EUR 850.00 For Business Accounts Only

Morningstar | Applied Materials Is the Wafer Fab Equipment of the Jack of All Trades (Except Lithography)

Applied Materials is a leading vendor of semiconductor fabrication tools. While competitors tend to specialize in a single core competency, Applied competes in almost every key equipment segment with the exception of photolithography. As a result, all major chipmakers develop strong relationships with Applied that span multiple process steps of their chip production. The firm is the dominant player in the material deposition and removal (etch) areas, among others.Applied boasts an impressive global presence with an installed base of more than 30,000 tools and customer engineers stationed in nearly every chip-manufacturing facility in the world. With semiconductor fabrication becoming increasingly complex, resulting in more process steps and new manufacturing technologies, collaboration between chipmakers and equipment providers is set to reach unprecedented levels. We expect Applied to leverage existing relationships and insights into future customer technology needs to take advantage of the proliferating demand for state-of-the-art chips.The company’s scale and resources allow a research and development budget in excess of $2 billion to serve cutting-edge technologies. Recent inflections such as 3D architectures (found in advanced NAND and logic chips) have been enabled by advanced tools in deposition and removal. As a result, these segments have grown faster than the broader market in recent years, and firms such as Applied have directly benefited, as they can outspend smaller chip equipment firms in R&D to develop relevant solutions.Beyond semiconductors, Applied is a leading supplier of manufacturing tools for flat-panel displays, including liquid crystal displays, or LCDs, and organic light-emitting diodes, or OLEDs. The cyclical nature of the chip industry and the display market is a ubiquitous threat to equipment suppliers. However, we believe Applied's expansive product portfolio and large installed base will allow the firm to comfortably weather business cycles over time, and we expect the company to experience decent growth over the long term.