Applied Materials Inc SEMICON West 2026

Well, good morning, everybody. I'm Mike Sullivan. I'm the head of investor relations at Applied Materials, and once again, I have the honor of being the first to welcome you to SEMICON West. It's my pleasure. We really thank you all for being here. Applied has a very long tradition of hosting a technology breakfast at SEMICON. We've been doing it for years, and we've been looking forward to seeing you pretty much all year and spending time with you. A big focus of this year's SEMICON, of course, is really understanding what is the state of the AI build-out and what does it mean for companies all across the entire technology ecosystem. The figure of merit that everybody's focused on is tokens per second per watt.

When you look at today's presentations, what you'll see is that ultimately, every AI system and every AI chip depends on two ingredients, made of two key ingredients, and those are transistors and wiring. What you'll see today is that over 60% of the transistors and wiring, 60% of those materials are put there by Applied Materials. What that means is we have an enormous opportunity and responsibility as a company to make them even faster and much more energy efficient. We know the entire AI ecosystem is waiting for breakthroughs, and inventing those and accelerating those, it's a challenge that we love. It's a challenge we accept. You saw a video a second ago. Yesterday, many of us were in Sunnyvale, California, for the unveiling of the EPIC Center. All of the world's top chip makers were there.

Intel, TSMC, Micron, KIOXIA was there, SK Hynix, Samsung, all there talking about how they're going to be working with us to develop these innovations, accelerate them, and bring them to market together. We're extremely excited about that. What I wanted to do just now quickly is give you today's agenda. Traditionally, what we do at SEMICON West is we focus on our core Semiconductor Products Group, and that's Prabu Raja and his team. Of course, they're here, and they will be speaking. This year we're doing more. We've invited Gary Dickerson to give you an update on the state of the industry and on our strategy. In addition, we've asked Keith Wells to join us this year for the first time, and he's going to give you insights into our fast-growing process control business.

We've asked Tim Deane to come and explain how we're accelerating the growth of our services business. Usually at SEMICON West, because we're in quiet period, our CFO is kept hidden in Santa Clara. This year, we've invited Brice Hill to talk about our financial progress as a company and our plans and targets for the future. We're going to be giving you a lot of new data today. Then all of our presenters, they're going to take the stage to answer your questions. I've got two final quick housekeeping items for you. Number one is, as I mentioned, we are in our quiet period, so if you have near-term questions, we're going to answer those for you, but next month on our earnings call. Finally, I've already had people saying, "Where's the presentations? Where are the slides? I can't find them on your website." Please know that you don't need to write anything down.

We have a tremendous amount of new information. A lot of the forecasts that we had in the past have changed. Many of them have increased, so there's a lot of new data. There are new financial targets. All of those are going to be available on our website as Bryce concludes his presentation. That's going to be at about 9:45 A.M., so please relax. You don't need to write anything down. I promise you it'll be there at 9:45. That's about it for me right now. I'll come back and help you with the Q&A. But in the meantime, thank you again. It's so great to have you with us, and I'd now like to welcome to the stage Gary Dickerson. Hey, Gary. Well, thanks, Mike, and thanks for all of you joining us here today.

This is an incredibly exciting time for Applied Materials. Many of you probably remember nine years ago, this thing is. Oh, there we go. Nine years ago, we had our AI Design Forum, and many of the top innovators in the data center were at that event. Over the last decade, Applied, we anticipated that AI would be the major driver of the industry, and we've been creating enabling capabilities to position us to grow quickly going forward. That's what you're going to hear today. AI is driving the global economy, it's driving the semiconductor industry. The fastest-growing wafer fab equipment segments in the industry driven by AI are leading-edge foundry logic, DRAM, and advanced packaging.

In all of those areas, Applied is number one and positioned to outperform, and you'll see that today in the subsequent sessions. One thing that, I've been in the industry for a long time as an innovator. I'm an engineer. I love innovating with all of our partners. Always there's a focus on technology innovation and performance innovation, and especially for AI, innovating in chips and packages for tokens per second per watt is a race for every one of our customers. They're racing for every new inflection to be first to market with design wins. We have these incredibly deep relationships, I'll talk about that today, with all of these leading companies. But the thing that I would say has changed more than I've seen any time in my career this year is the focus on capacity innovation, yield, and output innovation.

