Applied Materials has been the most dominant maker of semiconductor production equipment for more than 30 years. It has just announced what I consider a truly novel collaboration project with chip makers and universities that aims to drive big advances in chip production techniques. I’m talking about the kinds of process improvements that could bring new chip technologies to market years faster than the status quo.
In my decades of studying the tech industry, I’ve seen plenty of companies launch showy R&D initiatives basically as a glorified vehicle for marketing and sales. But that’s not what I see at all with Applied’s new Equipment and Process Innovation and Commercialization (EPIC) Center. (Great acronym, huh?) After talking with Applied executives, and based on the company’s long history of innovation, the partners it has already lined up and the funds it’s putting into this project, I believe this will be the real deal: a collaboration that will make substantive contributions to the semiconductor industry for many years to come.
The rationale behind the EPIC Center
We usually take them for granted, but modern chips really are one of the great engineering marvels in all of human history. Relentless improvements in circuit design, materials, engineering software, deposition equipment, packaging and many other areas have enabled all the incredible advances we’ve seen in everything from smartphones to medical devices to avionics.
But as these devices have gotten ever more sophisticated, the equipment and processes supporting them have become ever more complex. As shown in the timeline below, that leads to very long cycle times in terms of fundamental research, the development of new equipment and production methods and ultimately the mass commercialization of new chips.
I got a taste of this myself many years ago when I was an executive at AMD. The amount of work and expertise required at each stage is honestly staggering, and in some ways it’s no wonder that the whole cycle can take 10 to 15 years to play out.
Still, there has to be a better way to deal with what Applied executive Satheesh Kuppurao calls the “excruciatingly painful” iterative processes of back-and-forth between researchers and equipment makers, and then equipment makers and chip manufacturers. Kuppurao, who serves as group vice president for business development and growth at Applied (and who holds a Ph.D. in materials science), explained that the frictions and bottlenecks in the current way of doing things can lead to endless disconnects and delays.
“You can only solve these challenges if everybody comes together,” he told me. Which explains why Applied has created EPIC.
Creating overlapping timelines for both research and development
The key insight driving the EPIC Center is that the timelines for foundational research, development of new manufacturing equipment and processes and then real-world rollout into commercialization don’t have to be purely linear, where one leads to the next like a row of dominoes. In fact—as shown in the following diagram—they can be overlapped. The potential time savings could be 30%, meaning that even the most complex new chip technologies could reach end users three or more years faster than before.
By giving dedicated space to university labs, equipment companies and chip makers in a single state-of-the-art facility, Applied intends to reduce the traditional frictions and bottlenecks that Kuppurao was talking about. Researchers from engineering powerhouses like Stanford, MIT, Cal-Berkeley, Arizona State and the University of Texas will have a chance to rub shoulders with industry pros from Applied and other equipment makers as well as chip companies including Intel, AMD, TSMC, Samsung, IBM and Nvidia.
In this environment, after a critical mass of fundamental research in a new area has been done, the process development experts can begin to work in parallel with the physicists, materials scientists, electrical engineering professors and other researchers. And then when the time is right, the process engineers will work alongside the implementation pros who know how to get new processes implemented in commercial fabs.
Side-by-side collaboration. Real-time communication. Getting all the smart people from different areas into the same room. It all sounds simple in concept, but Applied has the resources and expertise to make it happen for some of the most complex engineering challenges imaginable.
Who will benefit from the EPIC Center
I have no doubt the EPIC Center will be a winner for Applied. The company has lived at the epicenter of chip development technology for decades, and this project will only strengthen its position as it enables Applied to influence one new area of process technology after another. In the long run, I expect that the money the company has committed to invest – up to $4 billion over the next seven years, including potential government incentives – will seem like a small price to pay for that.
EPIC should also be a clear winner for the chip makers that will be able to bring new products to market—especially the most advanced products—that much faster. If I were running engineering for the likes of AMD or Nvidia, I’d certainly jump at the chance to have early access to cutting-edge processes that could accelerate my whole product roadmap.
