SANTA CLARA, Calif. - Applied Materials (NASDAQ:AMAT), Inc. has introduced a series of materials engineering innovations aimed at improving the performance-per-watt of computer systems as chips scale down to the 2nm logic node and beyond. The company's latest developments include the use of ruthenium in high-volume production to enhance copper chip wiring and a new low-k dielectric material that strengthens logic and DRAM chips for 3D stacking.
Dr. Prabu Raja, President of the Semiconductor Products Group at Applied Materials, emphasized the importance of these advancements for the AI era, which demands more energy-efficient computing. The new materials solutions are designed to address the physical limitations encountered as chipmakers scale down to the angstrom level, which can lead to increased resistance and reduced performance.
One key innovation is the introduction of an enhanced version of Applied's Black Diamond material, which is part of the Producer Black Diamond PECVD family. This new material lowers the dielectric constant (k-value) to support scaling to 2nm and smaller nodes, while also providing greater mechanical strength, essential for advanced 3D logic and memory stacking.
Additionally, Applied Materials has unveiled a binary metal combination of ruthenium and cobalt (RuCo) as part of its Integrated Materials Solution (IMS). This combination allows for a 33 percent reduction in the thickness of the liner used in chip wiring, leading to up to a 25 percent decrease in electrical line resistance. This improvement is critical for enhancing chip performance and reducing power consumption.
The new materials have been adopted by leading logic and DRAM chipmakers, with shipments beginning at the 3nm node. Industry leaders like Sunjung Kim from Samsung Electronics (KS:005930) and Dr. Y.J. Mii from TSMC have recognized the importance of these innovations in overcoming interconnect wiring resistance, capacitance, and reliability challenges.
Applied Materials, being the industry leader in chip wiring process technologies, sees a significant market opportunity with these advancements. The company estimates an increase in its served available market opportunity in wiring by more than $1 billion per 100,000 wafer starts per month (100K WSPM) from the 7nm to the 3nm node, reaching approximately $6 billion. Further growth is anticipated with the introduction of backside power delivery.
More details about these innovations will be shared at Applied's SEMICON West 2024 Technology Breakfast, with presentation materials available on the company's website on Tuesday, July 9, 2024.
The information in this article is based on a press release statement from Applied Materials, Inc.
In other recent news, Applied Materials has seen significant developments. The company announced a 25% increase in its quarterly cash dividend, raising it from $0.32 to $0.40 per share. This move continues the company's trend of annual dividend growth, reflecting its strong financial health and a commitment to return capital to shareholders.
In financial performance, Applied Materials reported robust revenues and earnings per share for the April quarter, exceeding the upper end of guidance. The company's advanced packaging segment is projected to surge 70% year-over-year to $1.7 billion, and its Gate-All-Around (GAA) technology is expected to generate over $2.5 billion in revenues in 2024, doubling to $5 billion by 2025.
Several top-tier financial firms have updated their stances on Applied Materials. Citi raised its price target for the company's shares to $250, citing a strong demand outlook, while KeyBanc maintained its Sector Weight rating, citing recovery. B.Riley increased the company's stock price target to $255, highlighting the company's future growth potential, and Stifel raised its price target for Applied Materials shares to $240, maintaining a Buy rating.
InvestingPro Insights
As Applied Materials, Inc. (AMAT) continues to innovate at the forefront of materials engineering for the semiconductor industry, its financial and market performance provides additional context to the company's growth trajectory. With a robust market capitalization of $200.86 billion, AMAT demonstrates significant presence in the Semiconductors & Semiconductor Equipment industry. The company's commitment to innovation is also reflected in its financial health, as indicated by a strong gross profit margin of 47.18% over the last twelve months as of Q2 2024, underscoring its ability to maintain profitability while pushing the boundaries of technology.
Investors are taking note of AMAT's strategic moves, as evidenced by the 18 analysts who have revised their earnings upwards for the upcoming period—an InvestingPro Tip that signals market confidence in the company's future performance. Additionally, AMAT's stock has seen a high return over the last year, with a one-year price total return of 75.18%, showcasing the positive reception of its technological advancements and market strategies.
While the company is trading at a high P/E ratio of 27.67, suggesting a premium valuation relative to near-term earnings growth, AMAT's dividend growth of 25.0% over the last twelve months points to a commitment to shareholder returns, having raised its dividend for 6 consecutive years. This balance of growth and return may appeal to a broad range of investors looking for both innovation and stability in their portfolios.
To delve deeper into Applied Materials' financials and for more InvestingPro Tips, such as the company's ability to sufficiently cover interest payments with its cash flows and its moderate level of debt, visit Investing.com/pro/AMAT. With a total of 20 additional InvestingPro Tips available, investors can gain a comprehensive understanding of AMAT's market position and financial health. Don't forget to use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, offering valuable insights for informed investment decisions.
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