Applied Materials Faces Market Share Test as Global Chip Equipment Spending Surges 23%

• Worldwide wafer fabrication equipment spending is projected to increase 23.1% to $143.9 billion in 2026, following a record $116.9 billion in 2025
• Applied Materials’ global equipment market share declined from 20.0% in 2024 to 17.9% in 2025, while Lam Research, KLA and ASML gained share
• Applied Materials’ equipment revenue increased only 1.0% during the first half of 2026, compared with double-digit growth at its three major competitors, raising questions about its ability to recover market share

Applied Materials Faces a Market Share Challenge

The global semiconductor equipment industry is experiencing another major expansion, supported by artificial intelligence infrastructure investment, high-bandwidth memory, advanced logic manufacturing and increasingly complex semiconductor architectures. Worldwide wafer fabrication equipment (WFE) sales are projected to increase 23.1% to $143.9 billion in 2026, following a record $116.9 billion in 2025. The forecast reflects continued investment in the manufacturing technologies required to support the next generation of semiconductor devices.

However, the expansion is not benefiting every equipment manufacturer equally. Applied Materials (AMAT | AMAT Price Prediction), historically one of the industry’s largest and most diversified suppliers, has experienced a significant deterioration in its global market share. Its competitors, including Lam Research (LRCX), KLA (KLAC) and ASML (ASML), have demonstrated substantially stronger revenue growth during the latest first-half comparisons.

According to proprietary data from The Information Network, Applied Materials’ global WFE market share declined from 20.0% in 2024 to 17.9% in 2025, representing a loss of 2.1 percentage points. During the same period, Lam Research increased its share from 9.1% to 11.2%, KLA advanced from 7.9% to 8.2%, and ASML recovered from 22.4% to 23.0%.

The concern for investors is that Applied Materials’ equipment revenue increased only 1.0% during the first half of 2026 compared with the corresponding period in 2025. This contrasts sharply with the growth recorded by its major competitors and raises questions about whether Applied Materials can participate proportionately in the industry’s projected expansion.

The distinction is particularly important because the five largest semiconductor equipment manufacturers collectively account for a substantial majority of global WFE revenue. Their combined revenue is projected to increase from approximately $83.2 billion in 2025 to $113.6 billion in 2026, representing growth of approximately 36.5%. This is considerably faster than the projected 23.1% expansion of the worldwide market, suggesting that the industry’s largest suppliers could collectively increase their market share.

For Applied Materials, however, the question is whether its own revenue performance will improve sufficiently to participate in that shift.

A Continuing Shift in Semiconductor Equipment Market Share

Applied Materials’ market share deterioration is not an isolated development. Its global WFE market share reached 22.2% in 2016, declined to 18.1% in 2019, and subsequently recovered to approximately 20.0% in 2022. That recovery has not been sustained, with its share falling to 17.9% in 2025.

The recent decline is particularly significant because the semiconductor equipment market has benefited from increased investment in advanced logic, memory and packaging technologies. Applied Materials participates in many of these markets through deposition, materials engineering, ion implantation and other process technologies. Nevertheless, its overall market share performance indicates that its revenue growth has not consistently matched the industry’s expansion.

According to Table 1, Applied Materials’ global WFE market share remained approximately stable between 2023 and 2024 before declining sharply in 2025. Lam Research experienced the opposite trajectory, increasing from 8.5% in 2023 to 11.2% in 2025. KLA also gained share, while ASML recovered in 2025 after declining in 2024. The 2026 projections illustrate the market share recovery that would be possible if the manufacturers achieve their respective full-year revenue forecasts.

The projected improvement in Applied Materials’ market share from 17.9% in 2025 to 20.4% in 2026 would require a substantial acceleration in its equipment revenue growth. Its full-year revenue projection assumes approximately 40% growth, a sharp contrast with the 1.0% increase recorded during the first half of 2026.

This difference between projected annual growth and actual first-half performance is central to evaluating the company’s outlook. The market share forecast demonstrates what Applied Materials could achieve under a strong recovery scenario, but its recent revenue performance provides limited evidence that such an acceleration is already underway.

The forecasts also indicate that the largest equipment manufacturers could capture a greater proportion of worldwide spending. However, these projections depend on the companies achieving their respective revenue targets and on maintaining consistent definitions between reported equipment revenue and the global WFE market.

First-Half 2026 Revenue Growth Reinforces the Competitive Divergence

The competitive differences become more apparent when examining semiconductor equipment revenue growth during the first halves of 2025 and 2026.

Applied Materials’ equipment revenue increased 8.7% during the first half of 2025 compared with the corresponding period in 2024. However, its full-year 2025 equipment revenue increased only approximately 2%, coinciding with its 2.1-percentage-point market share decline.

During the first half of 2026, Applied Materials’ equipment revenue growth slowed further to just 1.0%. In contrast, Lam Research, KLA and ASML continued to report substantially stronger growth.

According to Table 2, Lam Research’s equipment revenue increased 23.3% during the first half of 2026, compared with 12.6% for KLA and 13.3% for ASML. The three manufacturers averaged 16.4% growth, substantially exceeding Applied Materials’ performance.

Although revenue growth slowed across all four manufacturers, Applied Materials’ performance remained substantially weaker than that of its competitors. Its first-half 2026 growth was only a small fraction of the increases recorded by Lam Research, KLA and ASML.

This divergence raises questions about the assumptions underlying the company’s projected full-year recovery. If Applied Materials is to increase its equipment revenue approximately 40% in 2026, its second-half performance would need to accelerate dramatically from the first-half growth rate.

