Applied Materials

Applied Materials ships the machines that make the chips—$27.2 billion in equipment revenue for 2024, representing 73% from semiconductor systems. This is keystone species dynamics: AMAT doesn't make processors, but Intel, TSMC, and Samsung can't build fabs without its deposition and etching tools. The company's Sym3 Magnum etch system alone generated $1.2 billion in 2024. Gate-all-around (GAA) transistor equipment revenue doubled from $2.5 billion to $5 billion in 2025. When the entire semiconductor industry transitions to new manufacturing processes, Applied Materials captures value across every fab that must upgrade.

The biological advantage is network effects through installed base. Once a fab standardizes on AMAT equipment, switching costs are prohibitive—revalidating new tools takes 12-18 months and risks production delays worth billions. Applied's 35,700 employees include field service engineers embedded at customer sites, creating mutualistic relationships where AMAT's success depends on customer yields. The company's service business generated 25% of revenue in 2024, providing recurring income that semiconductor equipment peers struggle to match. This is symbiosis: Applied Materials provides the tools; customers provide the predictable maintenance revenue and first look at next-generation requirements.

But keystone dependency creates concentration risk. China represented 30% of sales in Q3 2024, dropping to 25% by Q2 2025 as U.S. export controls tightened. AMAT ranks second globally in wafer fab equipment (WFE) behind ASML, which surged ahead through EUV lithography monopoly. The company's preparation for "higher demand in second half of 2026" reveals the fundamental constraint: wafer fab equipment revenue tracks industry CapEx cycles, not end-market demand. When chipmakers pause fab construction, Applied Materials' revenue collapses regardless of how many smartphones or data centers get built. The keystone depends on the ecosystem's expansion, not just its health.