Applied Materials (AMAT) Citi’s 2026 Global TMT Conference summary

Market outlook and demand trends

• Customer visibility and demand forecasts have improved, driven by AI system growth and rising cloud service provider CapEx, with global investments nearing $1 trillion this year.

• AI adoption is fueling strong token demand and positive economics for both cloud providers and equipment suppliers.

• Utilization rates are increasing across all end markets, including mature technology nodes, indicating robust semiconductor device volume growth.

• Over 100 new fabs are being tracked globally, with more than 10 added in each of the last two quarters, signaling sustained capacity expansion.

• Medium-term growth is gated by clean room availability, with investments closely monitored to align with demand.

Growth drivers and technology focus

• Advanced packaging, foundry logic, and DRAM are expected to drive over 80% of growth this year and next, with advanced packaging growing over 70%.

• ICAPS (IoT, communications, auto, power, sensors) is recovering, with moderate growth expected in 2026 and normalization in 2025.

• NAND demand is strong, but productivity gains from additional layers reduce the need for new wafer starts, making it a smaller equipment market.

• Panel-level packaging is in development, with investments in larger substrates and recent acquisitions like NEXX to enhance capabilities.

• Engineering challenges in panel adoption include thermal management and maximizing density, with ongoing experimentation in form factors.

Supply chain and capacity planning

• Manufacturing space has doubled, with plans to double system output by 2028 and ongoing planning through 2030.

• Clean room investments are prioritized, with eight-quarter forecasts shared with over 2,000 suppliers to ensure readiness.

• Supplier coordination is critical, as forecasts have risen every quarter this year, requiring agile communication and planning.