That acceleration is mathematically possible, particularly if equipment shipments and customer investments are heavily weighted toward the latter part of the year. However, investors should distinguish between a forecast that assumes strong second-half growth and evidence that such growth is materializing.

The company’s recent market share deterioration also illustrates the consequences of falling behind the overall industry. Applied Materials lost 2.1 percentage points of global WFE share in 2025 despite reporting positive equipment revenue growth. If its 2026 performance remains below the projected 23.1% expansion of worldwide WFE spending, further market share erosion would follow.

Why Lam Research, KLA and ASML Are Better Positioned

The semiconductor equipment market is undergoing a structural transition as chipmakers adopt gate-all-around transistors, advanced DRAM architectures, higher-layer-count 3D NAND and increasingly sophisticated packaging technologies. These developments increase the importance of specific manufacturing processes, creating opportunities for suppliers with strong positions in those categories.

Lam Research benefits from growing etch and deposition requirements in advanced memory and logic manufacturing. Increasing NAND layer counts, more demanding DRAM structures and new transistor architectures require sophisticated processing technologies. Lam’s global WFE market share increased from 8.5% in 2023 to 11.2% in 2025, demonstrating its ability to capture a larger portion of equipment spending. Its first-half 2026 revenue growth of 23.3% also provides evidence of continued competitive momentum.

KLA benefits from the increasing importance of semiconductor inspection, metrology and process control. Advanced manufacturing requires tighter process tolerances and more sophisticated defect detection to maintain acceptable yields. KLA’s global market share increased from 5.9% in 2018 to 8.2% in 2025, reflecting the growing importance of these capabilities. Its competitive position becomes increasingly valuable as semiconductor structures become more difficult to manufacture.

ASML occupies a different position through its dominance in extreme ultraviolet lithography. The transition toward advanced logic nodes increases demand for sophisticated lithography systems, supporting ASML’s long-term growth. Its global WFE market share increased from 15.5% in 2015 to 23.0% in 2025, although annual results fluctuate with equipment delivery schedules and customer investment.

Applied Materials also participates in many of the technologies driving equipment demand. Its deposition, materials engineering and other process technologies remain essential to semiconductor manufacturing, while advanced packaging provides additional opportunities. Nevertheless, the company’s recent revenue performance suggests that these opportunities have not yet translated into growth comparable to that of its principal competitors.

For investors, the distinction between participation in growing markets and capturing a larger share of those markets remains critical. Companies with strong positions in the most rapidly expanding manufacturing processes may benefit disproportionately from the current equipment investment cycle.

China’s Domestic Equipment Expansion Adds Competitive Pressure

Applied Materials also faces growing competition from Chinese semiconductor equipment manufacturers, which are expanding their presence in deposition, etch, cleaning and other manufacturing processes.

According to The Information Network, six leading Chinese equipment manufacturers recorded average first-half 2026 revenue growth of 35.6%, compared with 11.4% for seven major non-Chinese manufacturers. These figures represent unweighted company averages rather than aggregate market growth rates, but they illustrate the momentum of China’s domestic equipment industry.

Piotech recorded first-half revenue growth of 49.1%, followed by Hwatsing at 35.6%, ACM Research at 35.2%, AMEC at 34.9%, Skyverse at 34.0% and NAURA at 24.9%. Their expansion reflects continued investment in domestic semiconductor manufacturing capabilities and efforts to increase the use of locally manufactured equipment.

However, Chinese manufacturers still account for less than 10% of worldwide semiconductor equipment revenue. Their rapid growth therefore cannot independently explain major market share shifts among the industry’s largest international suppliers. Those changes also reflect differences in technology exposure, product demand and the distribution of capital spending across manufacturing processes.

For Applied Materials, the competitive challenge comes from both directions. Chinese suppliers are expanding their participation in domestic equipment spending, while established international manufacturers continue to benefit from strong positions in critical advanced manufacturing technologies.

Investor Takeaway

The semiconductor equipment industry remains one of the principal beneficiaries of artificial intelligence infrastructure investment, advanced memory manufacturing and continued semiconductor technology development. With worldwide WFE revenue projected to increase 23.1% to $143.9 billion in 2026, the industry offers substantial opportunities for manufacturers capable of capturing incremental capital spending. However, The Information Network’s historical data demonstrate that Applied Materials has struggled to maintain its competitive position. Its global market share declined from 20.0% in 2024 to 17.9% in 2025, while Lam Research, KLA and ASML all gained share during that year.

The first-half 2026 revenue comparisons raise additional concerns. Applied Materials’ equipment revenue increased just 1.0%, compared with 23.3% for Lam Research, 12.6% for KLA and 13.3% for ASML. Although the full-year projections indicate that Applied Materials could recover market share to approximately 20.4% if its equipment revenue increases 40%, achieving that outcome would require a substantial acceleration during the remainder of 2026. The discrepancy between actual first-half performance and the projected full-year recovery is therefore a critical issue for investors evaluating the company’s competitive position.

For investors, the semiconductor equipment industry’s expansion remains attractive, but company selection is increasingly important. Lam Research’s recent market share gains and revenue growth make it particularly well positioned, while KLA’s process control capabilities and ASML’s lithography leadership provide important competitive advantages. Applied Materials remains an important industry supplier, but its investment case increasingly depends on demonstrating that its broad technology portfolio can generate revenue growth comparable to the overall market. Until that improvement becomes evident, the possibility of further market share erosion remains an important consideration in evaluating the stock.

Contact [email protected] for any questions or corrections.