We're in an environment where demand is much bigger than supply. The chips have never been more valuable. So yield innovation, more good chips per wafer, higher yielding packages is incredibly important, and it creates great opportunities for Applied Materials. We have been creating advantages that position Applied Materials with the most enabling technologies, and I will describe that. In materials innovation, Mike talked about over 60% of the materials in the chip are coming from Applied Materials. Integration innovation is incredibly important. Mike talked about EPIC, and we had all of the key R&D leaders through the technology stack on Sunday. Yesterday morning, it was really amazing. We had hyperscalers. We had the top companies designing next generation AI servers. We had all of the top chip manufacturing companies, design companies, materials companies.

One of the things that for me was very notable, every single one of the. These are the top R&D leaders in the entire technology stack that were there, which is very rare, if ever, to have all of those people in one room. What they said is it's not good enough to innovate on just components. You have to innovate from a system level. We talk about high velocity co-innovation coming together because the workloads are changing very quickly, and the need for higher velocity innovation has never been greater than today. This integration innovation capability that we've built at Applied Materials, certainly it's co-optimization through that whole tech stack, co-optimizing with all of the technologies. Mike talked about how Applied is the leader in transistors, wiring, advanced packaging. Again, co-optimizing across that whole flow is incredibly important.

Applied has leading integration innovation teams working 10 years out in the future, co-creating those future chip and packaging architectures from a system standpoint. Again, that's never been more important than today. As I mentioned, good chips per wafer. Yield in advanced packaging is incredibly important, and Applied has leadership in the highest resolution materials analysis. We're 2 times bigger than our nearest competitor in E-beam, which Keith Wells will talk about later today, is incredibly enabling to accelerate innovation for transistors and wiring and high speed memory and advanced packaging. These capabilities are tremendous. Tim Deane, who leads our services business, will talk about how we've created advanced service technologies with AI that will accelerate more good chips per wafer and more wafers out. We'll also talk about, Bryce later will talk about value creation.

Applied being positioned to grow very quickly in wafer fab equipment. Over 20% increase in the coming years in revenue per tool in our services as we're accelerating R&D, enabling more good chips per wafer, enabling higher wafer output. Again, just for me, I'm meeting a lot of these top CEOs every month, top R&D leaders constantly. I probably will see all the top CEOs in the next two weeks. That's because, again, they're all racing to drive performance leadership at these inflections, and I have never seen the pull stronger than today in yield innovation. The top priority for them is good chips per wafer and more wafers, especially again, when the chips are so valuable. You'll also hear about how we're growing our gross margins and operating margins through the day today. I've been, again, in the industry for a long time.

I've always thought what we do is incredibly cool. I believe that we deliver miracles all the time in the semiconductor industry. There was a period of time where there wasn't growth in wafer fab equipment. There was a period of time when you had the transition from 200 millimeter to 300 millimeter. Then Moore's law started slowing down, and more of the growth was driven by power, performance, area cost, and time. You see a 14% compound annual growth rate. We're not going to give a specific WFE forecast today, but what I would say is that I have tremendous confidence computing demand is going to grow at a tremendous rate. The compound annual growth rate is going to be very strong. Very confident in that. You'll hear today also how Applied is using AI across everything that we do.

The pacing factors are fab space, certainly supply chain components, energy, financing. Some of those factors will impact the rate of growth. Value pricing can increase the rate of WFE growth. I have very high confidence as we are working across this whole ecosystem and technology stack, and I see how we are using AI inside Applied Materials, it is fundamental to our competitiveness, and I will describe that also, and Bryce will talk about this later today. You will also hear from our Chief AI Officer, who started his PhD at 16. Brilliant guy. We formed an AI leadership team 3 years ago. Very clear ROI inside Applied, and we will describe that. Leading-edge foundry logic and DRAM compute memory. This shows the percent wafer starts for mobile, PCs, and data center. What you can see in just a few years, there has been a tremendous inflection.

A few years ago, in leading-edge foundry logic, mobile was the major driver of wafer starts. Now, data center has crossed over, and data center is growing at a tremendous rate going forward into the future. In DRAM, you see the same thing. Data center, high performance computer, really driving wafer fab equipment starts. The great thing for Applied Materials is that in both of these segments, we are the leader. We are enabling the key inflections for performance and power and the race for our customers for their design wins. I think as all as you know, the chips in the data center are huge. They are at the reticle field limit. That drives tremendous growth in wafer fab equipment, and this is going to continue to accelerate in the coming years. New AI applications driving growth and diversification.