Chip Equipment Makers Post 16% Revenue Surge as AI Demand Drives Eight Straight Quarters of Double-Digit Profit Growth

By NineScrolls Team · 2026-03-24 · 4 min read · Industry

Nine Equipment Giants Hit 16% Combined Growth

The world's nine largest semiconductor equipment manufacturers are posting a combined 16% year-over-year revenue increase for Q1 2026, with net profits jumping 20%. This marks eight consecutive quarters of double-digit profit growth for the sector, a streak fueled almost entirely by insatiable demand for AI-related chips.

The surge represents a sharp acceleration from the prior quarter's 8% growth rate. Front-end wafer fab equipment suppliers, the companies that build the deposition, etch, and lithography tools used to form circuit patterns on silicon wafers, expect global market growth of 15% to 20% for the full year.

Company-by-Company Breakdown: Lam Research Leads at 21%

Lam Research, a dominant force in plasma etch and thin film deposition, leads the pack with 21% revenue growth. The company reported record quarterly revenue of $5.32 billion, with systems revenue up 48% year-over-year. Foundry investments accounted for 60% of Lam's system revenue, with non-volatile memory at 18% and DRAM at 16%. Record gross margins of 50.6% signal strong pricing power in advanced deposition and etch tools.

Screen Holdings posted 18% growth. ASML, the EUV lithography monopolist, climbed 10% after reporting record Q4 2025 bookings of €13.2 billion, nearly double analyst expectations. ASML now guides for €34–39 billion in 2026 revenue. KLA grew 9%, Applied Materials added 8%, and Tokyo Electron posted 3% growth but upgraded its full-year forecast. Teradyne, primarily a test equipment maker, surged 75%.

AI Server Demand Reshapes Equipment Spending

The growth engine is clear: DRAM for AI servers and logic chips for AI accelerators. ASML CEO Christophe Fouquet described the market outlook as "notably improved" during January earnings, citing chipmakers rushing to add DRAM capacity for AI servers and logic capacity for high-performance computing.

SEMI forecasts that foundry and logic equipment spending will grow 5.5% in 2026, reaching $75.2 billion in 2027 as chipmakers build out capacity for AI accelerators and premium mobile processors. The NAND equipment market is expected to grow 12.7% to $15.7 billion in 2026. DRAM equipment remains the highest-growth segment, driven by high-bandwidth memory (HBM) production for AI training clusters.

SEMI Forecasts $139 Billion in 2026 Equipment Sales

The industry trade group SEMI projects total semiconductor equipment sales will hit $139 billion in 2026 and $156 billion in 2027, both records. Wafer fab equipment (WFE) sales are forecast to rise 9% year-over-year in 2026 and 7.3% in 2027, reaching $135.2 billion. Back-end equipment, including test and advanced packaging, is also accelerating: test equipment sales are projected to grow 12% in 2026, while assembly and packaging equipment grows 9.2%.

Geographically, Taiwan leads equipment spending, driven by TSMC's massive leading-edge capacity builds for AI and HPC. Korea follows with heavy investment in advanced memory technologies. China remains a $10.2 billion quarterly market for equipment makers, accounting for roughly 30% of total sector revenue. ASML's China revenue jumped approximately 60%, driven by sales of non-restricted older-generation lithography tools.

What This Means for Plasma Processing and Thin Film Deposition

The AI-driven equipment surge directly benefits the plasma processing and thin film deposition segments. Lam Research's 21% growth is almost entirely attributable to its plasma etch systems (Kiyo, Flex, Syndion) and PECVD/ALD deposition platforms (ALTUS, VECTOR, Striker). Every new AI logic node at 2nm and below requires more deposition and etch steps per wafer, expanding the addressable market for these tools.

HBM production, the memory type essential for AI training, is particularly deposition-intensive. Each HBM stack requires dozens of thin film layers deposited via CVD and PVD, plus precision plasma etch steps for through-silicon vias (TSVs). As DRAM makers scale HBM capacity, demand for plasma sources, sputtering targets, vacuum components, gas delivery systems, and process monitoring equipment grows in lockstep.

The equipment supply chain, from plasma source manufacturers and RF generator suppliers to vacuum pump makers and precursor gas producers, is entering a sustained growth cycle. With SEMI projecting three consecutive years of record spending through 2027, companies supplying components for deposition and etch systems are positioned for durable demand.