Key Findings: Applied Materials Sees Over 70% Growth in Advanced Packaging Revenue, 40% Total Revenue Growth Driven by AI and HBM
Applied Materials is significantly benefiting from the increasing complexity in AI chip and High Bandwidth Memory (HBM) manufacturing, projecting approximately 40% year-over-year growth in its total revenue for 2026. Specifically, the advanced packaging business is expected to grow by over 70%, and the process control business by more than 50%. The company reported a record Q3 2026 revenue of $9.115 billion, representing a 25% increase from the previous year, with non-GAAP gross margins expanding to 50.4%, indicating improved profitability.
Technical and Portfolio Details: Comprehensive Processes and Strategic Acquisitions
As chip structures become more intricate, new materials and process steps are required, leading to increased demand for deposition, etch, planarization, inspection, and packaging equipment. Applied Materials is one of the equipment companies with the broadest exposure to these processes, offering a wide portfolio for advanced packaging including deposition, copper plating, CMP, bonding, and E-beam process control. The company has reinforced its advanced packaging capabilities through acquisitions of panel-level plating and X-ray technology firms and actively invests in hybrid bonding technology. New CMP, ECD, deposition, and E-beam systems for HBM and 3D packaging were also announced in June 2026, enhancing its responsiveness to cutting-edge technologies.
Background and Industry Context: AI as the “Biggest Technology Inflection Point”
The CEO of Applied Materials identifies AI as the “biggest technology inflection point” seen in his lifetime, emphasizing its role as a multi-year growth driver. Cutting-edge foundry logic, DRAM including HBM, and advanced packaging account for 80% of wafer fab equipment (WFE) growth this year, driven by AI system demand and robust ecosystem-wide investments. Customer capital expenditure forecasts and cloud provider investments are on the rise, with HBM and 3DIC identified as the fastest-growing segments this year.
Future Outlook: Panel-Level Packaging and Continuous Innovation
While recognizing panel-level packaging as being in its development phase, Applied Materials is strengthening its capabilities through investments in larger substrates and recent acquisitions. Process diagnostics and control, particularly E-beam inspection, are expected to grow by over 50% due to increasing device complexity, further boosting Applied Materials’ future revenues. As advanced packaging becomes a primary industrial battleground, driven by AI and data center expenditures, Applied Materials is poised to play a central role in this new growth cycle through its extensive technology portfolio and strategic investments.
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