Applied Materials (NASDAQ:AMAT) Semiconductor Products Group President Dr. Prabu Raja told investors and analysts that customer demand for wafer fab equipment remains high and that his top near-term priority is scaling operations to deliver tools on time. Speaking with U.S. semiconductor equipment analyst Joseph Moore, Raja said Applied is seeing “incredible visibility” from customers, with frequent communications focused on delivery schedules and the need to avoid becoming a bottleneck during what customers are calling a “super cycle.”
Focus on on-time delivery and scaling capacity
Raja said the company’s immediate focus is meeting elevated demand by scaling manufacturing and execution. He described a customer environment in which tool availability, installation, and service readiness are critical, requiring Applied and its customers to plan earlier. Raja said customers are now providing forecasts “much, much early than ever before,” in some cases two years in advance or more, because they want assurance they will receive tools and have trained personnel ready to install and maintain them.
AI-driven mix shift toward leading-edge logic, DRAM, and advanced packaging
Raja said the growth mix within semiconductor capital equipment has shifted, with the “fastest growing markets” tied to AI and data center demand. He highlighted three areas as growing faster than others: leading-edge foundry/logic, DRAM, and advanced packaging. By contrast, he characterized NAND and ICAPS as “slow growth areas” tied more to general computing.
Raja said Applied is “number one” in the three faster-growing areas he highlighted and linked the company’s positioning to its strategy of “inflection-focused innovations,” which he said Applied has discussed for several years. He argued that technology complexity is increasing as the industry moves from 2D to 3D structures, adding more process steps and new materials, which expands the opportunity for companies that can address those challenges.
Customer collaboration moves earlier as complexity rises
Raja said the equipment-customer relationship has changed as device architectures become more complex and time-to-market becomes more important. He contrasted earlier eras—where customers could specify hardware requirements and integrate process steps largely on their own—with today’s environment, where he said customers and suppliers must work together as partners.
As an example, he pointed to Gate-All-Around (GAA) complexity, describing processes with “more than 2,000 steps,” many of which are interdependent. He said tiny dimensional tolerances mean “one angstrom really matters,” citing the challenge of placing multiple materials into small feature spaces. Raja compared the process integration challenge to a “Rubik’s cube,” where changes in one step can impact many others.
He said Applied’s broad portfolio gives it an advantage in understanding step-to-step dependencies and enabling “optimized solutions,” with customers working with Applied “three nodes ahead” and in some cases “three to four nodes ahead.” Raja said this early engagement improves visibility into customer roadmaps and helps guide Applied’s R&D investments, while also increasing the likelihood that Applied’s tools are “designed in” and difficult to replace once integrated.
EPIC strategy aimed at accelerating innovation
Raja discussed Applied’s EPIC initiative in the context of shortening the innovation-to-commercialization cycle. He said that traditionally, moving from academic research (such as new materials) through equipment adoption and semiconductor manufacturing to commercial chips can take 10 to 15 years, pointing to past transitions such as FinFET and high-k metal gate as examples of long timelines.
According to Raja, the goal of EPIC is to enable parallel “co-innovation” under one roof among universities, equipment makers, and customers, improving success rates and speeding time-to-market by validating materials on equipment and customer wafers sooner. He noted Applied has announced a partnership with Samsung and said more announcements involving customers, universities, and peers are expected “in coming months.”
Technology and product themes: GAA, wiring, copper, moly, DRAM, and packaging
In leading-edge foundry/logic, Raja said Applied is the “number one” process equipment provider and framed opportunity around two major modules: transistors and wiring. For transistors, he said Applied has leadership positions across key areas such as epitaxy (EPI), PVD, CVD, implant, treatments, and conductor etch, emphasizing the company’s “Integrated Materials Solution” approach, including integrated under-vacuum systems to prevent exposure-related material changes.
On wiring, Raja pushed back on concerns that copper and PVD copper deposition are at risk, saying he has heard predictions of copper’s demise for decades and that “copper continues to extend.” He said wiring is a major bottleneck for customers and described increasing complexity, including “20+ layers” in today’s GPUs and rising copper layer counts. Raja said copper should extend “at least…three-plus nodes,” and argued that molybdenum (moly) is not replacing copper but instead has a role in contacts, where it may replace tungsten. He referenced Applied’s “Spectral ALD Moly” product and said Applied already has a position in foundry/logic where ALD moly is replacing tungsten.
In DRAM, Raja said Applied has gained market share over the past decade, attributing gains to patterning—including EUV patterning—and wins in capacitor modules driven by new materials and a “co-optimized” approach across deposition, etch, removal, and analysis. He said conventional DRAM is increasingly following logic roadmaps and adopting more copper layers, while future inflections such as “3D DRAM” and materials-sensitive scaling could further benefit Applied’s materials engineering strengths. For HBM, Raja described growth as driven by needing “3x-4x more number of wafers per die,” along with more process-intensive packaging.
Raja also said Applied is “number one” in advanced packaging, including HBM, and highlighted growth in HBM packaging and “3D chiplet stacking.” He characterized advanced packaging as “nothing but wiring,” suggesting Applied’s on-chip wiring experience translates to off-chip packaging. He pointed to Applied’s packaging lab in Singapore and said two major inflections in packaging include bonding—where he cited a partnership with Besi—and panel-level packaging, referencing Applied’s acquisition of Tango Systems and product development leveraging its display business experience.
On margins and pricing, Raja said Applied has expanded margins by “7 percentage point” since CEO Gary Dickerson joined. He emphasized a value-sharing approach with customers—focused on performance, yield, reliability, and time-to-market—rather than simply raising prices. He said the company intends to balance value capture with margin improvement, R&D investment, and shareholder returns, while also maintaining a “big, big focus on cost” through technology and innovation.
About Applied Materials (NASDAQ:AMAT)
Applied Materials, Inc is a U.S.-based supplier of equipment, services and software used to manufacture semiconductor chips, flat panel displays and other advanced materials. Headquartered in Santa Clara, California, the company designs and sells capital equipment and related technologies that enable production of integrated circuits, display panels and materials used across the electronics supply chain.
Applied Materials’ offerings include process equipment and factory software that support critical steps in device fabrication, such as deposition, etch, implantation, inspection and metrology, as well as systems for packaging and advanced heterogeneous integration.
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