Applied Materials on How Semiconductor Innovation Is Accelerating the Next Wave of Computing

Gary Dickerson doesn't think the AI compute race has even started. At Six Five Summit, Applied Materials' President and CEO places us in the pregame, not the first inning, and argues that whoever wins the race for AI compute leadership will determine who wins across every country, market, and company for decades.

That belief is why Applied Materials built EPIC, a $5 billion co-innovation center in Silicon Valley designed to collapse the traditional materials-to-systems innovation cycle into one where their engineers, customers, and partners work side by side instead of in sequence. Dickerson's logic: no single company can drive AI compute innovation alone, and speed to high-yield commercialization, not just speed to invention, is what separates who wins.

Key Insights:

🔹 Dickerson places AI compute demand in the pregame, arguing the race for compute leadership will determine competitive outcomes across every country, market, and company.

🔹 Roughly 80% of wafer fab equipment growth this year is coming from AI-driven segments, advanced logic, memory including HBM, and advanced packaging, where Dickerson says Applied holds the number one position in every category.

🔹 Applied Materials’ advanced packaging business is growing over 50% this year, with next year's packages expected to hold 300+ chips, 500 billion transistors, and 2,000+ miles of wiring.

🔹 EPIC's premise: compress the traditional serial innovation cycle. Bringing customers, partners, and Applied's own innovators into the same physical space, moving from materials to systems simultaneously instead of step by step.

🔹 Dickerson says commercialization decides winners. Customers need performance, yield, and reliability at high volume before cost ever enters the conversation.

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Gary Dickerson:
AI will have a profound impact across everything that we do. And this race for AI compute leadership is the most important race that will determine who wins.

Patrick Moorhead: Welcome to Six Five Summit 2026, AI Unleashed. It is amazing the impact that AI is already having today, and I'm even more enthused about what it's going to do in the future. There have been a lot of industry discussions, a lot of discussions around semiconductors, but less about how they actually get built, the equipment. the materials that go into manufacturing, because quite frankly, none of this would be possible without companies like Applied Materials. And with that, I'd love to introduce Gary Dickerson, President and CEO of Applied.

Gary Dickerson: 

Well, thank you. Happy to be here with you guys.

Patrick Moorhead: 

Yeah, great to see you.

Daniel Newman:

 It's great to have you here. It's great to have you kick off day three for us here at the Six Five Summit. I think what you were trying to say in the beginning was these people that are creating little miracles every single day, right? That are changing our world.

Gary Dickerson: 

Big miracles.

Daniel Newman: 

Yes. Many, many small ones and many big ones. Okay. We absolutely agree. All right, so I want to ask you something. Clearly, you're building Epic right now, investing $5 billion here in the heart of Silicon Valley to revolutionize the future of chip making. So you feel very optimistic about AI and where we're heading with all this stuff. Oh, absolutely. Where are we with AI? Because this is a question I get asked a lot when I'm doing interviews. I'm flipping the script here. I'm asking you the question. Are we in the first inning? Are we in the fifth inning? Or is it halftime? Are we in the pregame? What do you say when people ask you that question?

Gary Dickerson: Yeah, so I think AI is the biggest inflection of our lifetimes. I think it's going to transform every industry. It's going to touch every individual. So for me, I look at how we're implementing AI inside applied materials. So we're innovating the way we innovate. We're innovating the way we bring products to market. We're innovating in our operations and supply chain. in our services across the entire company. And the big focus for me is not headcount savings. It's bringing products and services to market, miracles to market faster and driving top line growth. And so what is super clear to me is that the opportunity is tremendous. We are bringing products to market faster. We have a service business that's growing at a 20% compound annual growth rate. And I can bring services to market because these tools are incredibly complex. Our customers want to innovate with AI computing, with new materials and new architectures, but also they want to yield as fast as possible. It's really hard. So AI really is a game changer in our ability to bring those services and products to market faster and better. So I look at ourselves, where are we at? What inning are we in? We are bringing products to market this year that we wouldn't have been able to bring to market without AI. And I think this is just profound. I think that we will transform every part of the company. And I think this technology is at the foundation of competitiveness for everybody. So it is the race for AI compute leadership is profound for every country, for every market, every company, and every individual. So I believe we're very early in what's possible. And again, AI will have a profound impact across everything that we do. In this race for AI compute leadership, is the most important race that will determine who wins and loses.

