The Future of Applied Materials

In 2021 and 2022, we had an extreme supply chain shortage of semiconductor chips in America. This was the first time in recent history where we experienced the challenges of offshoring critical infrastructure.

Applied Materials (AMAT) was one of the beneficiaries of this shortage. They are a $95b semiconductor manufacturing business based in Santa Clara, California. Pretty cool to see how big these sleepy technology businesses have become. Not as sexy as software but the margins are comparable. 25-29% profit margins with 50% return on equity. The operating leverage really kicks in for great manufacturing businesses.

Now it looks like they along with other manufacturers like Intel, Micron and Texas Instruments will benefit from the $50b CHIPS Act next.

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