areas to account for roughly 75% of incremental wafer-fab-equipment growth through 2030, according to President of Semiconductor Products Group Prabu Raja.
AI demand and technology roadmap
Dickerson said the company increased its long-term wafer-fab-equipment outlook due to rising demand for agentic AI computing. He described AI factory “pods” as modular building blocks for AI infrastructure and said agentic AI configurations can consume two to four times as many wafers as generative AI configurations, depending on their design.
The company said data-center demand has become a larger driver of wafer starts in both leading-edge logic and DRAM. Dickerson also said server CPUs, GPUs, networking chips and custom ASICs are moving more quickly to leading-edge manufacturing nodes, where Applied has a stronger position.
Raja said the company expects to increase its share of the wafer-fab-equipment market by more than two percentage points by 2030. He said Applied’s addressable market in leading-edge logic is expected to rise from about $12 billion at the 3-nanometer node to about $15 billion at 1.4 nanometers, while its share is expected to increase by three points over that transition.
In DRAM, Raja said Applied expects its served market and share to grow as memory makers progress from 6F² architectures toward 4F² and 3D DRAM designs. He said the company expects its share in that segment to rise by five points. In advanced packaging, Applied expects the market it serves to exceed $5 billion within several years and said it anticipates outgrowing that market over the next five years.
- Applied said it enabled about three-quarters of packaging process steps for high-bandwidth memory, from through-silicon-via formation to microbumps.
- Raja said the company holds more than 60% share of the served market for HBM packaging and expects more than $1 billion in related revenue this year.
- Applied said hybrid bonding could double its addressable market compared with microbump and TSV packaging technologies.
EPIC collaboration center
The company highlighted its new EPIC Center, a research-and-development collaboration facility intended to bring customers and partners together with Applied engineers. Dickerson said the facility is designed to support co-development of semiconductor and packaging architectures several technology nodes in advance.
Executives from Micron Technology, Samsung Electronics, Intel, SK hynix and Broadcom appeared in recorded comments supporting the initiative. Micron Chairman and CEO Sanjay Mehrotra said the partnership would help the companies “move faster from research to commercialization,” while Intel CEO Lip-Bu Tan said AI requires advances in devices and packages, including transistors, interconnects and advanced packaging.
Raja said EPIC’s parallel-development model could compress the time from materials research to commercial chip production by roughly half compared with a more sequential approach. Applied said the facility will include more than 100 test vehicles and customer reticles to support development work.
Process control and services growth
Keith Wells, who leads Applied’s Imaging and Process Control group, said the company expects 50% revenue growth in both optical inspection and electron-beam, or eBeam, businesses from 2025 to 2026. He said Applied currently serves roughly $2 billion of a $9 billion optical-inspection market and plans to introduce products over the next several years to address additional market opportunities.
Wells said the company’s eBeam technology provides roughly 200 times the resolution of optical tools and can help customers identify process defects and variability across thousands of wafer locations. He said Applied expects more than $3 billion in combined systems and service revenue from its metrology and inspection activities in 2026.
Applied Global Services Senior Vice President Tim Deane said the company’s AIx platform connects equipment data with analytics and service engineering to improve yield, tool matching and factory output. Applied has connected more than 37,000 chambers to AIx, about 80% of them remotely, and expects that total to exceed 90,000 chambers by 2030.
Deane said data collected over more than 18 quarters showed AIx-connected tools achieved 30% faster service resolutions than comparable unconnected tools. The company expects its services business to grow at a mid-teens compound annual rate through 2030 and said revenue per tool is expected to rise more than 20% between 2025 and 2030.
Financial targets and investment plans
Chief Financial Officer Brice Hill said Applied generated $34.3 billion in revenue after growing at a 12.2% compound annual rate over the last decade. Over that period, the company’s non-GAAP gross margin expanded 680 basis points to 50%, while non-GAAP operating margin increased by more than 1,100 basis points.
For 2030, Applied set targets including more than $12 billion in Applied Global Services revenue, more than $2 billion in combined “other” revenue from its display and SENZ waveguide-photonics businesses, a 54% non-GAAP gross margin, a 40% non-GAAP operating margin and a 15% estimated tax rate.
Hill said the company is investing to more than double its laboratory and manufacturing capacity over the planning horizon. Capital expenditures were approximately 8% of revenue this year and are expected to decline as a percentage of revenue over time, he said.
Applied also said it plans to return 80% to 100% of free cash flow to shareholders over time while continuing to reinvest more than half of its generated cash in research and development, capital spending, working capital and smaller acquisitions.
About Applied Materials (NASDAQ:AMAT)
Applied Materials, Inc is a global supplier of equipment, services and software used to manufacture semiconductor chips, flat-panel displays and other advanced electronic products. Its technologies help customers build and enhance materials at the nanoscale, supporting processes such as deposition, etching, inspection, metrology and packaging.
The company’s offerings include semiconductor manufacturing systems, process-control and inspection equipment, and services designed to improve the performance, productivity and longevity of production equipment.