Patrick Moorhead: 

I'm putting it in the pregame. Exactly. We are very early. I love that. I'm getting excited now, Gary. This is great. Me too. But I got to tell you, though, everybody seems to have an opinion on the demand for semiconductors. And it's not just, oh, the next week, but it's the next month, it's the next year. You have a view that very few have in the ecosystem. What are you seeing in terms of demand and where do you think it's going? And I don't know, why is it different than the industry cycles? I mean, you know, mainframe to mini, mini to client server, local and mobile, social, web, e-commerce.

Gary Dickerson: 

Yes.

Patrick Moorhead: 

A lot of runs. Mobile boom bust. Exactly.

Gary Dickerson: 

So I think this is memory. As you said, we've been through mainframe to PC and then you've got mobile social media. This is way more pervasive than anything that we've ever seen. And it's more profound. It really is at the foundation of competitiveness for every industry. And so, you know, this, the computing demand, and you also have, it's not, compute just being consumed by people, it's also compute being consumed by agents. And so, again, I just profoundly believe that the demand is going to continue to increase as we keep driving forward the new AI compute architectures and the innovation. And there is more and more adoption of these technologies in every industry and in every company. I mentioned what we're doing inside Applied Materials. There is zero question in my mind at the foundation of competitiveness. So yeah, again, I'm very, very confident that this inflection will determine who wins and loses around the world and in every single market and every single industry. And so the compute demand is going to keep going up. There is zero question in my mind. from the data center to new edge AI types of applications, you're going to see more demand for compute. And again, this is inevitable because the economics are so compelling.

Patrick Moorhead: 

Every device, every country, every industry, every workflow that currently exists.

Daniel Newman: Absolutely. Subtly, I think he's telling us that that demand curve goes beyond weeks, months, years, and it's decades into the future.

Gary Dickerson: Absolutely. What we're seeing currently in our business, again, the race for compute leadership is the most important race. In wafer fab equipment, Around 80% of the growth this year is really in the areas that are being driven by AI. So you have advanced logic, memory including high bandwidth memory, and advanced packaging, the multi-chip connectivity. That's about 80% of the wafer fab equipment growth. And again, it's really being driven by AI. Now, also what's great for Applied Materials, we're number one in every one of those different segments that are enabling that AI compute innovation. So we're seeing tremendous pull from all of the companies that we work with, our customers and other companies across the ecosystem.

Daniel Newman: 

So Gary, it's not just a race to create more chips, right? We certainly, it certainly feels like we need more of everything, right? For sure. But having said that, everything you just mentioned, you know, breaking through memory walls, building next generation advanced packaging to make everything more efficient or move data via light. Of course, computer architectures that, you know, bring more transistors and more throughput, all those different things. But like, you see it all. That's part of why you're doing what you're doing. That's part of why you're making the $5 billion investment in Epic. That's part of why you have all these partnerships. But like, where is the opportunity that you see in all these different things? Like, where's the biggest opportunities live for us to get that efficiency? Because if the AI demand is as big as you and I, and by the way, Pat, we all think this way, is the compute and the memory and the networking, the storage, the energy, we're short everything. Yes. And we're going to be for the foreseeable future.

