"The New York Times" veteran commentator Thomas Friedman once wrote, "Applied Materials is one of the most important US companies you've probably never heard of." There is a good reason why not many people have heard of it - it is a boring company that manufactures machines for testing microchips used in cloud servers, smartphones, and electric vehicles for defects. Its share price trod water on the New York Stock Exchange for years.
The company’s name was mentioned mainly in reports about organizational changes or layoffs. Its executives granted few interviews other than for launches of new products and kept a low profile.
In the early 2000s, Ofer Greenberger, 64, was known as the CEO of KLA-Tencor, a competitor of Applied Materials. He was appointed CEO of Applied Materials Israel in 2017, then left that job for a position as Group VP Strategic BD - M&A and Investments in Applied Materials' global headquarters.
Last year, Greenberger accepted an offer to resume his position at the head of Applied Materials' Israeli center. "I was on a different path in my life, so I took a timeout," he says in his first-ever interview to "Globes."
Greenberger: "I went sailing for a few months. The situation to which I agreed to return was a completely different one. The Israeli center is no longer merely a development center of a global company; it is an independent business unit. Besides technological depth, it also features business acumen, awareness of competitive advantage, and a strong desire to take advantage of the surges in the market."
Greenberger asserts that over the past five years, the Israeli division has tripled its global sales, boosted its profit margin, and enhanced its potential. "We're now exploiting the rises in the market to grow as powerfully as we can," he declares. "Friedman wrote that Applied Materials was one of the most important US companies you've never heard of. Today, I can say that its Israeli division, the PDC division (Process, Diagnostics, and Control) is a company no less important to the global economy that many people have never heard of."
The timing selected by Greenberger for his interview is no accident. He is now marking an extraordinary achievement with no precedent in the company's 30 years of activity in Israel, since it acquired Israeli companies Orbot Instruments and Opal and merged with them.
50% projected growth
In a meeting with investors last week, Applied Materials CEO Gary Dickerson shed some light on events in the Israeli division. He said the division had achieved an all-time revenue record in the past quarter and was projecting growth of over 50% this year, the highest rate of all the company's divisions.
Management does not specify the exact revenue generated by the company's Israel activity, but the prevailing opinion in the sector speaks of billions of dollars out of the $9 billion posted by Applied Materials in the second quarter of 2026. It is also believed that the division has a "strong orders backlog" that is projected to continue growing in 2027.
Applied Materials reported a 25% rise in revenue in the second quarter, compared with the corresponding quarter last year, an increase in adjusted gross profit margin from 48.9% in the second quarter last year to over 50% in the second quarter this year, and adjusted profit per share of $3.50 in the second quarter, up 41% compared with the second quarter of 2025. The company raised guidance for the current quarter to $10.2 billion revenue and earnings per share of $4. Dickerson notes that several of Applied Materials' customers are providing forecasts up until 2030, adding that the company's visibility for next year's demand is unprecedented. The company now plans to double its output of machines by 2028.
Like many other microchip companies that have stood still in the past decade, Applied Materials is also being rejuvenated by the boom in AI microchips, particularly microchips manufactured by other companies, which have also soared: Samsung, SK Hynix, and Micron Technology. Applied Materials, however, is benefiting from the growth everywhere in the market, fueled by the rise in sales of Nvidia and Apple processors and the production lines of giants such as Taiwan Semiconductor Manufacturing Company (TSMC) and Intel.
Applied Materials stock has skyrocketed 200% in the past year and 88% this year, while the Standard & Poor 500 was gaining only 12% and Nasdaq 14%. Without referring to his customers, Greenberger insists, "There isn't a microchip in the world that isn't screened by a made-in-Israel Applied Materials machine."
The memory microchips craze
Applied Materials' Israel division develops, produces, and markets electronic and optical microchip testing machinery. It is benefiting from a number of trends that are emerging simultaneously: a meteoric rise in demand for memory microchips used in AI processing, particularly high-bandwidth memory (HBM) microprocessors that contain Nvidia's graphic processors, and the new trend in the microchips market - developing more and more microchips in "stacks" using thin layers stacked on top of one another. The end result is a larger microchip that requires more testing options in addition to extra packaging capabilities.
The Israel PDC division is the largest player in the electronic testing machines market, i.e. machines that perform electronic sensing tests for defects in the microchips. These tests are conducted in all the microchip "stacks" to detect disconnects, short circuits, and inadequate filling of the copper connectors. The division is competing there successfully with companies such as ASML Holding (the Netherlands) and Hitachi (Japan). In the optical machine testing market, however, its share of the market, currently dominated by KLA, Camtek, and Lasertec, is smaller.
The company is reporting growth in two types of machines: electronic (eBeam) and optical, powered by the memory microchips boom. Nvidia's graphic processor, with its limited memory capability, requires larger memory microchips - HBM processors composed of layers of smaller processors called DRAM. These were formerly deployed horizontally around the processor but are now composed of thin layers deployed in "stacks" inside a larger microchip.
