Dive Brief:
- Semiconductor equipment maker Applied Materials expects sales to dip in the current quarter, driven by soft consumer demand for PCs and smartphones.
- “Measured as a percentage of total wafer fab equipment, memory spending is tracking at its lowest level in more than a decade,” President and CEO Gary Dickerson told investors on Thursday, adding that customers have also trimmed semiconductor logic spending for the remainder of the year.
- Dickerson said the company sees the pullback on orders as an adjustment in spending by customers to account for current market conditions, but noted that chipmakers remain "fully committed" to advancing technology in a market expected to reach $1 trillion by 2030.
Dive Insight:
While chipmakers like TSMC adjust spending in the near term, Applied Materials is boosting investment in new technology research to support demand for equipment upgrades in the long term.
As the U.S. deploys around $400 million in government incentives over the next five years to help build out regional supply chains to support industry verticals vital to its economy, a “significant portion” are planned for IoT, communications, automotive, power and sensor markets, Dickerson said.
“Semiconductors are the foundation of the digital economy,” the CEO said.
Chip technology is simultaneously becoming more complex as the industry works to improve performance and cut time-to-market, Dickerson added. “Increasing complexity means that wafer fab equipment can grow at a higher rate than semiconductor revenues and then, within equipment spending, major technology inflections are increasingly enabled.”
As such, Dickerson said Applied Materials is making significant investments in its research and development infrastructure to support customers.
"We are increasing our manufacturing and logistics capacity, and we are making significant investments in our R&D infrastructure to collaborate more closely and productively with our customers and industry partners to help solve their highest-value problems," he said.
On Monday, Applied Materials announced plans for an up to $4 billion research center in Silicon Valley to advance semiconductor process technology and manufacturing equipment in collaboration with chip companies.
