• Applied Materials and Broadcom struck a new R&D partnership to develop advanced packaging technologies for AI chips.
• The partnership will leverage resources available through Applied’s global network of innovation centers, including the EPIC Center in Silicon Valley.
• Applied’s Silicon Valley EPIC facility is on track to be operational this year.

As the artificial intelligence race drives demand for faster, more power-efficient chips, semiconductor companies are also focusing on a critical part of the supply chain: advanced packaging. Semiconductor solutions provider Applied Materials (AMAT) and chipmaker Broadcom (AVGO) announced a new research and development partnership on Wednesday, under which the companies will develop advanced packaging technologies for artificial intelligence chips.

As part of the partnership, Broadcom will leverage Applied’s resources through the company’s global network of innovation centers, including the new Equipment and Process Innovation and Commercialization (EPIC) Center in Silicon Valley.

The Silicon Valley EPIC facility is on track to be operational this year, which, according to Applied, is “the largest-ever U.S. investment in advanced semiconductor equipment R&D.”

Shares of Applied Materials are up more than 2% in early open market trading, while Broadcom shares are trading up marginally.

Significance Of The Partnership

The collaboration between the companies comes amid soaring demand for artificial intelligence, which has led to a worldwide chip shortage as hyperscalers build infrastructure to bring the necessary compute power online for AI workloads.

“Innovation in advanced packaging is essential to enabling sustainable progress in the AI era,” said Dr. Prabu Raja, President of the Semiconductor Products Group at Applied Materials. “We look forward to working side-by-side with Broadcom engineers to explore new technologies for boosting performance-per-watt through advanced chip packaging.”

Speaking at a JPMorgan conference earlier, Applied executives said AI-driven chip demand remains strong, especially in advanced logic, DRAM, high-bandwidth memory, and advanced packaging.

What Retail Thinks About AMAT, AVGO

On Stocktwits, retail sentiment about AMAT remained ‘extremely bullish’ and ‘neutral’ for AVGO over the last 24 hours.

AMAT and AVGO have outperformed the benchmark S&P index so far this year and over the last 12 months.

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