Karnataka's cabinet has granted approval for Applied Materials Inc. to acquire 140 acres of land near Kempegowda International Airport in Bengaluru, marking a significant expansion of the U.S. chip-equipment maker's research and development footprint in India. The site, located within the Bengaluru Signature Business Park, is valued at approximately ₹780 crore, though final pricing and regulatory clearances are still pending.
The land allocation, announced by Karnataka Law and Parliamentary Affairs Minister H.K. Patil, comes at a critical juncture for Applied Materials. The company is scheduled to report its fiscal second-quarter earnings on May 14, with shares closing at $389.08 on Friday, down 1.37%, giving the company a market capitalization of roughly $310.9 billion. Investors are closely watching how the company navigates ongoing U.S. export restrictions on China while capitalizing on surging demand for artificial intelligence chips.
The Bengaluru Signature Business Park, which spans a total of 267 acres, has been designated by the state as a high-tech business destination. Authorities have fixed the land price at ₹1,288 per square foot and are evaluating options for selling the remaining acreage. Applied Materials plans to build a comprehensive R&D ecosystem at the Devanahalli site, focusing on AI chip development, including advanced logic chips, high-bandwidth memory, and advanced packaging technologies.
This expansion builds on Applied Materials' long-standing presence in India. In February, the company inaugurated a sprawling 800,000-square-foot campus in Bengaluru, which it describes as more than just a building. The campus houses the India Validation Center, the country's only facility equipped to handle 300-mm wafers, the foundational material for semiconductor manufacturing. Avi Avula, head of Applied Materials India, emphasized the strategic importance of the new campus for the company's global operations.
Applied Materials' financial performance underscores the strategic rationale behind the India expansion. In the fiscal first quarter, the company reported revenue of $7.01 billion, a 2% decline year-over-year. GAAP earnings per share came in at $2.54, while non-GAAP earnings per share were $2.38. CEO Gary Dickerson attributed the quarter's results to industry investments in AI computing, while CFO Brice Hill noted that system manufacturing capability has nearly doubled in recent years. For the fiscal second quarter, the company has guided for sales around $7.65 billion, with a $500 million range on either side.
Analysts remain focused on whether AI demand will sustain the next wave of equipment investment. Timm Schulze-Melander of Rothschild & Co. Redburn described memory and logic-foundry capital expenditure as two sides of the same coin, but highlighted memory as the heavier lift in the near term. The company's ability to meet this demand will be crucial for its growth trajectory.
However, the India approval does not eliminate regulatory risks. The land allotment still requires key clearances and a final price determination. Last week, Reuters reported that the U.S. Commerce Department had sent letters halting some shipments to two Hua Hong Semiconductor facilities, a move believed to impact Applied Materials, Lam Research, and KLA. Chris McGuire, senior fellow at the Council on Foreign Relations, described the crackdown as overdue and welcome, but noted it would lack teeth unless it includes overseas subsidiaries.
In a related development, Defiance ETFs launched a daily 2X long AMAT ETF on May 1, designed to deliver double the daily returns of Applied Materials shares. The fund is intended for short-term trading and does not constitute direct ownership of Applied Materials, with the firm warning that investors could lose their entire principal in a single trading session.
