Chip Talk > Applied Materials Navigates Challenges Amid Global Chip Reforms
Published September 02, 2025
Applied Materials, a leader in supplying equipment to the semiconductor industry, has adopted a cautious stance on the recent U.S. incentives aimed at boosting domestic chip production. Despite the government's efforts to incentivize reshoring manufacturing, CFO Brice Hill noted at the Deutsche Bank Tech Conference that these incentives have only marginally impacted overall demand. Trendforce and other sources highlight Hill's observations that many semiconductor companies are still building overseas, indicating that while attractive, the U.S. incentives are not significantly swaying strategic decisions in the industry at large.
One of the significant investments from Applied Materials is their $200 million expenditure in Arizona, adding to over $400 million already invested across the United States. Despite these investments, Hill believes that the U.S. incentivization is less influential compared to the underlying market demands driven by sectors such as PCs, smartphones, and data centers.
Applied Materials also faces notable challenges in China, a key market for the semiconductor industry. The company's revenue in the region has seen fluctuations due to uncertainties driven by U.S. policies, tariffs, and regulations impacting trade. As noted by Reuters, these external pressures have led to a conservative forecast with modest growth in the near-term.
Moreover, China's focus on mature-node semiconductor technology has resulted in an oversupply in some segments, which may dampen demand for certain Applied Materials' products. Nevertheless, the company remains engaged and anticipates that technological shifts, particularly towards 28nm node processes, will necessitate new equipment, allowing Applied Materials to capitalize on its significant 28nm market presence.
Looking forward, Applied Materials is positioning itself to leverage the rise in AI and DRAM technologies. With semiconductor giants like TSMC and Intel pushing towards smaller nodes like 2nm, Applied Materials is ramping up its production of Gate-All-Around (GAA) equipment, reflecting a strategic pivot to support next-generation chip manufacturing. An impressive $2.5 billion was achieved in GAA equipment sales in 2024, with expectations set for $4.5 billion in 2025, demonstrating their increasing market share.
Aside from scaling GAA technologies, the demand for advanced packaging driven by AI innovations presents another area of growth. By focusing on these technologies, Applied Materials teams up with leading chip manufacturers to deliver solutions that meet the sophisticated requirements of emerging devices.
While the U.S. incentives have had limited impact, Applied Materials remains committed to expanding its domestic footprint. Conversely, the challenges and opportunities within China reflect the intricate balancing act the company must perform given global trade dynamics. As the semiconductor industry continues to evolve, Applied Materials' strategic focus on embracing cutting-edge technologies like AI and 2nm nodes positions it to potentially shift the industrial landscape.
For detailed insights, further reading and updates are available from Trendforce and other associated reports.
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