Global semiconductor equipment leader Applied Materials reported Q3 FY2026 revenue of $12.03B on July 25, up 28% YoY, a record high and above expectations. CEO Gary Dickerson stated during the earnings call that the semiconductor industry is entering a "super cycle," with strong advanced process investment driving robust demand for etch, deposition, and inspection equipment.
Advanced Process Arms Race: 3nm/2nm Demand Driven
Applied Materials' earnings showed that revenue from foundry and logic chip customers accounted for 72%, with the largest contributions from TSMC, Samsung Electronics, and Intel. These three leaders are accelerating capacity buildout for 3nm and 2nm processes, especially TSMC's new fabs in Arizona and Kumamoto, Japan, and Intel's Ohio wafer fab, all extensively purchasing Applied Materials equipment.
Analysts note that global digital transformation and AI applications continue to expand, driving increasing demand from HPC chips, server processors, and autonomous vehicle chips for advanced processes. Applied Materials' order visibility extends to 2027, with backlog exceeding $40B.
Semiconductor Equipment Market Estimated at $150B by 2027
According to the latest SEMI report, global semiconductor equipment sales are estimated to reach $135B in 2026, up 18% YoY, and break $150B by 2027. Front-end equipment (etch, deposition, lithography) leads with over 20% growth; back-end packaging and test equipment also see double-digit growth driven by advanced packaging technologies like TSMC 3D Fabric and Intel EMIB.
Singapore, a key Southeast Asian semiconductor hub, has a complete equipment supply chain. Local listed companies like UMS Holdings (vacuum chamber components for Applied Materials) and AEM Holdings (semiconductor test solutions) directly benefit from this expansion cycle. UMS Holdings recently reported 35% YoY net profit growth in H1 2026, mainly from increased orders from Applied Materials and Lam Research.
Geopolitics and Supply Chain Resilience in Focus
Notably, US export controls on Chinese semiconductor equipment are escalating. Applied Materials stated its revenue from China has dropped from 30% in 2022 to 15% currently, but demand from other regions fully offset the gap. To reduce geopolitical risks, Applied Materials is accelerating localized production in the US, Europe, and Singapore.
In June, Applied Materials announced a $2B investment to expand its technology R&D center in Singapore, expected to complete by 2027. The center will focus on advanced etch and deposition technologies to serve Asia-Pacific clients. Singapore's EDB noted the investment will create over 1,000 engineer positions locally.
Semiconductor Index Hits Record; Investors Continue Positioning
Boosted by Applied Materials' strong results, the Philadelphia Semiconductor Index (SOX) rose 3.2% to 5,280 points on July 25, a record high. TSMC ADR gained 2.5%, and Samsung Electronics surged 4.1% on the Korean exchange. Analysts broadly believe semiconductor equipment stocks will be major beneficiaries of the next AI investment wave.
Semiconductor-related stocks on the Singapore Exchange (SGX) performed well. UMS Holdings (stock code: 558) rose as much as 7% intraday on July 26, hitting a 52-week high; AEM Holdings (stock code: AWX) also gained 4.5%. Market Pulse analysts said, "With fab utilization rates above 90%, equipment procurement momentum will likely last until at least 2027. Investors can focus on opportunities in the Singapore semiconductor equipment supply chain."
Investment Recommendations and Risk Disclaimers
- Favorable Targets: UMS Holdings, AEM Holdings, and ETFs tracking semiconductor equipment indices (e.g., VanEck Semiconductor Equipment ETF).
- Risk Factors: Further escalation of US-China tech war, weaker-than-expected end demand, and advanced process technology bottlenecks.
Overall, Applied Materials' earnings confirm strong growth momentum in the semiconductor equipment market. As Singapore is a key node in the global semiconductor supply chain, local companies' earnings visibility has greatly improved. Investors should closely monitor quarterly orders and shipments of equipment makers to seize the next positioning opportunity.
