The semiconductor equipment supercycle is coming! Applied Materials (AMAT.US) collaborates with two major storage chip giants to launch a wave of upgrades and expansion.

One of the world's largest semiconductor equipment manufacturers, Applied Materials, Inc. (AMAT.US), announced on Tuesday Eastern Time that it has reached a major cooperation agreement with leading storage chip companies, Micron Technology, Inc. (MU.US) and SK Hynix based in South Korea. The agreement aims at developing and constructing cutting-edge solutions for DRAM, high-bandwidth memory (HBM storage systems), and data center NAND storage systems, as well as upgrading iterative routes to comprehensively enhance the overall capacity of storage chips and the performance of artificial intelligence training/inference systems. It is understood that Applied Materials and Micron Technology plan to further strengthen the semiconductor innovation pipeline in the United States by utilizing Applied Materials' EPIC supercenter in Silicon Valley and Micron's Innovation R&D center in Boise, Idaho. Applied Materials stated that after deep cooperation with Micron, the strategic focus will be on accelerating the advancement of DRAM, HBM, and NAND production technologies. Their collaboration will integrate the expertise of Applied Materials' EPIC center with the innovation achievements of Micron's Innovation center in Boise, Idaho. The cooperation between Applied Materials and South Korean storage giant, SK Hynix, will focus on improving cutting-edge materials, advanced process integration for storage chips, and 3D-level advanced packaging technology for the next generation of high-performance DRAM and HBM storage systems. These efforts will also take place at the Applied Materials EPIC center. By collaborating with two of the world's three largest storage chip manufacturers, Micron Technology and SK Hynix, to jointly develop cutting-edge storage chips and actively expand storage chip capacity, these partnerships highlight that semiconductor equipment manufacturers are entering a super growth cycle in the midst of the global wave of AI computational infrastructure construction and the "storage chip super cycle" macro backdrop. They will be the largest beneficiaries of the sharp expansion trend in AI chips (including AI GPU/AI ASIC) and DRAM/NAND storage chip capacity. Recent reports from several Wall Street financial giants have suggested that the semiconductor equipment sector is one of the biggest winners in the AI computational power and storage demand explosion. As the construction of global mega-scale AI data centers led by tech giants such as Microsoft Corporation, Alphabet Inc. Class C, and Meta intensifies, driving the rapid expansion of AI chips with advanced processes of 3nm and below, along with the acceleration of CoWoS/3D advanced packaging capacity, the long-term bull logic of the semiconductor equipment sector is becoming increasingly robust. In a recent statement, Sanjay Mehrotra, Chairman, President, and CEO of Micron Technology, Inc., said, "High-performance memory and storage are important drivers of AI technology development, and continuous innovation in these technologies is crucial for unleashing the full potential of AI. For decades, Micron has collaborated with Applied Materials to provide material and engineering innovations for new types of memory and storage devices. We are pleased to extend this partnership to Applied Materials' new EPIC center in Silicon Valley. Combined with Micron's research and manufacturing Hub Group, Inc. Class A based in the United States, this partnership has created a unique innovation pipeline from the laboratory to the final wafer fab to drive the development of storage technology in the United States." This deep collaboration also includes joint research and development in 3D advanced packaging technology to achieve high-bandwidth, low-power comprehensive storage solutions for high-power AI workloads. The two companies also stated that Applied Materials' new $5 billion EPIC supercenter is one of the largest investments in cutting-edge semiconductor equipment research and development in the United States. Scott DeBoer, Executive Vice President and Chief Technology and Products Officer of Micron Technology, said, "Our collaboration with Applied Materials at the EPIC center goes beyond the next generation of advanced storage process nodes it is about driving disruptive advances in devices, materials, and processes to create future memory components and storage architectures, technologies, and achieving the extreme miniaturization needed for significantly improved performance and higher energy efficiency to meet the needs of our large customers." Chip manufacturer factories, application materials are ubiquitous. Unlike ASML Holding NV ADR's focus on lithography, Lam Research focuses more on etching, cleaning, patterning, and critical thin-film processes, focusing on the high aspect ratio (HAR) etching/deposition processes and related capabilities needed for advanced HBM storage. Applied Materials' advanced equipment plays a crucial role in almost every step of chip manufacturing, covering important chip manufacturing processes such as atomic layer deposition (ALD), chemical vapor deposition (CVD), physical vapor deposition (PVD), rapid thermal processing (RTP), CMP, wafer etching, and ion implantation. Applied Materials defines HBM as its key direction and emphasizes that the performance improvement of HBM comes not only from the advanced process of the DRAM die itself but also from the 3D packaging and interconnection technology; the company's hybrid bonding route has already been applied to NAND and is seen as an important path for further stacking of DRAM/HBM by storage chip manufacturers. In other words, Applied is more like a company that integrates materials, processes, and packaging into a producible platform. The current global demand for AI computational infrastructure and enterprise-level storage chip needs continues to show exponential growth trends, far outstripping supply intensities. This is evident from the incredibly strong performance and capital expenditure guidance from semiconductor industry leader Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US), as well as the substantial growth prospects of Applied Materials and Lam Research. If we delve into the capabilities of semiconductor equipment, Applied Materials' core strengths are concentrated in "material engineering + cutting-edge technology integration + occupying advanced packaging heights." It provides nearly 75% of the steps required for High Bandwidth Memory (HBM) manufacturing, while also launching a hybrid bonding system focused on advanced packaging/stacking of storage chips. Applied Materials' presence in its latest technical interpretation indicates that the HBM manufacturing process adds about 19 additional material engineering steps compared to traditional DRAM, and claims that its most advanced semiconductor equipment covers about 75% of these steps. The company also emphasizes advanced packaging equipment for second-generation stacking of HBM and DRAM, which will drive the company's next strong growth phase. The unprecedented wave of AI infrastructure and storage super-cycle has brought semiconductors into a new stage that is more "material-intensive, process-control-intensive, and packaging technology-forward": logic-side three-dimensional structures and new material overlays, storage-side HBM stacking and interconnect upgrades, packaging-side CoWoS/hybrid bonding converting system performance into manufacturing difficulty these three forces together raise the value density of crucial steps such as deposition/etching/CMP/advanced packaging/core measurement, transforming the cyclical fluctuations of semiconductor equipment demand more clearly into a "structural large expansion cycle." It is particularly worth noting that advanced packaging is accelerating from the "bump deposition era" to the "hybrid bonding era": hybrid bonding further shortens interconnect lengths and increases I/O density and reduces energy consumption through copper-copper direct interconnection, hitting the ultimate constraints on bandwidth-latency-power consumption for AI training/inference. Applied Materials not only elucidates the performance/power advantages of hybrid bonding relative to TSV on its official website, but also launches a scaled hybrid bonding platform, and strengthens its industry positioning through the investment in BESI (one of the leading hybrid bonding equipment companies) for "process-equipment synergy." The AI computational power and storage chip demand are expanding rapidly! Semiconductor equipment welcomes a super cycle The burgeoning AI infrastructure wave and storage super cycle have pushed semiconductors into a more "material-intensive, process-control-intensive, and packaging-technology-forward" stage. The logic side three-dimensional structures and new material overlays, storage side HBM stacking and interconnect upgrades, packaging side CoWoS/hybrid bonding to convert system performance into manufacturing difficulty - these three forces collectively enhance the value density of key steps such as deposition/etching/CMP/advanced packaging/core measurement, and transform the demand for semiconductor equipment from "cyclical fluctuations" to a "structural large expansion cycle." In the context of the recent global economic upheaval caused by the comprehensive outbreak of wars between the United States/Israel and Iran, spreading to multiple countries in the Middle East, triggering a new wave of political superstorms, investors are cooling their risk appetite sharply amid soaring oil and gas prices. This fear is driven by the serious concerns of fund managers about the global economy, which is still in a fragile recovery process, being on the verge of "stagflation" due to out-of-control surges in energy prices. However, recent reports from the analyst team at Bank of America Corp, a financial giant on Wall Street, suggest that the latest supply chain research and tracking of the storage industry chain indicate that the global storage industry, centered around storage chips, is still in the midst of a "storage super cycle." The impact of the Middle East political conflict on storage industry and core supply chains and the impact on fund managers' bullish outlook for the storage sector is almost negligible. Especially since core semiconductor equipment mainly comes from the United States and Europe and is usually transported by air, without having to pass through