Major ClientsNarrow moat

Applied Materials (AMAT) — moat facet

Two customers take a third of Applied's revenue, and since 2025 its annual report no longer says who they are.

Applied sells to a small number of very large buyers. In fiscal 2025 "two customers accounted for approximately 19 % and 15 %" of revenue1, and in the first nine months of fiscal 2026 about 20% and 14%2. Together that is about a third of the company3. The 10-K itself warns: "We are exposed to risks associated with a highly concentrated customer base"4.

Largest two customers, share of revenue (%)20+15FY202120+12FY202219+15FY202312+11FY202419+15FY202520+149M FY2026Applied Materials Forms 10-K FY2022-FY2025 and Q3 FY2026 10-Q
Back to a third after one year of spread.

Until fiscal 2024 the filing named them. Samsung took 12% and TSMC 11% of revenue in 20245; in 2022 Intel also passed 10%6. The fiscal 2025 10-K gives only percentages. Revenue by country, Taiwan $6,857 million and Korea $5,608 million in fiscal 20257, suggests the two are still the largest chipmakers in those countries, but that is an inference.

Revenue and backlog concentration tell different stories. Revenue is concentrated in two customers; the backlog is concentrated by segment, and services now hold the larger part of it, $7,141 million of $15,002 million at October 20258. Applied does not disclose backlog by customer, so no one can tell whether the two largest customers dominate future orders as well.

Geography is concentrated too: "particularly in China, Taiwan and Korea"9. China is covered under the moat's dangers and the export-control page.

The spread of the rest of the business is wide. Japan took $2,273 million of revenue in fiscal 2025, Southeast Asia $1,076 million and Europe $962 million10. In the first nine months of fiscal 2026 China was 28% of revenue, Taiwan 25%, Korea 19%, the United States 12% and Japan 8%11. Five places take more than nine-tenths of the company's sales, and each depends on a few chipmakers.

The customers' concentration has also shaped what Applied sells. Stacked memory, advanced packaging and new transistor structures are all technologies decided by a handful of chipmakers12, and Applied builds research programmes, and a research centre, around them. Concentration is a risk to revenue and an advantage in research, because the few customers tell Applied exactly what they need.

Concentration is the price of selling to the leading edge. The share of the two largest customers is the figure to follow; if it rises above 40%, a single customer's pause would become a company-wide recession.

Moat trajectory: Holding steady

Two largest at 34% in FY2025 and the first nine months of FY2026.

The number that tests this moat
Reported
Two largest customers' share of revenue
About 34% (20% and 14%, nine months FY2026)

Customer concentration; a combined share above 40% would make one customer's pause a company recession.

