Applied Materials Israel Leads Global Chip Testing Amid AI Chip Boom
Applied Materials, a key global supplier of semiconductor manufacturing equipment, has seen its Israeli division triple sales and improve profitability over the past five years. The company, which manufactures machines that test chips used in cloud servers, smartphones, and electric vehicles, is experiencing unprecedented demand driven by the surge in AI-related memory chips and multi-layer chip designs. Ofer Greenberger, CEO of Applied Materials Israel since 2017, highlights that the Israeli unit is now an independent business with deep technological and commercial expertise, contributing billions to the global semiconductor market.
In a recent investor call, Applied Materials’ global CEO Gary Dickerson revealed the Israeli division reached record revenues last quarter and is expected to grow over 50% this year, the fastest growth among all company units. The Israeli branch, based in Rehovot with 2,400 employees, develops and manufactures electronic and optical chip testing machines that detect defects in multi-layer chips, a critical step as chips become larger and more complex. Greenberger asserts that "there is no chip in the world that does not pass through an Israeli machine from Applied Materials."
The company is investing heavily in expanding production capacity and R&D, including a $175 million new development center in Rehovot. Despite some workforce adjustments last year, Applied Materials Israel is actively hiring for over 100 positions. The division also supports a significant local supply chain, spending around $500 million annually on Israeli suppliers, mostly in peripheral regions.
Greenberger calls for improved government incentives that recognize vertically integrated companies like Applied Materials, which combine development and manufacturing in Israel. He stresses the importance of proximity between engineers and production lines in central Israel to maintain product quality and innovation. The company’s growth contrasts with some competitors’ slower expansion and reflects the global semiconductor industry’s rapid acceleration fueled by AI chip demand.
Applied Materials was founded in 1967 and established its Israeli R&D center in 1990, later acquiring local companies Orbotech and Opal. Its global headquarters is in California. The firm reported a 25% year-over-year revenue increase to $9.1 billion in Q2 2024, with adjusted gross margins exceeding 50%. The company plans to double machine output by 2028, capitalizing on strong order backlogs and long-term customer forecasts extending to 2030.