Gary Dickerson: 

Yes. So I think there's a real drive on tokens per second per watt. And I've been in the semiconductor industry for decades. I love what we do. As you mentioned earlier, we're delivering miracles. I think I stole that from you earlier. Your smartphone, the application processor is a computer that has tens of billions of transistors, 60 miles of wiring, and it's over a thousand steps to build and it costs $30. I mean, you think about what we've been able to create in this industry, it is a miracle. And I can guarantee you there are many more miracles that are coming. And by the way, they're coming faster than ever. And so I think what you see with a lot of companies is this concept of co-innovation through the whole technology stack. So no one can drive this innovation by themselves. So I think of it from materials to systems. And so for us, we're enabling new innovations, miracles, in every part of that technology stack. So you think about advanced logic to process data. There's tremendous innovations there. And, you know, in some of these materials that we're creating, They're a nanometer or two nanometers thick. And you need to control to within an angstrom, which is a tenth of a nanometer, a millionth the size of human hair. And we're just bringing all of this materials innovation together to enable that computing innovation. In memory, you want faster and faster memory to get data on and off the chip. So a lot of the innovation that applied materials enabled in logic chips are being brought into memory chips. Because again, for AI, that high speed is incredibly important. Or stacking memory chips, where you're bringing the chips closer and closer together for higher speed, lower power consumption, and there's just so much innovation there. And then you have advanced packaging. And that business for Applied is growing over 50% this year. But how you connect computing components together is one of the most important innovations in the entire industry. So if you look at an advanced package, Next year, you'll have over 300 chips in the package. You'll have over 500 billion transistors, over 2,000 miles of wiring. And how you connect those compute components together and how you move the data has an enormous impact on performance, power, and cost. So for us, these co-innovation relationships are really fundamental. I really think about this concept of high-velocity co-innovation. Again, winning compute leadership is everything to everyone in this ecosystem. Whoever's winning in compute will make an enormous amount of money. And so for us, we're working across this entire tech stack in partnerships with our customers, with our customers' customers, enabling these new architectures in all of these different areas. And when you say which one is most important, I would say they're all important. Because again, everyone wants to drive at the highest possible velocity in every part of this technology stack. And that's where Epic, we made this $5 billion investment, co-locating innovators together. so that our innovators are with our partner innovators, moving as fast as we possibly can, where we're creating new ways to build those chips. We're creating new ways to connect all those computing components. And so, our customers, again, the first place they're going to have access to those key innovations is right here in Silicon Valley. And so I can tell you my experience being in the semiconductor industry for a long time, our leading customers, they want first access to the innovations. They want first access to the key innovators. and it applied, it's not just equipment. We have integration innovators. We can work and we are co-creating architectures with our partners that are dramatically better than anything that exists today. So that high velocity co-innovation here in Silicon Valley, where you have the highest innovation density per square meter of innovators, is a huge driver for applied materials and for our customers.

Patrick Moorhead: 

So Gary, in Epic, I mean, you have your customers, you have your customers' customers, you have your supply chain. We do. All interacting here. Give us the future state. I mean, you know, looking at the vision of why you did this, What do you want, you know, three years, five years from now, what do you want to have accomplished with this?

Gary Dickerson: 

It's really bringing these compute innovations to market faster. Again, the economics are tremendous, especially AI. There's so much demand for compute. So improving tokens per second per watt, cost per token, is something that everybody is focused on. And I said earlier, my view is that AI Demand is going to continue to increase become more pervasive going forward. So every one of these companies It's really time to market for those innovations and design wins. So for them, they're all in a race whether it's a logic company or a memory company or or how you connect all of this together so you can have design wins in your business, or system companies, or AI companies, again, all of them, they're trying to drive this compute innovation as fast as possible. So for us, the vision is to accelerate those innovations dramatically, instead of working in kind of a serial process, as you go from one step, from materials to systems, to another, to another, to another, we want these innovators working earlier, faster, and better. And here, in Epic, you have more materials innovations together applied in our partners than any place in the world. This is the place you're going to have first access to those materials innovations that will enable those new architectures for compute. And so again, our vision is we're accelerating time to market for those innovations. We're enabling our partners design wins in really big markets. And of course, for us, we want to be designed in with our equipment and services in this new platform.