Source: Applied Materials Form 10-Q, Q3 FY2026 ↗
Dig deeper
DIG DEEPER 01
Two Customers, 34 Percent, No Longer Named
Applied's two largest customers took 34% of its revenue in 2025, up from 23%, in the same year the company stopped naming them.
DIG DEEPER 02
Taiwan: Up 71% in a Year
Applied's revenue from Taiwan rose 71% in one year as the leading-edge logic build took off.
DIG DEEPER 03
Korea and the Memory Makers
Korea brings Applied a fifth of its revenue, mostly from memory makers whose spending follows memory prices.
DIG DEEPER 04
America Doubled in a Year
Applied's American revenue doubled in a year to 15% of the total as chipmakers built at home.
References
  1. ReportedIn fiscal 2025 "two customers accounted for approximately 19 % and 15 %" of revenue, and in the first nine months of fiscal 2026 about 20% and 14%.
    Applied Materials Form 10-K for fiscal 2025 (year ended 26 October 2025) - segment note: revenue, operating income, gross margin, research, capital spending and goodwill. — FY2025 · publ. 12 December 2025 · source ↗
  2. ReportedIn fiscal 2025 "two customers accounted for approximately 19 % and 15 %" of revenue, and in the first nine months of fiscal 2026 about 20% and 14%.
    Applied Materials Form 10-Q for the quarter ended 26 July 2026 - FY2026 segment basis (200mm moved to Semiconductor Systems), nine-month results, customer concentration, geography, the BIS settlement and the balance sheet - nine-month results, customer concentration, geography, capital returns and legal matters. — Q3 FY2026 · publ. 20 August 2026 · source ↗
  3. Moat Explorer calcTogether that is about a third of the company.
    Moat Explorer calculation from Applied Materials' reported figures ($ millions unless stated). Segment shares FY2025: Semiconductor Systems 20,798 / 28,368 = 73.3%; Applied Global Services 6,385 / 28,368 = 22.5%; Corporate and Other 1,185 / 28,368 = 4.2%. Segment operating margins FY2025: 7,379 / 20,798 = 35.5%; 1,792 / 6,385 = 28.1%; FY2024 6,981 / 19,911 = 35.1%, 1,812 / 6,225 = 29.1%; FY2023 6,879 / 19,698 = 34.9%, 1,529 / 5,732 = 26.7%. Q3 FY2026 margins: Semiconductor Systems 2,657 / 7,040 = 37.7%; Applied Global Services 536 / 1,781 = 30.1%; company operating margin 3,075 / 9,115 = 33.7%. Q1 FY2026 Semiconductor Systems 1,427 / 5,141 = 27.8%. Nine months FY2026 6,176 / 18,146 = 34.0% and 1,461 / 5,005 = 29.2%. Growth Q3 FY2026: Semiconductor Systems 7,040 / 5,564 - 1 = 26.5% year on year and 7,040 / 5,965 - 1 = 18.0% on the quarter; Applied Global Services 1,781 / 1,463 - 1 = 21.7%; revenue 9,115 / 7,910 - 1 = 15.2% on the quarter; United States revenue 1,367 / 683 - 1 = 100%; Europe 483 / 160 = 3.0 times. Nine months: 18,146 / 16,562 - 1 = 9.6%; 5,005 / 4,236 - 1 = 18.2%. Segment history, revenue: Semiconductor Systems 11,367 (FY2020), 16,286, 18,797, 19,698, 19,911, 20,798 (FY2025), compound growth (20,798 / 11,367)^(1/5) - 1 = 12.8% a year; Applied Global Services 4,155, 5,013, 5,543, 5,732, 6,225, 6,385, compound growth (6,385 / 4,155)^(1/5) - 1 = 9.0% a year, 6,385 / 5,732 - 1 = 11.4% over two years; Corporate and Other including Display 1,607 + 73 = 1,680 (FY2020), 1,634 + 130 = 1,764 (FY2021), 1,331 + 114 = 1,445 (FY2022), 868 + 219 = 1,087, 885 + 155 = 1,040, 1,185 (FY2025); 1,185 / 1,680 - 1 = -29%. Display operating margin 235 / 1,060 = 22% (FY2025) and 51 / 885 = 6% (FY2024). DRAM equipment 26% x 20,798 = about 5,400; flash 7% x 20,798 = about 1,460. Company margins: gross 13,808 / 28,368 = 48.7% (FY2025), 12,897 / 27,176 = 47.5% (FY2024), 12,384 / 26,517 = 46.7% (FY2023); operating 8,289 / 28,368 = 29.2%. R&D 3,570 / 28,368 = 12.6%; 3,570 / 1,451 = 2.5 times (FY2015-FY2025). Effective tax 2,273 / 9,271 = 24.5% (FY2025) and 975 / 8,152 = 12.0% (FY2024). Revenue