Applied Materials, Inc.
Applied Materials, Inc. provides materials engineering solutions, equipment, services, and software to the semiconductor and related industries in the United States, China, Korea, Taiwan, Japan, Southeast Asia, Europe, and internationally. The company operates through Semiconductor Systems and Applied Global Services (AGS) segments. The Semiconductor Systems segment includes semiconductor capital equipment to enable materials engineering steps, including etch, rapid thermal processing, deposition, chemical mechanical planarization, metrology and inspection, wafer packaging, and ion implantation. The AGS segment offers integrated solutions to optimize equipment and fab performance and productivity comprising spares, upgrades, services, and 200 millimeter and other equipment and factory automation software for semiconductor and other products. It serves manufacturers of semiconductor wafers and chips, and other electronic devices. Applied Materials, Inc. was incorporated in 1967 and is headquartered in Santa Clara, California.
What does it do?
Applied Materials makes the machines that make computer chips. Think of it this way: before a chip can power your iPhone or AI server, it has to be physically built layer by layer from raw materials like silicon and metal. Applied Materials sells the equipment that does that building — the ovens, etchers, and deposition tools that chipmakers like TSMC, Samsung, and Intel use every single day. Without Applied Materials, the world's chip factories would have nothing to run on.
The AI boom has triggered a massive wave of spending on new chip factories — companies like NVIDIA need more and more advanced chips, which means the fabs that make them need more of Applied Materials' equipment. Governments worldwide are also pouring hundreds of billions into domestic chip manufacturing through programs like the US CHIPS Act and similar efforts in Europe and Japan, creating a multi-year buildout cycle that directly benefits Applied Materials. It sits at the center of one of the most strategically important industries on the planet right now.
How does it make money?
Applied Materials earns money in two main ways. Its largest segment, Semiconductor Systems, sells the actual manufacturing equipment to chip factories — this drove the bulk of its $28.4 billion in revenue last year, up from $27.2 billion the prior year. Its second segment, Applied Global Services (AGS), sells ongoing support, spare parts, and service contracts to keep that equipment running — this is a highly reliable, recurring income stream that grows as more of its machines are installed globally. The more chips the world needs, the more machines get bought, and the more service contracts follow.
Why do investors care?
The core growth story is simple: every major AI model, electric vehicle, and smartphone requires more sophisticated chips, which require more advanced manufacturing equipment. Applied Materials is one of only a handful of companies in the world that can supply this equipment, giving it enormous pricing power — meaning it can charge more without losing customers. For the thesis to work, global chip capital spending needs to keep rising, AI infrastructure investment must continue, and Applied Materials needs to stay ahead on next-generation technologies like gate-all-around transistors and advanced packaging.
Deep Dive
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