This is where the Israel division's ability to electronically detect defects in each of these "stacks" enters the picture because optical testing in multilayered microchips is virtually impossible. According to Greenberger, however, the Israeli division's rapid growth is attributable not only to an increase in microchip production, but also to the tendency to purchase testing machines at a faster pace than manufacturing machines: "This is due to the growing size of the microchip, the switch to 3D, and the need to test microchips from different angles. If you produce one large microchip composed of eight microchips, all of them must be tested," he explains.
"We are now experiencing an unprecedented peak in demand," Greenberger admits. "The smart way to manage such a company is to maximize these increases in the most aggressive way: the stronger you are during the upsurge, the better off you will be when it comes to a halt. This is one of the reasons why I resumed my position last year; I wanted to make sure that we were not missing out on the surge. When there is a decline, everyone falls, but when there is positive momentum, you must grow faster than the rest of the industry. One of our advantages is that everything is done from here, from Israel, and especially from Rehovot: development, production, and marketing. Our VP operations is located here in Israel. He allows us to make difficult decisions. There is no doubt that the 2026-2027 period belongs to builders (builders of machines). Anyone who builds machines will be a winner in these years."
Over the past year, Greenberger concentrated on shortening the response times to the market by acquiring new mechanization capabilities, building infrastructure and clean rooms, and through a $175 million investment in the construction of a new development center in Rehovot. "Our revenue growth consists of operating revenue. It comes from the delivery of machines that have been produced and released, but we are also growing in development and working on the machines that will be part of the manufacturing processes in another 3-5 years."
The company has 2,400 employees in Israel, mostly in Rehovot. Greenberger claims that 300 jobs were added in Israel and several overseas subsidiaries. Applied Materials nevertheless laid off 100 employees late last year. He says, "Sometimes you must make adjustments in your array of talent and adapt the company to its new needs. We made quite a few changes and moved between areas of content. When you get down to it, we're a profit and loss unit that must make a profit. We didn't reduce our staff; we made adjustments that managers are required to make from time to time." Greenberger stresses that at this stage, the company is recruiting employees for at least 100 jobs.
Exports in the billions of dollars
The comparison of Applied Materials Israel to Nvidia Israel, based on Mellanox, is a natural one. Both companies are registered in Israel, operate relatively independently, and have been given special status in their US parent companies owing to their extraordinary growth. Nvidia reported 263% growth to almost $15 billion in its Israel activity in the last quarter, compared with the corresponding quarter last year, making its Israeli division the company's fastest growing division. Its Israeli activity is based on AI communications microchips.
At the same time, in contrast to Nvidia, Applied Materials Israel takes pride in its local manufacturing. All its production and sales come from the company laboratories in Rehovot, but most of its investment in new manufacturing activity, its $500 million in spending on Israeli suppliers in the manufacturing process value chain, as well as its electronic cards and cables assembly and microchips processing, takes place in Israel's outlying areas. The company's total contribution to Israel's exports is believed to amount to billions of dollars, while Intel Israel, which manufactures millions of microchips locally in its Kiryat Gat fab, has suspended its expansion in Israel.
Like managers of other development centers in Israel, Greenberger is also working with the Ministry of Finance and the Ministry of Economy and Industry to ease the lives of US employers in Israel. "The strong shekel is a challenge, but we have managed to balance our activity between professions that we recruit in other countries because of certain talent that exists there and activity that it pays me to keep in Israel because the local employees understand the product, the technology, and the system that we're building here," Greenberger explains.
Message to the government
He believes that the investment environment in Israel must change. In the work being done by Israel Advanced Technology Industries (IATI), the umbrella organization of tech and life sciences industries in Israel, Applied Materials Israel has become a case study. The company objects to the Law for the Encouragement of Capital Investments, which grants a discount only if investment is made in the outlying areas. Greenberger, who invested in development infrastructure primarily around Rehovot, justifies this investment in the central region.
"Our products are so complex that it is important for the engineers involved (who usually live in central Israel) to go on the production floor and take part in the decision-making processes," he declares. "This is not an automated assembly line engaging in mass production; there are a few machines that require both customization to the customer and great expertise. This requires a close connection between operational and development personnel."
"Anyone who invests in infrastructure in Israel deserves recognition of his importance," Greenberger adds. "I'm talking about companies investing hundreds of millions of dollars in local infrastructure. Benefits for manufacturers in national priority areas are irrelevant to us, even though the $500 million a year that we spend on suppliers goes mostly to the outlying areas. The government should think about how it can encourage companies operating vertically here (from development to production). These companies influence Israel's economic growth because this diversity is essential to the economy.
"We need a system-wide and strategic perspective here that will encompass an event, and focus on ways to encourage entire industries, instead of exclusively on narrow definitions of development talent. My only incentive to be here is the Israeli talent, but this involves what we established here. If I invest in a clean room in Rehovot and am unable to take a cent out of the country because of it, it's a significant disadvantage because proximity to central Israel is an advantage, although most of my suppliers are in the outlying areas.
"If you look at how much activity has moved from the US to Asia, it is incomparably larger than everything that has moved from Israel to Europe because this is happening under a global policy of dispersing sites," Greenberger concludes. "Despite the geopolitical challenges, we made most of our investments in Israel after October 7, 2023."
Published by Globes, Israel business news - en.globes.co.il - on September 4, 2026.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2026.