Applied Materials to Build $4 Billion Lab Focused on New Process Tech

Applied Materials said it plans to invest up to $4 billion in a new research hub in the heart of Silicon Valley, in a bid to bring new innovations in process technology to market faster.

The facility will be located on the company’s existing site in Sunnyvale, Calif. At the new fab, it intends to build the next generation of chipmaking gear in collaboration with leading logic and memory chipmakers, which will later use those tools in their fabs. Applied expects it to be the largest such facility in the world when it opens in early 2026, and estimates it will create up to 2,000 engineering jobs.

The world's leading maker of machinery used in semiconductor fabs, Applied said it will staff from the likes of Intel, Micron, and TSMC and other major players in the ecosystem, such as AMD, IBM, and NVIDIA, in a space to experiment with new process technologies and pre-release equipment.

As CEO Gary Dickerson explained, the research center “presents a golden opportunity to re-engineer the way the global industry collaborates.” The outlook is that $25 billion of research and development will be done at the site in its first decade of operation.

The move comes as the U.S. aims to regain its global leadership in manufacturing advanced chips with the CHIPS Act. When it was approved last year, the act created $52.7 billion in manufacturing incentives as well as subsidies for other priorities such as R&D and workforce development.

Applied Materials, which will seek additional funding from the U.S. government, said it will invest in the project through 2030.

More Transistors, More Problems

Dubbed the Equipment and Process Innovation and Commercialization (EPIC) Center, the site will include about 180,000 square feet—the size of more than three American football fields–of cleanroom space.

The company said it picked Silicon Valley as the site for the new effort because of its proximity to major semiconductor makers, as well as systems companies focused on in-house chips design to varying degrees.

Applied hopes to help companies navigate the challenges of what it calls the “angstrom era” of chip design and sustain the pace of innovation that the world has come to rely on from the chip industry.

Today, a state-of-the-art chip that fits into a square of silicon measuring only 10 mm contains more than 15 billion transistors linked by 60 miles of wiring. These building blocks are shaped using a wide range of materials—with more than 100 combinations—deposited in layers only several atoms thick. The production process for such a chip is orders of magnitude more complex than in previous generations.

Each year, a single company can spend billions of dollars to figure out the optimal way to create, shape, modify, and connect the transistors and other parts in a way that boosts performance, power, and area of their chips, while limiting costs and time-to-market. Even more important is scaling the underlying technologies to the point where they can be used to economically mass-produce their chips.

These hurdles, coupled with a critical shortage of technical talent and the urgent need to reduce the carbon intensity of the chip industry, are forcing companies to, among other things, adopt artificial intelligence (AI) in everything from their EDA tools to factory equipment.

For Applied, the rising complexity of chips requires a new approach to R&D—one in which materials engineering happens at the same time as process innovation instead of separately.

R&D Reimagined

Applied said EPIC is designed to be a central hub for collaboration across the ecosystem. For the first time, chip companies will be able to reserve space within an equipment supplier facility, extending their in-house pilot lines.

One of the project’s unique perks is early access to new generations of semiconductor equipment— months or even years before it’s widely released. It will enable chipmakers to run experiments and validate the tools in a context that closely resembles a real production line.

That should help its customers fine-tune new process technologies faster than before, while in turn, giving Applied Materials insights it can use to upgrade equipment for emerging tech. According to Applied, companies will be able to keep their work secret by using different areas of the lab.

The site will also give university researchers access to state-of-the-art labs and equipment to work on and validate new innovations. The goal is to increase the commercial success rate of their research.

Taking a new concept in semiconductor technology from the lab and fine-tuning it to the point where it is ready for commercial use in a fab can take anywhere from 10 to 15 years, said Applied.

But by working in parallel with universities and semiconductor firms, the company hopes to reduce the time it takes by up to 30% and, in turn, increase the return on R&D investment for the entire ecosystem.

By giving students a place to get hands-on experience and hone their skills, it also hopes to restock the pipeline of engineering talent to the industry. This is a high priority as semiconductor firms face a potential shortage of tens—possibly hundreds—of thousands of engineers and fab technicians.

While Applied Materials foresees university researchers working with industry professionals at EPIC, it also looks forward to collaborating with its academic partners to build a network of satellite labs.

The new project expands the company’s existing relationships with top engineering schools, where it has been conducting research in materials science and chip technologies, along with faculty and students.

Leading universities partnering on the project include the Massachusetts Institute of Technology (MIT), the State University of New York, University of California, Berkeley, and University of Texas at Austin.

Purse Strings Attached

In the end, Applied Materials hopes the U.S. research hub will help solve some of the challenges facing the chip industry on its path to becoming a $1 trillion market in the years to come.

The move, like many of the latest semiconductor projects in the U.S., is also a bid for government funds. But in a statement, the company said the scale of its investment in the new facility will depend on the availability of federal subsidies and other incentives available through provisions of the CHIPS Act.

While the law allocates about $39 billion in incentives for semiconductor firms looking to invest in U.S. fabs, it creates a separate pool of $11 billion of funding to be used to construct and upgrade R&D facilities.

EPIC is set up to engage with a future U.S. National Semiconductor Technology Center, which is being planned as part of the CHIPS Act. It will be a focal point for pre-competitive R&D in the chip sector.

Vice President Kamala Harris joined other senior U.S. officials at an Applied Materials event in Silicon Valley to announce EPIC. Top executives from chip design, manufacturing, and equipment firms, as well as academic leaders representing top U.S. engineering universities, also took part.