the Strait of Hormuz. Whether it is the unparalleled TPU AI computational cluster led by Alphabet Inc. Class C or the massive NVIDIA Corporation AI GPU computational cluster, they cannot do without the HBM storage systems integrated with AI chips. In addition to HBM, current tech giants led by Alphabet Inc. Class C and OpenAI are accelerating the construction of new or expanded AI data centers and must also purchase server-level DDR5 storage and enterprise-level high-performance SSD/HDD storage solutions. Different from Seagate and Western Digital Corporation focusing on monopolizing near-line large-capacity HDD, SanDisk focuses on high-performance eSSD, while Samsung, SK Hynix, and Micron - the three major storage chip factories are all simultaneously positioned in multiple core storage areas: HBM, server DRAM (including DDR5/LPDDR5X), and high-end enterprise-grade eSSD, making them the most direct beneficiaries of the "AI memory+storage stack" and the shared benefits of the AI infrastructure "super bonus." A recent report from BNP Paribas, the French bank, predicted a 90% increase in DRAM contract prices in the first quarter of 2026, with NAND prices expected to rise by a considerable 55%. The second quarter will continue the upward price trend seen since the second half of 2025. In terms of target stock price, the analyst team at BNP Paribas has given a target price of up to $500 for Micron, the semiconductor company. Micron rose by 3.54% to $403.11 on Tuesday. BNP Paribas' assessment of the rising trend in storage prices is not an isolated view. TrendForce recently revised its expectations for the first quarter of 2026, predicting a quarterly increase from the previous estimate of 55%-60% to +90%-95% for regular DRAM contract prices and a significant upward revision to +55%-60% for NAND Flash contract prices. North American cloud computing companies' demand for enterprise SSD (i.e., enterprise-level SSD, eSSD) is increasing significantly, driving prices to rise by an additional 53%-58% quarter-on-quarter in the first calendar quarter. All of this indicates a key fact: storage chips have become the "absolute C position" no less than NVIDIA Corporation AI chips in the current wave of AI super growth, and continue to be one of the core supply bottlenecks that first show supply-demand imbalances and pricing power in this wave. The AI computational power and storage chip demand are expanding wildly! Semiconductor equipment welcomes a super cycle The unprecedented AI infrastructure wave and storage super cycle have pushed semiconductors into a new stage that is more "material-intensive, process-control-intensive, and forward-moving in packaging technology": the three-dimensional structures on the logic side and new material overlays, the HBM stacking and interconnect upgrades on the storage side, and the CoWoS/hybrid bonding on the packaging side are all aimed at transforming system performance into manufacturing difficulties - these three forces have collectively raised the value density of crucial steps such as deposition, etching, CMP, advanced packaging, and core measurement. This has rewritten the demand for semiconductor equipment from "cyclical fluctuations" to a "structural large expansion cycle." It is particularly worth noting that the advanced packaging is accelerating from the "bump deposition era" to the "hybrid bonding era": hybrid bonding, through copper-copper direct interconnection, further shortens interconnect lengths, increases I/O density, and reduces energy consumption, hitting the ultimate constraints of bandwidth-latency-power consumption for extreme AI training/inference. Applied Materials not only elaborates on the performance/power advantages of hybrid bonding relative to TSV on its official website, but also introduces a scaled hybrid bonding platform and strengthens its industrial positioning through stakes in BESI (one of the top hybrid bonding equipment companies) for "process-equipment synergy." The global demand for AI computational infrastructure and enterprise-level storage chip continues to show exponential growth trends, far outstripping supply intensities. This is evident from the incredibly strong performance and capital expenditure guidance from semiconductor industry leader Taiwan Semiconductor Manufacturing Co., Ltd. Sponsored ADR (TSM.US), as well as the substantial growth prospects of Applied Materials and Lam Research. If we delve into the capabilities of semiconductor equipment, Applied Materials' core strengths are concentrated in "material engineering + cutting-edge technology integration + occupying advanced packaging heights." It provides nearly 75% of the steps required for High Bandwidth Memory (HBM) manufacturing, while also launching a hybrid bonding system focused on advanced packaging/stacking of storage chips. Applied Materials' presence in its latest technical interpretation indicates that the HBM manufacturing process adds about 19 additional material engineering steps compared to traditional DRAM, and claims that its most advanced semiconductor equipment covers about 75% of these steps. The company also emphasizes advanced packaging equipment for second-generation stacking of HBM and DRAM, which will drive the company's next strong growth phase. Translated from Chinese.