Applied Materials (AMAT) Goldman Sachs Communacopia + Technology Conference summary

Industry trends and technology inflections

• Energy-efficient computing is the primary focus, driven by AI, edge, IoT, industrial automation, EVs, and renewable energy, with data center wafer starts expected to surpass PCs and smartphones in the coming years.

• Major technology inflections include Gate-All-Around transistors, backside power, 4F squared/vertical channel DRAM, and advanced packaging, each offering significant improvements in energy efficiency and market size.

• Gate-All-Around revenue is projected to double next year, with over 50% share targeted; backside power and DRAM inflections are also expected to drive growth.

• Advanced packaging and high-bandwidth memory are rapidly growing segments, with packaging revenue increasing from $500 million in 2020 to $1.7 billion and high-bandwidth memory revenue growing sixfold in 2024.

• Materials innovation and integrated solutions are key differentiators, with 30% of revenue now from platforms connecting multiple technologies under vacuum, up from 20% in 2019.

Market outlook and growth drivers

• The wafer fab equipment (WFE) market is expected to grow robustly, with capital intensity projected to remain in the mid-teens or higher, driven by increasing complexity and demand for energy efficiency.

• High-performance logic, DRAM, high-bandwidth memory, and advanced packaging are the most promising segments, with DRAM and compute memory in AI servers requiring significantly more content and wafer starts.

• The China market is stabilizing at around 30% of revenue, primarily driven by ICAPS (IoT, communications, automotive, power, sensors), with mid- to high single-digit CAGR expected.

• Share gains in DRAM and ICAPS have been significant, with 10 points gained in DRAM over 10 years and 5 points in ICAPS over five years.

• The company is positioned to outgrow the overall market, with services expected to grow at double-digit rates.

Competitive advantages and innovation strategy

• Integrated solutions and a connected technology portfolio are major competitive advantages, enabling co-innovation with customers on future technology nodes and architectures.

• Weekly engagement with customer R&D leaders ensures early involvement in projects and strong visibility into future trends.

• Service business has delivered 20 consecutive quarters of year-over-year growth, now at a $6 billion run rate, driven by remote connectivity and rapid yield ramping.

• AI is leveraged across R&D, operations, supply chain, and field services to drive productivity and efficiency, with a focus on doubling company size in the coming years.

• The company’s unique integration innovation team and high-velocity co-innovation model are seen as key to maintaining leadership and capturing future market opportunities.