Daniel Newman: 

It's interesting. It's like the world's largest technology incubator. It absolutely is. You remember when the VCs would stick all the companies in one building, and you've done this in a very specific space and with great scale.

Gary Dickerson: 

But let me say one more thing. I think that there is the innovation. So we talk about innovating the way you innovate. which is really important, but you also have to commercialize. That's the IC of Epic. So, our customers, to ramp any of these new architectures, they need to go to very high yields very quickly. So, it's not just who innovates first. Who is it that can ramp at high yield? When our customers are focused on design wins, they focus on performance, yield, reliability first. If you don't have those three things, cost doesn't matter. So whoever gets there first with those capabilities will win. And so we are working on innovations, but the innovations need to be able to be commercialized at high yield and the right cost, and it's really innovation in performance, innovation in yield, innovation in cost. All of those areas we're focused on with our partners.

Patrick Moorhead: 

Epic is as much a business proposition as it is an innovation proposition. Absolutely. In other words, this is not a science project. Oh, absolutely. I would certainly hope not at $5 billion.

Gary Dickerson: 

Oh, yeah. No, we have very good line of sight to enabling the architectures and then design wins with our products and services. I would say the other thing that's really valuable for us is our ability to work with the architecture innovators and integration innovators so we have very high visibility on what's important over the next 10 years. over many technology nodes. So it gives us very high visibility where to invest and where not to invest. And so that kind of engagement for us is incredibly important. Obviously, Enabling our customer success is important. All of those design wins, design wins for applied materials are important, but I do believe it'll make R&D way more efficient. If you think about how much money all of the ecosystem spends on these architectures, there are many, many, many billions of dollars. If you can bring those architectures to market faster and better, then the economics are overwhelming, not just for top line growth, but it can make your whole company dramatically more efficient.

Daniel Newman: 

Well, Gary, really appreciate you taking all the time with us today. As our viewers head into day three here at the Six Five Summit, you know, and you're the opening, you're the opener, you know. Big thoughts. What is the one big, I've heard a few messages here, by the way, throughout your conversation, but like the one big takeaway on AI and the semiconductor industry that you want all of our viewers to come away with today?

Gary Dickerson: 

Yeah, I think this is, I've been in the semiconductor industry delivering miracles for many years. I have never been more excited at any time in my career. I think the magnitude of the value that we're going to create is bigger than ever. The opportunities are tremendous. AI is the biggest inflection of our lifetimes. As I said, it will impact every country, every market, every company, touch every individual. So the compute demand and the need for compute innovation is bigger than ever. So I think the opportunity is there, but I believe that we have to innovate the way we innovate. or we will not accomplish what we could accomplish together. Fortunately, what I'm seeing is tremendous pull from ecosystem partners in high-velocity co-innovation. We've built capabilities inside applied materials over many years that put us in a position to engage in a completely different way than we ever have in the past. I deeply believe I love material innovation, And I deeply believe material innovation will be the key to these new compute architectures for AI. And so it is so much fun. The opportunity is tremendous. And I look forward to working together across the whole ecosystem to create many big and small miracles.

Daniel Newman: 

Gary, thank you so much for spending some time with us here. Appreciate you having us to your HQ and over to CEPIC. The first equipment may actually be being installed now as this conversation is going live. But love to continue to follow the work. And by the way, love the enthusiasm because we feel very much the same way here.

Gary Dickerson: 

Wow, that's great. Thank you guys. Thanks.

Daniel Newman: 

And thanks everybody for being part of this Six Five Summit day three opener. That was Gary Dickerson, CEO of Applied Materials. What a optimistic outlook to the future. Can't wait for you to spend the rest of the day here with us at the Six Five Summit. Stay with us, more to come.

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