FY2019 14,608 / 16,705 - 1 = -12.6%. Diluted shares 808 / 1,226 - 1 = -34%. Revenue outside the United States 25,305 / 28,368 = 89%. China share of revenue: 5,456 / 17,202 = 31.7% (FY2020); 7,535 / 23,063 = 32.7%; 7,254 / 25,785 = 28.1%; 7,247 / 26,517 = 27.3%; 10,117 / 27,176 = 37.2% (FY2024); 8,529 / 28,368 = 30.1% (FY2025). Taiwan 6,857 / 4,010 - 1 = 71%. Two largest customers 19% + 15% = 34% (FY2025) and 20% + 14% = 34% (nine months FY2026). Backlog: 15,002 / 19,011 - 1 = -21% (October 2022 to October 2025); Semiconductor Systems 7,105 / 12,691 - 1 = -44%; Applied Global Services 7,141 / 5,643 - 1 = +27%; shares of backlog 7,141 / 15,002 = 48% and 7,105 / 15,002 = 47%. Contract liabilities 3,271 / 2,566 - 1 = +27%; receivables 7,691 / 5,185 - 1 = +48%. Cash: net cash 7,241 + 1,332 - 100 - 6,455 = 2,018 (October 2025); 8,022 + 1,449 - 799 - 5,460 = 3,212 (October 2024); 7,037 + 2,196 - 1,299 - 5,245 = 2,689 (July 2026). Payout 1,384 / 6,998 = 19.8%; dividends plus buybacks 1,384 + 4,893 = 6,277, 6,277 / 7,958 = 79% of operating cash flow. ROE 6,998 / ((20,415 + 19,001) / 2) = 35.5% (FY2025), 40.6% (FY2024), 48.0% (FY2023). Trailing twelve months to July 2026: revenue 6,800 + 24,037 = 30,837; net income 1,897 + 7,370 = 9,267; operating cash flow 2,828 + 5,568 = 8,396; capital expenditure 785 + 1,988 = 2,773. Implied FY2026 revenue at the guidance midpoint 24,037 + 10,250 = 34,287, 34,287 / 28,368 - 1 = 20.9%; fourth-quarter midpoint 10,250 / 6,800 - 1 = 50.7%; implied non-GAAP EPS 8.73 + 4.02 = 12.75. Market: 376,360 / 9,267 = 40.6 times trailing earnings; 376,360 / 30,837 = 12.2 times sales; price 474.25 / 723.00 - 1 = -34.4%; Lam Research 384.36 - 376.36 = 8.00 bn more market value. ASML 662.45 / 376.36 = 1.8 times; KLA 246.05 / 376.36 = 0.65. Calendar year-end 2025 P/E 203,780 / 6,998 = 29.1; fiscal year-end P/E 40.91 / 11.83 = 3.5 times the FY2022 low. Other: services growth FY2025 6,385 / 6,225 - 1 = 2.6%; company revenue 28,368 / 27,176 - 1 = 4.4%; dividends 1,384 / 7,958 = 17.4% of operating cash flow; two largest customers FY2024 12% + 11% = 23%; Korea 1,521 / 1,160 - 1 = 31%; Semiconductor Systems 20,798 / 11,367 = 1.83 times (FY2020-FY2025); Display 1,060 / 1,607 - 1 = -34%; net income 6,998 / 1,377 = 5.1 times and EPS 8.66 / 1.12 = 7.7 times (FY2015-FY2025); revenue 28,368 / 9,659 = 2.9 times; balance sheet build July 2026 6,564 + 7,691 + 5,606 = 19,861; Display revenue excluded from Corporate and Other FY2025 1,185 - 1,060 = 125. Revenue FY2024 27,176 / 26,517 - 1 = 2.5%; R&D Q4 917 / 858 - 1 = 6.9%; revenue 30,837 / 25,785 - 1 = 19.6% (FY2022 to trailing July 2026); strategic investment gains 755 + 949 = 1,704; China less Taiwan nine months 6,688 - 5,902 = 786; forward earnings implied 40.91 / 26.95 = 1.52 times trailing; Q4 guide 10,250 / 9,115 - 1 = 12.5% above Q3. Memory share of systems revenue: DRAM plus flash 19% + 21% = 40% (FY2021), 17% + 6% = 23% (FY2023), 26% + 7% = 33% (FY2025). Market value 376,360 / 182,232 = 2.07 times the FY2025 year-end value; trailing net income 9,267 / 6,998 - 1 = 32%. Operating income 8,289 / 1,693 = 4.9 times (FY2015-FY2025). P/E gap to Lam 57.7 - 40.9 = 16.8. Q3 FY2026 returns 860 / 3,037 = 28% of operating cash flow. China plus Taiwan nine months (6,688 + 5,902) / 24,037 = 52%. Systems revenue Q1 to Q3 FY2026 7,040 / 5,141 - 1 = 37%. Systems share of segment operating income FY2025 7,379 / (7,379 + 1,792) = 7,379 / 9,171 = 80%. Systems R&D 3,042 / 20,798 = 14.6%. Third quarter share of nine-month systems profit 2,657 / 6,176 = 43%. Services FY2024 6,225 / 5,732 - 1 = 8.6%. Services share of backlog 4,335 / 11,758 = 37% (October 2021). Research per diluted share 1,451 / 1,226 = 1.18 (FY2015) and 3,570 / 808 = 4.42 (FY2025). Net cash plus long-term investments 2,689 + 5,268 = 7,957. Dividends per share 1.78 / 1.22 - 1 = 46%. ROE 35.5% / 10% = 3.5 times - geography, customers and backlog. — FY2015-FY2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Applied Materials' Forms 10-K and 10-Q, results releases and market data; operands shown in the source line.
