Applied Materials CFO: AI Boom Lifts Chip Equipment Demand

Semiconductor equipment demand is strengthening as artificial intelligence infrastructure investment drives customer spending forecasts higher, according to Applied Materials CFO Brice Hill.

Speaking at Citi's 2026 Global TMT Conference, Hill said the company's rolling eight-quarter forecasts from major customers—particularly DRAM and leading-edge logic manufacturers—have increased throughout the year. The trend reflects surging demand for AI systems and expanding capital expenditure plans from cloud service providers, which now exceed $700 billion for U.S. companies and approach $1 trillion globally, according to details first reported by MarketBeat.

"Really all the indicators, all the arrows point up," Hill said. "Our customers are investing, our customers' customers are investing and highly profitable, and we're investing."

Why it matters

The trajectory Hill describes signals that AI infrastructure buildout has moved beyond proof-of-concept into sustained capacity expansion. When the world's largest equipment supplier reports consistent upward revisions to multi-quarter forecasts, it suggests hyperscalers and chipmakers see durable demand—not a transient spike. For technology leaders planning capital allocation or supply chain strategy, these equipment orders are a leading indicator of where production capacity will land 12 to 18 months out.

Advanced packaging and memory lead growth

Applied Materials expects advanced packaging revenue to grow more than 70 percent this year, Hill said. The company is also seeing DRAM enter a significant greenfield expansion cycle driven by AI-related capacity requirements.

The company is tracking design specifications for AI systems, including GPU, accelerator, CPU, and memory content, to forecast future demand by device category. Applied is monitoring more than 100 fabrication facility projects globally, with more than 10 new projects added in each of the past two quarters, Hill noted.

Clean-room availability remains a key constraint on industry capacity growth over the medium term, he said. Applied is evaluating the timing of new fabs and the capacity they will add while using customer forecasts to plan for equipment demand.

Services and process control accelerate

Applied Materials expects services revenue to grow more than 20 percent this year, with process diagnostics and control revenue forecast to increase more than 50 percent. Hill attributed the acceleration to higher chip complexity and the adoption of AI-enabled tools in manufacturing.

The services and process-control segments provide recurring revenue streams that tend to be less cyclical than new equipment sales, offering Applied Materials greater revenue stability as the industry scales AI-related production.

These details were first reported by MarketBeat based on Hill's remarks at the Citi conference.