It’s also great for the universities involved. When I talked with Tristan Holtam, group vice president for corporate strategy and development and chief of staff to Applied Materials CEO Gary Dickerson, he was eloquent about the vital role of universities in maintaining the strength of the semiconductor ecosystem in the U.S. The universities’ importance—along with the industry’s need for a big talent pipeline to match its growth in the coming years—is why Applied wants to invest in cultivating the next generation to come into the industry.
By the way, university involvement will extend beyond the dedicated EPIC facility to satellite labs managed by Applied at the different schools involved. Even the best engineering programs often don’t have the latest production equipment they would need to transform their research findings into commercially viable processes. But EPIC and the satellite labs ought to change that, giving these university research programs access to professionally managed lab environments kitted out with great tools at the lowest cost. Applied believes that this will only increase the success rate of innovations coming out of these great engineering schools.
Besides that, just imagine what an incredible learning experience—and career opportunity—it will be for bright young grad students who have the chance to solve real-world problems alongside veteran technologists from Applied, Intel, TSMC and so on.
From Silicon Valley to the world
The 180,000-square-foot EPIC Center building, which is expected to be completed in early 2026, will be located on an Applied campus in Silicon Valley. As Holtam pointed out to me, the publicly-traded companies within a 50-mile radius from that site have an aggregate market value of more than $10 trillion—about a third of the entire value of the S&P 500. Besides chip and chip equipment companies like AMD, Broadcom, Intel, Lam Research, Maxim, Nvidia and Xilinx, Applied’s corporate neighborhood includes other big names like Apple, Google, Cisco, Meta, Oracle and Salesforce.
All of these companies, even the ones that don’t make their own chips, stand to benefit from EPIC’s work. By the end of this decade, Applied predicts that the global semiconductor market will pass $1 trillion in annual revenue—about twice as much as today. Many of the new technologies driving that growth (AI, software-defined vehicles, IoT, smart electrical grids, you name it) will rely on chip production techniques that are orders of magnitude more complex than the ones that have brought us to this point. As if that’s not enough, we can also expect increasing pressure on the industry to reduce its carbon footprint, which will keep growing rapidly unless more efficient production methods are created.
For all of these reasons, an all-hands-on-deck approach to improving chip production technology makes perfect sense. Applied is the ideal company to spearhead that, and its plans for the EPIC Center seem very well thought out.
Securing the process
The one reservation I have—one that I shared with the Applied executives I talked to—is around security. The production technologies we’re talking about are incredibly sensitive, and not only in terms of market competition that might make some chip makers wary about working together in a shared R&D facility. Advanced chip manufacturing methods are in many cases also seen as strategically important by the federal government, meaning that Uncle Sam is very watchful about how these technologies percolate out to other countries, especially China. So security is paramount.
Holtam was certainly already alert to these risks. He pointed out that because Applied has been a major supplier of production equipment to the biggest chip makers for so long, it has also had decades to develop strict protocols for separating people or IP from different companies that should not come into contact with each other.
Beyond that, he emphasized that a lot of the work planned for the EPIC Center will be so foundational that it will be pre-competitive. In other words, it won’t be about the highly tailored refinements that will allow Manufacturer X to produce a certain kind of chip 3% faster than Manufacturer Y. Rather, the efforts will be focused on the kinds of breakthroughs that create a rising tide to lift boats across the semiconductor industry.
A strong initiative that should produce tangible results
EPIC passes the “smell test” for me as a project that’s far more than a marketing ploy. This will not just be a venue for delivering cool demos, which is what so many corporate R&D showcases end up being. Rather, it looks like a place where real breakthrough work will be done. Because of that, I believe EPIC could end up creating a lot of benefit for the universities and companies directly involved, and for the chip industry as a whole.
I’ll be keeping my eye on progress as EPIC comes online. Building an environment that fosters genuine co-creation isn’t easy, especially in an industry as competitive as semiconductors. But if any company can do it, Applied Materials can.