  4. ReportedThe 10-K itself warns: "We are exposed to risks associated with a highly concentrated customer base".
    Applied Materials Form 10-K for fiscal 2025 (year ended 26 October 2025) - Item 1A risk factors: competition, export controls, customer concentration, backlog and the EPIC Center. — FY2025 · publ. 12 December 2025 · source ↗
  5. ReportedSamsung took 12% and TSMC 11% of revenue in 2024; in 2022 Intel also passed 10%.
    Applied Materials Form 10-K for fiscal 2024 - four-segment results including Display for FY2022-FY2024, customer concentration naming Samsung and TSMC, backlog at October 2024. — FY2024 · publ. December 2024 · source ↗
  6. ReportedSamsung took 12% and TSMC 11% of revenue in 2024; in 2022 Intel also passed 10%.
    Applied Materials Form 10-K for fiscal 2024 - four-segment results including Display for FY2022-FY2024, customer concentration naming Samsung and TSMC, backlog at October 2024. — FY2024 · publ. December 2024 · source ↗
  7. ReportedRevenue by country, Taiwan $6,857 million and Korea $5,608 million in fiscal 2025, suggests the two are still the largest chipmakers in those countries, but that is an inference.
    Applied Materials Form 10-K for fiscal 2025 (year ended 26 October 2025) - financial statements and notes: capital returns, debt, investments, tax and geography. — FY2025 · publ. 12 December 2025 · source ↗
  8. ReportedRevenue is concentrated in two customers; the backlog is concentrated by segment, and services now hold the larger part of it, $7,141 million of $15,002 million at October 2025.
    Applied Materials Form 10-K for fiscal 2025 (year ended 26 October 2025) - Item 1A risk factors: competition, export controls, customer concentration, backlog and the EPIC Center. — FY2025 · publ. 12 December 2025 · source ↗
  9. ReportedGeography is concentrated too: "particularly in China, Taiwan and Korea".
    Applied Materials Form 10-K for fiscal 2025 (year ended 26 October 2025) - Item 1A risk factors: competition, export controls, customer concentration, backlog and the EPIC Center. — FY2025 · publ. 12 December 2025 · source ↗
  10. ReportedJapan took $2,273 million of revenue in fiscal 2025, Southeast Asia $1,076 million and Europe $962 million.
    Applied Materials Form 10-K for fiscal 2025 (year ended 26 October 2025) - financial statements and notes: capital returns, debt, investments, tax and geography. — FY2025 · publ. 12 December 2025 · source ↗
  11. ReportedIn the first nine months of fiscal 2026 China was 28% of revenue, Taiwan 25%, Korea 19%, the United States 12% and Japan 8%.
    Applied Materials Form 10-Q for the quarter ended 26 July 2026 - FY2026 segment basis (200mm moved to Semiconductor Systems), nine-month results, customer concentration, geography, the BIS settlement and the balance sheet - nine-month results, customer concentration, geography, capital returns and legal matters. — Q3 FY2026 · publ. 20 August 2026 · source ↗
  12. ReportedStacked memory, advanced packaging and new transistor structures are all technologies decided by a handful of chipmakers, and Applied builds research programmes, and a research centre, around them.
    Applied Materials fourth-quarter and fiscal 2025 results release, Form 8-K exhibit 99.1 - full-year income statement, cash flow, balance sheet, Display results and one-off items. — FY2025 · publ. 13 November 2025 · source ↗
Sources
Generated September 25, 2026